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Before he proposed to his now-fiancee last fall, Marc Hostovsky spent weeks scouring the internet for information around the “4 Cs” of diamonds — cut, clarity, color and carat — and grading certifications.
The 31-year-old had never made such a significant purchase in his life, he said. He wanted the engagement ring to be extra special, of course. And he went to extra lengths, including reaching out directly to the owner of the e-commerce jewelry marketplace Rare Carat, before he committed to purchasing the final product online.
“The ring was by far the most expensive thing I’ve ever bought. It was nerve-racking,” said Hostovsky, an entrepreneur based in the New York City area. “I feel like I’m a jewelry-buying expert now.”
Younger consumers, like Hostovsky, are playing a growing role in helping to propel the jewelry category. That’s in part because many are either thinking about or preparing to get married. According to a forecast by The Wedding Report, next year is expected to bring about 2.5 million nuptials, which would mark a four-decade high. Couples will be splurging not only on engagement rings but also on wedding bands and other accessories for the big day.
Meanwhile, other buyers are looking for ways to show appreciation toward a loved one during the pandemic, and jewelry is a great way to do that.
“People really like giving lasting gifts that emphasize love and commitment, and especially during times of challenges, which I think everyone can certainly relate to [right now],” said Beth Gerstein, CEO of jeweler Brilliant Earth.
Last holiday season, from Oct. 11 to Dec. 24, sales in the jewelry category fell about 4.3%, according to data from Mastercard SpendingPulse. Albeit a decline, it was a notably better showing than sales at apparel retailers and department store chains, SpendingPulse said.
This holiday, however, jewelers are expecting a much stronger finish to the year. During the week of Thanksgiving, which includes Black Friday but not Cyber Monday, jewelry sales are forecast to grow a whopping 39.7% from year-ago levels, SpendingPulse said. Total retail sales, excluding autos and gas, are predicted to rise about 10% over that time frame.
‘Feel-good purchases’
According to Marie Driscoll, managing director of luxury and fashion at Coresight Research, some consumers were able to accumulate money during the pandemic since they weren’t spending on travel and other experiences last year. She explained that these consumers put the extra dollars into their bank accounts and were able to save up for aspirational purchases.
“If people still had a job and were working from home … developing this Zoom lifestyle, luxury became a way of celebrating life,” she said. “And one of the best feel-good purchases in luxury is jewelry because there are often stories behind [it].”
Younger consumers also claim to care more about sustainability than their elders, Driscoll said, and they are fueling the growth of lab-grown diamonds. More jewelry companies are adding eco-friendly options with this in mind and it is helping to grow the category, she said.
A lab-grown diamond is manufactured rather than being mined from the ground. It uses technology that replicates the natural diamond growing process but deals less of a blow to the environment. The stones are also less expensive and offer a guarantee that it isn’t a so-called blood diamond, which comes from a conflict zone.
“They have avatars, they live in a virtual world, they’re living in the metaverse,” Driscoll said of millennials, a demographic that encompasses ages 25 to 40. “A lab-grown diamond is not as off-putting to someone who’s under 30 as it is to someone over 30. And then there’s no problem in terms of the ethics of the diamond.”
De Beers, once an outspoken critic of synthetic diamonds, in 2018 launched its own lab-grown diamond brand called Lightbox. And Pandora, the jeweler best known for its silver charm bracelets, said earlier this year that it would stop selling mined diamonds and focus on more affordable, sustainable and lab-grown gems.
Meanwhile Tiffany, which is now owned by European luxury conglomerate LVMH, began disclosing last year the country of origin of its diamonds of more than 0.18 carat. The high-end jewelry chain has employed a number of other tactics to reach younger consumers, too. In April, it began selling its first-ever men’s engagement ring, tapping into the rise of same-sex marriages. And it has enlisted celebrities such as Jay Z and Beyonce to star in its ad campaigns.
“If you don’t capture the millennial customer, you put your business model at extreme risk for the future,” said Oliver Chen, a retail analyst at Cowen & Co.
Social media at the core
Brilliant Earth, a jewelry chain founded in San Francisco in 2005, said about 87% of its active consumer base is either millennial or Gen Z, which includes ages 9 to 24.
According to Gerstein, many of Brilliant Earth’s customers are finding the brand through social platforms such as Instagram. The company relies primarily on its website to sell engagement rings alongside a wide assortment of lab-grown gems. It has only about a dozen showrooms where people can try on its products in person.
“Social media has been core to us from the beginning,” she said. “It’s just the younger consumer mindset.”
The company offers virtual appointments on its website and recently debuted a gift portal for holiday ideas. Among the items that are expected to be top of shoppers’ wish lists this year are zodiac-inspired pieces and tennis bracelets, said Gerstein.
“This generation wants to buy from brands that they can feel good about wearing,” she said of millennials.
Brilliant Earth, which listed its stock on the Nasdaq on Sept. 23, joins other jewelry chains such as Mejuri, Studs and Kendra Scott that market their businesses toward younger consumers online. Some are more focused on everyday pieces rather than fine jewelry.
David Yurman, a privately held jewelry chain known for its signature cable bracelet and more high-end pieces, said it’s also luring millennial shoppers thanks to its amplified digital marketing efforts in recent months.
“The brand feels very relevant right now,” said Lee Tucker, head of merchandising and marketing at David Yurman. “We’re seeing in our data an influx of new clients to the David Yurman brands, many of which joined us during the pandemic through our e-commerce channels.”
Hostovsky said he ended up buying his fiancee’s engagement ring online only because he was bombarded by so many brands’ ads following his initial internet inquiries about diamonds. He’s already begun shopping around online for another piece of jewelry to give her over the holidays.
“A few of [my fiancee’s] friends who are now thinking of proposing have reached out to me and been like, ‘Where did you get that? What was your process?'” he said. “I had a really good experience.”
— CNBC’s Melissa Repko contributed to this report.