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Future of diamonds with young generations

24 september 2018

De Beers noted recently in its ‘Diamond Insight Report 2018’ that demand for diamond jewellery reached $82-billion in 2017, a 2 percent growth from the previous year’s $80 billion.

It attributed the growth to sustained robust growth in the US and a return to growth in US dollar terms in China.

Of particular interest was the Millennial and Generation Z (Gen Z) consumers, who when combined, accounted for 66 percent of global diamond sales last year, according to De Beers.

Millennials, those people currently aged 21 to 39, represent 29 per cent of the world’s population and are the current largest group of diamond consumers, according to De Beers.

They accounted for almost 60 per cent of diamond jewellery demand in the US in 2017 and nearly 80 per cent in China.

It said Gen Z, which covers those currently aged 20 or younger, represent 35 percent of the world’s population and would come of age as diamond consumers over the coming decades.

De Beers said despite Gen Z being a long way from financial maturity, it was already making its presence felt in the diamond market, with the oldest Gen Z consumers (those currently aged 18 to 20) acquiring five percent of all diamond jewellery pieces in the US last year.

“The younger generations present wide-ranging opportunities for the diamond industry, [given] the significant size and purchasing power of today’s Millennials and tomorrow’s Gen Z consumers,” said De Beers chief executive Bruce Cleaver.

“While both of these [groupings] desire diamonds just as much as the generations that have come before them, there are undoubtedly new dynamics at play: those diamonds may now be in different product designs, used to symbolise new expressions of love and researched and purchased in different ways to mark different moments in life.”

The diamond giant further noted that although the Millennials and Gen Z had similarities, they also had their differences.

Similarities between the generations included valuing love, being digital natives, being engaged with social issues, desiring authenticity and self-expression.

On the other hand, Millennials are in general more mistrusting, requiring brands to earn their trust before they can pursue growth, while Gen Z tend to be more individualistic and optimistic, desiring products that help build their own personal brands.

The report highlighted three key areas of opportunity that the two younger generations present for the diamond industry.

The first opportunity was meeting Millennial and Gen Z’ needs for love and commitment on their own terms. De Beers notes that romantic love remained the key driver globally for diamond jewellery sales, with both generations holding strong aspirations to be in committed relationships.

“However, their attitudes towards how they express and symbolise their love are evolving,” it said. “When it comes to love and marriage, although many Millennials and Gen Z still want to follow tradition, there is an increasing focus on personalised products and relaxed experiences that reflect their individual values and preferences.”

It further notes that the bridal market continued to be of central importance, representing around 27 percent of diamond jewellery demand in the main diamond consuming countries.

However, diamonds given simply as a gift of love or romance (unrelated to marriage) were also a significant share of demand from younger consumers, representing a further 12 per cent of total demand in 2017.

The second opportunity was tailoring communications, messages and media to the natural behaviour and preferences of Millennials and Gen Z.

Here the report states that as digital communication natives, the two generations had an ‘always on’ attitude, which means they live by a motto of ‘I Want What I Want When I Want It’.

Online shopping and social media are as significant to these generations as physical retail outlets when it comes to researching purchases.

The majority (60 per cent) of US Millennial and Gen Z women aged 18 to 39 search the internet prior to purchasing a diamond to learn about designs, quality, pricing and brands, with the younger Millennials and Gen Z being more likely than older Millennials to look on social media for inspiration prior to purchase.

 In China, notes De Beers, nearly all (98 per cent) Gen Z and Millennial consumers aged 19 to 29 research their purchase through one or more channels before buying.

As Millennials and Gen Z experience this seamless ‘phygital’ coexistence in their everyday lives, they expect an equally seamless omnichannel experience when buying products.

“Omnichannel strategies that are organic, authentic, humorous and use out-of-the-box thinking resonate most with these consumers,” it said.

“However, retailers need to understand the different channels they favour. Gen Z’s most popular social media platforms are Instagram and Snapchat, while Facebook, Twitter and Pinterest are considered older generations’ media and of relatively less interest to Gen Z.”

The third opportunity was aligning company, brand purposes and social commitments to Millennial and Gen Z priorities.

De Beers notes that both generations display strong concern for social causes and responsibly sourced products.

This shows the opportunity for diamond brands and retailers to be more proactive in communicating the good that diamonds do throughout the world, and the contribution their individual brands make to important social causes., it said.

“Gen Z find corporate ‘storytelling’ insufficient to meet their expectations and expect brands to be able to back up their ethical claims, moving from ‘tell me’ to ‘show me’ when it comes to ethical sourcing, making technologies such as blockchain that can provide digital asset tracking more important,” said De Beers.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished