Lab-grown diamonds are no longer the new kid on the block, and it shows. Early adopters of lab-grown now compete on pricing and customer acquisition with retailers that are newer to the field but no less prepared to give shoppers what they want. While a significant number of stalwart store owners refuse to sell them, consumer acceptance of lab-grown is only increasing.
A year ago, some industry experts predicted that the introduction of De Beers’ Lightbox jewelry line would get more consumers talking about lab-grown, but that doesn’t seem to have happened.
“People don’t mention Lightbox, but I know lab-grown is fully acceptable now,” says Rick Hamann, executive vice president at Sartor Hamann, which has three stores in Nebraska. “It’s not weird or unusual.”
Joseph’s Custom Jewelry, which has two stores in Washington state, began stocking lab-grown stones four years ago — well before Lightbox was introduced — because of client requests, according to Anthony Hoag, store manager of the Seattle branch. “When clients asked for lab-grown, we saw other jewelers around us weren’t willing to help, so we said, why not?” he explains.
Customer requests are also why Amy Astaraee, owner of Brax Jewelers in Newport Beach, California, started carrying lab-grown in 2018. “If we can make money, why not?” she says, echoing Hoag. “I had customers who said other stores didn’t even want to talk about lab-grown. But for me, I bring whatever my customers ask for.”
She currently stocks a minimal number of such stones — they’re only 2% or 3% of her inventory — but doesn’t advertise or market them, and always keeps them away from the rest of her stock.
Not rushing in
Without a significant push from customers, though, many retailers are still waiting to see how the market develops.
“I do not currently stock lab-grown diamonds, but I’m not opposed to them,” says Rich Goldberg, third-generation owner of Safian & Rudolph Jewelers in Philadelphia, Pennsylvania, and current president of Philadelphia’s Diamond Row. “Realistically, I’m a retail store that’s here to take care of my customers and sell product. Over the holiday season, we had maybe a half-dozen calls
for lab-grown, and we sold a few, and I have a couple of suppliers. But we’ve not had strong demand for lab-grown.”
There are also retailers who are firm in their decision not to sell lab-created stones for any reason.
“I can’t sell [lab-grown] in good conscience,” says Bill Jones, owner of Sissy’s Log Cabin, which has five stores in Arkansas and Tennessee. “We don’t sell them, and we’re not going to sell them. They’re of no value. They’re just an expensive cubic zirconia (CZ) as far as I’m concerned. And they’re not going to escalate in value.”
In fact, Jones feels stocking lab-grown would be damaging to his selling proposition. “We lose a lot of romance in what we’re selling by cheapening what it is.”
Where others won’t tread
Attitudes like these are fine with Matt O’Desky, owner of Texas-based jeweler The Diamond Room. He’s been selling lab-grown stones for four years, and says stores that refuse to carry them are doing him a favor. “I would have more challenges selling lab-grown,” he remarks, “but thanks to all the stores bashing them, it makes our job easy.”
That’s not to say there are no challenges. The biggest hurdle, he says, is that there’s a pronounced lack of inventory available in larger sizes. He also cites consumer education as an issue.
“We get a lot of feedback from customers who are convinced that there are so many of these lab-grown stones out there, because they were educated in stores that don’t sell lab-grown,” he says, adding that it’s a misconception that lab-grown means “mass-produced.”
O’Desky shows his lab-grown and mined stones side by side. “Anyone who’s not looking at both is doing themselves a disservice, because they’re the same product,” he asserts. “I got bashed when I first started, but more people want lab-grown once they get a non-biased education.”
Recently, O’Desky — whose company has locations in Austin and Dallas — has found that lab-grown sales are significantly outpacing his mined sales. “I’m pretty sure the majority of stones we sold in 2019 were lab. In October 2019, we didn’t sell a single mined stone.”
More bang for their buck
Hoag says 10% of his customers come in specifically looking for lab-grown, but for those who aren’t predisposed to lab-created diamonds, the decision to steer away from mined ones is ultimately about price. “With lab, it’s possible to give you a bigger diamond and still stay within your budget,” he says. While his stock is still 90% mined stones, he reports that his lab-grown inventory is increasing.
“And do they really care that mined stones were down there [in the ground] for millions of years?” asks Hoag. “No. Mostly they couldn’t care less.”
Hamann, who has been selling lab-created diamonds for five years, also focuses on providing value. “It’s bang for their buck,” he says. “They can get a 2-carat lab-grown for $7,000 versus $11,000. Mined is typically 30% to 50% more.”
In Austin, O’Desky takes a similar approach. “If customers are looking for a 3-carat lab-grown in a fancy shape, I can say, there’s three stones in your size and shape available now. And if people don’t mention lab when they come in, I tell them about it and help them understand that this isn’t moissanite and it’s not CZ. This is the same as a mined diamond, just created differently.”
It’s an approach that seems to be working. “Half the people reaching out to us are looking for lab,” he reports. “And those that come in not knowing about lab end up buying lab about 50% of the time.”
In addition, Hamann claims lab-created goods are more aesthetically appealing. “The actual material on the lab is visibly better, meaning the rough they use looks brighter to the customer and to our salespeople, unless we’re talking Hearts
on Fire [branded diamonds], or super ultra high-end makes. Lab-grown just looks better to the naked eye.”
The ethical side
For O’Desky, the ethical and environmental aspects of lab-grown are a non-issue when it comes to sales. “I don’t touch the ethical part, for the same reason I don’t touch it from the mined perspective,” he says. “I’ve read that there’s a larger carbon footprint with lab. And if customers want to look at it as an ethical footprint, fine.”
But Hamann is certain ethics are at least part of the picture for many of his customers. “Even after all these years, they mention the Blood Diamond movie,” he relates, referring to the 2006 film starring Leonardo DiCaprio. “The blood diamond thing is a factor. And it’s not just kids. Those ‘kids’ are in their 40s and 50s.”
Astaraee agrees that “there’s a certain percentage of customers who specifically want lab-grown for ethical reasons and not because of the price” — though she adds that demand at her store is waning. “At the beginning of 2019, we had a lot of customers asking about lab-grown. Then it slowed down, with fewer calls, and not as many people interested.”
Even retailers who don’t deal in lab-grown end up having to talk about the ethical implications of their inventory.
“The average person looking for lab-grown does not seem to be wooed by the environment issue so much as the bottom line,” says Goldberg. “Many customers like the conflict-free aspect, but I already stock only conflict-free natural diamonds.”
‘The prices will go down’
Astaraee thinks the drop-off she’s been seeing in lab-grown demand is a combination of price instability and increased competition from other retailers.
“A lot of vendors who are selling lab-grown are competing on the prices, and online is flooded with so many lab-grown stones at low prices — as much as 20% or 30% less than my cost,” she says. “With mined diamonds, there’s a limit to how low you can go in price, but there’s no limit with lab-grown. I had one customer who was looking for 4-carat studs and was [considering] lab-grown.... I told her I’d rather have her just wait a little, because I didn’t feel comfortable selling her something that would drop in price.”
Goldberg agrees that the desire for lab-grown is mostly about price. “The market has become so competitive that a lot of retailers are looking for a way to get an edge. It’s like when retailers went for silver a few years ago.”
But while he’s “not opposed to selling someone what they want,” he says, “I’ve never liked the approach of going cheaper just to try and survive. That’s not my brand.”
Jones acknowledges that laboratory-created stones have their place in the industry, but he, too, worries about price fluctuations and likens lab-grown diamonds to synthetic rubies and emeralds, as well as moissanite. “I know it’s a profit center for certain people, but if they’re selling at $800 a carat
now, they’ll only get cheaper, and every year they’ll go down somewhat,” he says. “Just like
the computer chip.”
Yet the retailers who are doing well with lab-grown tell a different story.
“I don’t think lab-grown will take over, but it’ll always be another option,” says O’Desky. “Some people will bash it until they’re dead, and tell
their sons and daughters to do the same. But I
bet the number of jewelers selling lab-growns now is about 5%. If it were 40% of retailers, we couldn’t do it, because there’s not enough lab-grown stones available.”
While the category currently represents only a fraction of the market, its growth and its tenacity mean its true impact on the industry may not be felt for many years.
“Lab-grown will take over a huge portion of the industry, and the prices will go down,” predicts Hamann. “That’s not good for anyone, but it is what it is. We can’t control what the consumer wants, but we need to provide what the consumer wants. And if you’re in an area with a lot of younger people, to them lab is a good alternative. Sometimes it’s just what they want.”
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