De Beers to Sell Lab-Grown Diamonds in Stores

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By middle October 11, 2019 15:50

De Beers to Sell Lab-Grown Diamonds in Stores

De Beers jolted the industry last May when it announced Lightbox — a direct-to-consumer subsidiary that sells laboratory-grown diamonds — after years of vehement opposition to man-made stones as jewellery.

This month, De Beers is doubling down on its investment by partnering with Bloomingdale’s and Reeds Jewellers to showcase its products in stores for the first time. The partnerships serve as a “brick-and-mortar trial” for the mining empire, which is grappling with a glut of natural stones that are hurting sales of “rough” mined diamonds.

Lab-grown diamonds serve as a potential safety net for De Beers as some consumers, including many young shoppers, turn away from mined jewels as unethical and environmentally harmful. Diamond miners have historically treated synthetics as a threat: some laboratory techniques produce stones that are virtually identical to those pulled from the ground, and are sold for a fraction of the cost. But De Beers said research shows that its lab-grown stones have not cannibalised rough diamond sales, with the two serving different needs in the eyes of consumers.

Whereas shoppers are likely to choose mined diamonds for engagement rings, man-made alternatives are better suited for “everyday gifting,” said Lightbox Chief Executive Steve Coe.

Customers see Lightbox’ $200 to $1,000 diamond earrings or necklaces as on par with nice handbags or shoes, Coe told BoF. These could be “gifts for teenage daughters, travel jewellery … [and other] opportunities that you wouldn’t associate natural diamonds with.”

Lightbox competes with a growing number of synthetic diamond makers, many of which are based in Asia. Diamond Foundry is the largest lab-grown diamond producer in the US.

De Beers, famous for minting the phrase “A Diamond is Forever,” railed against lab-grown diamonds when the technology first became commercially popular about five years ago. (De Beers, in fact, has been manufacturing lab-grown diamonds since the 1960s for testing and industrial purposes at its Element Six manufacturing facility in the UK.) As part of the Diamond Producers Association, the company helped fund the ongoing “Real is Rare” campaign, which launched in 2016 to a millennial audience.

The company, which holds 10 diamond sales events annually, saw sales dip 39 percent in its latest event, which generated $295 million. Analysts predict that profits will fall significantly for De Beers as the industry as a whole struggles with oversupply. Meanwhile, the market for man-made diamonds is slated to exceed $3 billion this year, up from $2 billion last year, according to diamond analyst Paul Zimnisky. That’s compared to $85 billion-$88 billion for mined diamonds.

Lightbox diamonds will only be available in a few Bloomingdale’s stores, including the flagship in Manhattan as well as its San Francisco store. In addition, Lightbox products will be featured in 30 Reeds stores, largely located throughout southeastern states in the US. Both retailers will also carry Lightbox jewellery on their websites.

Having brick-and-mortar exposure will allow shoppers to touch and feel the products, including stud earrings, bracelets, stack rings and pendant necklaces, with lab-grown stones in pink, blue and traditional white, Coe said. Lightbox charges $800 for a one-carat stone, not including the cost of setting. The mined version of a one-carat gem costs about of $5,500.

Pink- and blue-hued diamonds are only possible synthetically — one reason for Bloomingdale’s to embrace Lightbox, according to Charles Leavy, Bloomingdale’s vice president and designated market maker (DMM) of fine and fashion jewellery.

Next year, De Beers will unveil a $94 million manufacturing facility in Oregon that will be able to produce 200,000 polished carats every year, which equates to about $200 million worth of merchandise sales. Lightbox declined to disclose annual revenue.

Courtesy: BusinessofFashion

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By middle October 11, 2019 15:50
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