Millennials & Gen Z: the Future of Diamond Demand Is Now

Market Analysis
13/09/2018 18:14

The Millennial and Gen Z generations combined accounted for two-thirds of global diamond jewelry sales in 2017, as diamond jewelry demand reached a new record high of US$82 billion, according to data published today by De Beers Group in its latest Diamond Insight Report. The sheer size of the younger generations, combined with their increasing financial maturity (millennial spending power is forecast to overtake Gen X permanently by 2020), provide significant opportunities to the diamond industry provided, as CEO Bruce Cleaver emphasizes, the industry evolves to ensure it reflects younger consumers’ values. "With their focus on networks and instantaneous information sharing within an increasingly connected world, today’s consumers want businesses to demonstrate they understand what truly matters to them. To meet this expectation, we need to listen closely to consumers, bringing with us innovative and thought-provoking propositions that set us apart from the rest."

According to De Beers' research, Millennials - people currently aged 21 to 39 - represent 29 percent of the world’s population and are the current largest group of diamond consumers. They accounted for almost 60 percent of diamond jewelry demand in the US in 2017 and nearly 80 percent in China. Gen Z, those currently aged up to 20, is an even larger consumer generation - representing 35 percent of the world’s population and will come of age as diamond consumers over the coming decades. Despite the generation being a long way from financial maturity, Gen Z is already making its presence felt in the diamond market, with the oldest Gen Z consumers (those currently aged 18 to 20) acquiring 5% of all diamond jewelry pieces in the US last year.

"Millennials and Gen Z are the most populous generations in the world today," says Cleaver. "Since their spending power is rising, they are important drivers of growth in the luxury sector and account for a considerable share of global diamond jewellery demand. While Gen Z are still too young to match Millennials’ spending power, they are tomorrow’s consumers and will increasingly affect the way marketers have to communicate with and engage their customers. The diamond industry needs to understand the younger generations to keep diamonds relevant, but should regard Millennials and Gen Z as distinct groups." The report highlights key similarities and differences between Millennials and Gen Z that have particular implications for diamond brands and retailers. For example, 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.

However, De Beers points out, there are also a number of important similarities between the generations, especially with regards to valuing love, being digital natives, being engaged with social issues and desiring authenticity and self-expression. Considering these similarities and differences, the 2018 Diamond Insight Report highlights three key areas of opportunity that the two younger generations present for the diamond industry:

  • Meeting Millennial and Gen Z needs for love and commitment on their own terms: Romantic love remains the key driver globally for diamond jewelry sales, with both Millennials and Gen Z holding strong aspirations to be in committed relationships; the way they express and symbolise their love, however, is evolving. There is an increasing focus on personalised products and relaxed experiences that reflect their individual values and preferences. The bridal market continues to be of central importance, representing around 27% of diamond jewelry demand in the main diamond consuming countries, but diamonds given simply as a gift of love or romance (unrelated to marriage) are also a significant share of demand from younger consumers, representing a further 12% of total demand in 2017. Diamond brands and retailers must therefore complement traditional designs with more niche, customisable offerings to reflect the broader interpretation of love and commitment from young consumers.
  • Tailoring communications, messages and media to the natural behavior and preferences of Millennials and Gen Z: As digital communication natives, Millennials and Gen Z have an ‘always on’ attitude that 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%) 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 and they expect an equally seamless omnichannel experience when buying products.
  • Aligning company and brand purposes and social commitments to Millennial and Gen Z priorities: Millennials and Gen Z both display strong concern for social causes and responsibly sourced products. This highlights 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. 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.

CEO Cleaver ends with some positive notes: "It seems one thing the industry does not need to prove to young consumers is that diamonds are the perfect symbol of love. Those in the diamond sector must recognise that love may now be expressed in many ways, and diamonds may also be used differently to symbolise it, but the connection remains as strong as ever. With the younger consumer’s desire for qualities that diamonds can perfectly embody – including love, connections, authenticity and positive social impact – the most exciting changes will be ahead of us if we seize the opportunity to shape the future of the diamond industry." In short, the young generations are the present and future of the diamond industry: it is up to the diamond industry to adapt to their values, behaviors and way of life.