Customers may not always be right, but it’s rarely lucrative for retailers to argue with them. That’s what the diamond industry is discovering, grudgingly, when it comes to lab-grown diamonds. Back in April 2018, an MVI Marketing study found that “nearly 70% of respondents…would consider a lab-grown diamond for an engagement ring center stone.” Yet last year, only 52% of independent jewelers were stocking such stones, according to Instore magazine’s 2020 Big Survey — though that was still more than the 10% of four years ago.
Craig Slavens understands retailer reluctance. “When lab-grown first hit the market, I was against it,” says the owner of Luxe Fine Jewelry in Neenah, Wisconsin. “There wasn’t a lot of cost-benefit initially, and there were a lot of objections.”
Four years ago, he changed his mind. “Now the prices really benefit the consumer,” he says, adding that they’re good for retailers as well. “Whether customers buy lab-grown or earth-mined, it’s less costly [for me] to buy every shape in lab-grown, so I’m able to own more diamonds.”
The where and why of supply
Today, most of the inventory Slavens buys is loose. All of it is High Pressure-High Temperature (HPHT) lab-grown, as opposed to the less expensive chemical vapor deposition (CVD) stones, because “I would rather buy something with less done to it, and I want to offer the best I can.”
But the main benefit of lab-grown isn’t the price, in his view; it’s the cut. “As a rule, bigger lab-grown polished rounds are fantastic,” he says. “They’re cut better than earth-mined stones, because they’re not as worried about losing material.” That said, the category’s melee doesn’t yet meet his rigorous standards. “The lab melee is all over the place, so I have yet to use it. Most lab-grown melee is hit or miss, and most of it is miss.”
Lynn Bryan Young, owner of Bryan Jewelry in Prattville, Alabama, currently works with several different suppliers, but she began buying lab-created stones from Pure Grown. “They provided a great memo program, and it allowed us to get our feet wet, so we continue to work with them.” She started with loose and later branched out into mounted, driven entirely by client demand — particularly from self-purchasing women.
Service is a key attribute in a supplier, says Joe Maughan, owner of 9th and 9th Jewelers in Salt Lake City, Utah. “I use [jewelry manufacturer] Stuller for convenience. Shipping is easy and reliable, and their website is easy to navigate. The bigger guys, like Pure Grown, run you through credit checks, and I feel like I don’t need that. You better give me free shipping, and I want it overnight, and I want 10-day memo.”
Price is the main motivator for Scott Richardson, owner of After Midnight Jewelers in South Burlington, Vermont, both in choosing suppliers and in selling the stones. He buys loose lab-grown diamonds on memo from Blue Moon, Rainbow Diamonds, and IDD, among others. “What hits [customers] is that they’re half-priced,” he says. “I tried talking about how they were ‘green,’ with no mining. But it comes down to price.”
‘An all-out war’
Selling lab-grown is strictly a numbers game, according to Richardson. “Lab-grown is like [jewelry brand] Pandora. If you got in early, you made a lot of money. And I’m in business to make money.” Indeed, he says, for buyers age 30 and under, “if I can drive them into the store, at least nine out of 10 will buy the lab stones. People over 30, it’s 50/50.”
He thinks the diamond industry could be more supportive, though. “I don’t think the industry does anything to help. They’re completely deficient, and there’s an all-out war between lab-grown and mined.”
Part of that war, suggests Slavens, may be the trade’s financial ties to mined stones. “When I worked for [the American Gem Society (AGS)], De Beers gave them tons of money,” he relates. “And the Gemological Institute of America (GIA) gets money. All these companies get money, so it will be an uphill battle. And De Beers doesn’t want its multibillion-dollar mined industry disrupted, so they created Lightbox to make lab-grown seem like costume jewelry. They’re trying to create objections to lab-grown in the consumer’s mind.”
Maughan agrees, asserting that De Beers’ mined-diamond business benefits from a volatile lab-grown market. “There was a seminar that the GIA was doing at [the JCK show] three years ago, about what they called ‘synthetic stones,’” he recalls. “This is the year Lightbox came out. And I asked if De Beers is just trying to downplay lab-grown so they can sell more mined? And [the person running the seminar] said De Beers and the GIA have been doing business together for 50 years. He said he couldn’t comment on it.”
Then, too, stores are hurting themselves by undervaluing lab-grown stones, Young contends. “Retailers don’t need to be afraid to price the lab diamonds at a profit. They’re beautiful, and they’re a valuable addition to the diamond market, and they should be treated that way.”
Further down the road
Maughan worries about the dropping price of lab-grown. “Four years ago, I was seeing prices at 15% to 30% less than mined, and now we’re down to 40% to 50% less than mined. If it continues to drop, and I hope it doesn’t, we’re not going to do as well.”
What he doesn’t worry about, though, is whether lab-created diamonds are real. “Old-school jewelers and old-school clients don’t realize it’s the exact same thing,” he says, adding that some retailers’ negative attitudes are pushing patrons to shop elsewhere. “It’s hard to get that through their heads. But people don’t want someone in a suit and tie telling them lab-grown is fake.”
Young trains her staff on lab-grown and mined by providing reading materials and testing their knowledge. “Pure Grown was a great source for that initial information and training,” she says, though she stresses that her clients come in fairly informed.
And while she believes each retailer needs to make its own decision, she has found that “adding lab diamonds...only increased my diamond sales, because I had more to offer. The clients who wanted mined diamonds continued to purchase them, and clients that purchased labs became a new segment of business for us.”
Richardson agrees. “I want to become the lab-grown king of Vermont so I can retire. I’ve missed some boats in my time. I’m not missing this boat.”
Article from the Rapaport Magazine - April 2021. To subscribe click here.