We are currently going living in one of the most challenging times the world has ever been through. More than 3 million people world-wide have been struck down by the Covid-19 pandemic virus, it has caused deaths of hundreds of thousands of people and entire countries are in lockdown. Business and economies are badly affected. It goes without saying that this pandemic has had a devastating impact on the precious diamond trade. What does this mean for the consumer?
Like every other industry, the diamond industry too has been badly affected by the Covid-19 pandemic. As businesses are closed due to entire countries going into lockdown, it has lead to a build-up of inventory and a slump in sales.
Diamond prices slide
The price of precious diamonds has gone down during the first quarter of 2020. The RapNet Diamond Index (RAPI) being an industry benchmark of prices trends showed:
- Price of 1 carat diamonds – down 8.7% in the first quarter of 2020 (and down 13.1% year on year)
- Price of 0.50 carat diamonds – down 4.9% in the first quarter of 2020 (and down 9.5% year on year).
(Ref: Copyright 2020, Rapaport USA Inc – “Diamond prices slide in March as COVID-19 spreads”).
Businesses being shut as a result of the COVID-19 lockdowns has meant that retailers, wholesalers and manufacturers have had a build-up of inventory. As some countries ease the lockdown restrictions, the industry is keen to sell its built-up inventory.
Between December 2019 and February 2020 diamond manufacturers purchased large volumes of diamond rough in anticipation of good US holiday season sales. But as the pandemic hit, mining activity continued and businesses shut down. That has meant that there has been inflated inventory in the first quarter of 2020.
We are currently in a situation where diamond manufacturers have more than adequate diamond rough supply to polish and are not keen to purchase any more diamond rough from the miners. But the manufacturers are being cautious in commencing operations to polish the rough and export it to diamond centres world-wide. This is due to lockdowns and social distancing norms still in place in most countries.
It is unclear how long the virus will continue and how long international borders will remain closed.
A new way of doing business
The pandemic has meant that retailers who are able to adapt their businesses to online trading and ecommerce will be able to get sales. As various countries gradually lift COVID-19 restrictions, the value of emotional and personal connections will be felt more than ever before. This presents the industry with an opportunity to increase marketing by genuinely focussing on the emotional connect and desirability of precious diamonds. This combined with online trading will offer value and get businesses moving again. Obviously, this is a positive thing as business growth will offer employment opportunities once again.
From a consumer perspective, this industry situation offers a unique opportunity to shop around and get very good value. Those retailers who offer excellent value in terms of price, quality of jewellery manufacture and good after-sales services will stand out. The consumer has a unique opportunity to shop around get very competitive prices on some large and rare amazing diamonds. They may be able to upgrade and get a bigger stone for their same budget, or get a higher quality stone in their budget.
For instance, instead of a 1.20 carat diamond you may be able to get a 1.50 carat stone for the same budget.
The name of the game is not to shy away. The pandemic will ease and gradually governments are starting to ease lockdown restrictions. Life has to move on. Those who shop around will find there are plenty of amazing diamonds at some amazing prices on offer.