Regal Imports News for NOVEMBER 2019
The Diamond Crisis (Part 3)
In the Diamond Crisis Part 1 & 2, I discussed mining, manufacturing, the GIA and Rapaport. In Part 3, I will bring forward a radical theory concerning Millennials and Generation Z.
The Diamond Crisis Part 2 concluded that retained value has had a fundamental role in diamond appeal. Dario Marchiori, a diamond and gemstone researcher from Hong Kong, questioned this concept of diamond worth. He asks, "are younger generations still prone to being convinced that an indistinguishable yellow tinge and a few tiny, almost invisible spots, are enough to make them feel they possess something unique? Are these characteristics still worth spending a fortune for?"
His question suggests that younger consumers may view diamonds differently than past generations. The younger people that I know do not own or even wish to own a car. They live in small residences that are affordable and spend excess funds on travel and entertainment. They are practical, economical and smart. They know their priorities.
They are rebelling against the value systems that proceeded them. They want to impose their own values on the world which, by definition, differ from previous generations values. The question from Dario is simple. Are the values of this generation in conflict with the value proposition currently presented by the diamond industry?
If Millennials and Generation Z have their own definition of luxury then is current diamond marketing effective? Do they care about the intricacies of diamond grading? Do they see a salt and pepper diamond as more representative of their values than a D Internally Flawless? Taking this thought to its ultimate conclusion, is the diamond industry trying to impose old values on an indifferent audience?
This generation has not seen Marilyn Monroe or Breakfast at Tiffany's; to them old movies are boring and something to be avoided. They are tech-savvy and targeted by every form of marketing. They have replaced the baby boomers and are demanding to be acknowledged as the new economic force in the world. As Dario put it, "They want to break the rules, just like all previous generations did! They don't want to be talked into anything!"
There is a theory that I studied in university called the Copernican Revolution. Copernicus discovered that the earth rotated around the sun when all believed that the sun and planets revolved around the earth. His discovery turned the understanding of the structure of the solar system upside down and inside out.
Using the Copernican Revolution analogy, I ask the question, will Millennials and Generation Z turn the current definition of diamond value upside down? Just because a physical object is mined and rare does that make it valuable? Dario's question suggests that we could possibly be witnessing the beginning of a paradigm shift in diamond appreciation.
This idea is simply mind blowing! The thought of it makes me cringe. Current diamond marketing is all about ethical diamonds. We can trace origin. We are improving grading systems, sourcing and stressing rarity. We compare laboratory grown diamonds to natural diamonds but do we dare to think of our diamond world turned upside down and all these discussions deemed irrelevant?
My mentor, teacher and diamond guru Mr. Edward Ho, formerly of Gilly Diamond in Hong Kong, told me these possibly prophetic words in 1977 and I quote "For the life of me, I don't understand why so many people pay so much for white rock".
Dario describes the younger generation's buying preferences as "the battle for the new cool". The "new cool" is trending away from physical luxury. Antiques, china and silverware were once very popular articles. Items in these categories have lost a great deal of their value and appeal. They are considered by many younger consumers as useless baggage. And diamonds, could they be next?
Ester Oberbeck, the head of strategy development for De Beers summed up the state of the diamond industry with these words, "This passion for diamonds is ours to lose".