When Lightbox was first announced, the diamond-jewelry industry was unprepared, and more than a little uncomfortable.
“The initial reaction to Lightbox was one of huge surprise,” says Neelesh Hundekari, a partner and head of the gem and jewelry practice at global strategy and management consulting firm A.T. Kearney. “While [De Beers subsidiary] Element Six has been making laboratory-grown stones for industrial uses, no one imagined that the largest miner of diamonds would venture into production and sale of laboratory-grown-diamond jewelry.”
Even other companies within the lab-grown community were taken aback by what many saw as an unexpected, though not unwelcome, development. “The De Beers [Lightbox] announcement came as a surprise and a shock,” affirms Saurabh Agrawal, co-founder and chief marketing officer of Mumbai-based lab-grown company Fiona Diamonds. “This was truly a turning point for the entire diamond industry. It put an end to the arguments about the sustainability and the future of lab-grown diamonds.”
The concept of lab-created diamonds as a fine-jewelry consumer product was confusing to a lot of people in the trade. Many were — and still are — skeptical of lab-grown product and protective of mined diamonds’ legacy, explains Ben Smithee, CEO of consumer consultancy firm The Smithee Group.
“At first, there was a lack of clarity,” says Smithee, whose company specializes in millennial marketing and is one of the agencies approved to market Forevermark products. “It’s still really early and new, and the market is just starting to adjust.”
A boost in confidence’
In the months following the Lightbox announcement and its September 2018 launch, retailer sentiment began to change toward lab-grown product in general, recalls Agrawal. “Before the announcement, retailers were not willing to invest in inventory of lab-grown diamonds,” but since then, the category has received “a boost in confidence” regarding its future, he says. He has also observed greater awareness of the product at the consumer level than there was a year ago.
While Lightbox wasn’t the reason Agrawal’s own company entered the market, the news certainly didn’t hurt his business, he reports. “We had launched lab-grown-diamond jewelry a year before the Lightbox announcement. Lightbox’s entry into this market just validated all our claims, and boosted sales.”
In fact, from a consumer perspective, Lightbox isn’t even the lab-grown category’s top contender, says Smithee. “[Lightbox] is a competitive player in lab-grown, but there’s not a clear winner in the space yet.”
He also asserts that consumers who visited the Lightbox pop-up at New York’s Oculus shopping hub last year simply saw the brand as a good value, and weren’t interested in any of the issues that worry the industry. “They see 1 carat at a great price point, and they think, ‘I like it,’” he explains. “Very few were asking about certification, and there wasn’t a single conversation around ethical sourcing.”
The price of success
Lightbox’s biggest impact, however, might be on lab-grown pricing. Hundekari says the brand’s linear pricing structure of $800 per carat has created pressure on other laboratory-grown manufacturers to price their diamonds relative to Lightbox. And down the line, De Beers may outdo them in production as well: “If De Beers is able to produce and supply its planned volumes, and its pricing model becomes the industry norm...unless others have the same scale and similarly deep pockets, [lower margins would make it] hard for them to compete,” Hundekari speculates.
Yet even if lab-grown becomes the norm instead of an outlier, there will always be some industry pushback, according to Smithee, who asserts that “20% of [those in the diamond industry] think lab-grown is amazing, and 20% will say they’re never going to touch it. The middle 60% say they’ll see — and [that split] may even be 80/10/10. The top and bottom 20%? You’re never going to change their minds.”
Competition on the rise
In diamond-industry terms, Lightbox is still the new kid on the block.
“They’re still kind of a startup,” says Smithee. “They’ve seen some success, and now they have to scale.”
It has, however, upped the ante for others in the field. Since the Lightbox announcement, established lab-grown producers such as Diamond Foundry and Pure Grown, and upstarts such as Clean Origin, have faced stiffer competition. New World Diamond hired former Shinola president Jacques Panis as its CEO in July 2018, and Fiona Diamonds’ online campaign features the tagline “The New Forever,” which takes indirect aim at De Beers’ long-standing “A Diamond Is Forever” slogan.
More retailers are stocking lab-grown, too. In June 2018, New York jeweler Jennifer Fisher debuted a collection in partnership with Diamond Foundry, and the December holiday season saw Berkshire Hathaway subsidiary Richline Group join with JCPenney and Macy’s to offer a line of lab-created diamonds. Even Signet Jewelers has been hinting it might consider carrying lab-grown if customers indicated interest: Signet CEO Gina Drosos told analysts in September that the company was “very closely monitoring and assessing the demand for this emerging category.”
Change may also come from unexpected places, predicts Smithee. “Walmart is making a lot of smart acquisitions right now. Would it surprise me if [a company like that] bought Diamond Foundry? Not at all.”
Spreading its rings
Lightbox itself is making some changes as well.
“As of the end of April 2019, we’re launching stackable rings,” reports Sally Morrison, the brand’s chief marketing officer. “We haven’t had rings to date. And we’re adding more 1-carat product.” Lightbox has seen a lot of comments on social media asking for rings, she explains, and the company is responding. “We’re also introducing two new fancy shapes [in the colored-diamond category].”
Still, Lightbox rings are not being positioned as bridal jewelry. “They don’t look like engagement rings at all,” states Morrison. “Mostly because the way they work, they look better when they’re stacked. We think this is a sweet spot in the market. It’s fashionable and playful, and under $1,000.”
That said, she isn’t telling customers they can’t wear them as engagement rings. “When consumers buy our product, they do whatever they want with it.”
In addition to the new jewelry designs, Lightbox is dipping its toe into a possible brick-and-mortar strategy. “We’ve done a couple of pop-ups, and we’ve learned a lot about consumer reaction, not just [to] the product itself, but the whole category,” says Morrison. “But we need to know more, certainly in terms of refinement and assortment.”
She says Lightbox hopes to begin solidifying brick-and-mortar retail partnerships later this year, although the company is not disclosing with which retailers. Once the brand’s new production plant in Oregon comes online in 2020, “we can roll out those new partnerships,” she continues. “There are some stores that are more interested in this product than others, and there are some stores that are willing to do the training about how to sell it.”
That training is important, she stresses: Lightbox partner stores would need to be well-versed in the product’s messaging in order to stock the stones. “Certainly, for most consumers, blue and pink in diamonds is something they’ve never seen. And when you offer lab-grown blue or lab-grown pink, they don’t know what to think about it. So we need to work
with sellers who are willing to explain
the product.”
Image: LightboxArticle from the Rapaport Magazine - June 2019. To subscribe click here.