Disruptions are common occurrences in any business industry. The rise of the MP3 player or electronic cars is a good example. Their industries were initially resistant until the so-called disruptions started to make traction.
After which, the resistant members of the industry were forced to catch up to the innovations. In this case, the diamond industry faces disruption as well. That is in the form of the technology used in cultivating lab-grown diamonds.
Lab-grown diamonds are made in laboratories. They undergo a simulated process similar to mined diamonds. Though they were once dubbed as “synthetic diamonds”, they’re just as authentic as natural ones.
Lab-grown diamonds are often said to be the future of the diamond industry in general. And considering how people are leaning towards them more, they may be right.
The Industry During the Pandemic
The diamond industry was not an exemption when the pandemic hit several businesses hard. The widespread lockdowns gradually led to store closures. Consumers were more financially strained as well so the sales dipped by 14% for jewelry and 31% for rough diamonds.
Even if a recovery was expected, people were surprised to see the industry bouncing back enthusiastically in 2021. There was an unexpected boom in demand and an increase in revenue growth. The surge came from an increased urge for “emotional gifting”. That was because experience-based gifts were very limited due to the pandemic.
Back in 2021, its production was led by Russia, Canada, and Botswana. That was when rough diamond sales bounced back by more than 60%. The diamond mining sector also witnessed a 62% increase in revenue. On the other hand, the diamond jewelry retail witnessed a 29% revenue increase.
Emphasizing ESG
As the demand for diamonds increased again, sellers noticed a shift in consumers’ and investors’ expectations of their gems. They wanted ESG (Environmental, Social, and Governance) standards to be the foundation of the industry onwards.
The diamond market’s future will depend on the connection of all stakeholders. All the while they should maintain a strong focus on compliance, sustainability, and innovation.
The diamond industry’s public image is chequered when it comes to ethical issues. With that, it’s no surprise that consumers are demanding increased traceability. The industry’s climate impact and origin transparency are also big concerns of consumers and are on top of the list.
Some companies have opted to experiment with recycled and pre-owned jewelry. This is to introduce sustainable jewelry to the market. But another sub-sector opted to invest in lab-grown diamonds.
Why? Well, aside from being cheaper, they were created using technology and renewable energy. Thus, issues regarding carbon footprints were not in question. And since mining companies face issues with carbon neutrality, growing diamonds in labs has become a greener option that has risen in popularity.
Technology & Online Marketing
Technological advancements are helping the diamond industry achieve the ESG standards. We’re encountering renewable technology that can make mining greener. Moreover, we’re utilizing digital solutions to increase connections between supply chains.
This will offer consumers the traceability they’re demanding. Blockchain, for example, provides simple ways of collecting data. There are miners who partner with traceability solution providers. They can give their consumers a crystal clear view of their diamonds’ origins.
The pandemic also brought up the need for operational efficiency. Companies had to ramp up their operations to meet demands. They used dynamic pricing tools and automatic cutting and polishing services. This helps lower labor costs and also improves manufacturing efficiency.
E-commerce was accelerated due to the pandemic. Almost 90% of jewelry retailers now have online platforms to sell their products. They saw how online searches for diamond jewelry increased, more than during the pre-pandemic era.
The online markets have led to the closures of under-performing physical stores. At the same time, the market has widened to welcome a younger consumer audience. These are the customers who prefer and are more likely to shop online.
This new audience contributed to the efforts of pushing for ESG standards. This is because the younger generations have demonstrated to be very keen on emphasizing the need for sustainability.
Lab-Grown Diamonds
The diamond industry has certainly seen an amazing recovery from the damage done by the pandemic. However, reports still say that the production might take five years to be on par with the pre-pandemic production levels.
This is because miners and operators are still wary of potential new virus strains that could halt operations. People are hesitating to start new major projects so production growth will probably stay between 1-2% for the next half-decade.
However, the demand for diamonds isn’t showing any signs of decline, especially during holiday seasons. Perhaps more lockdowns can dampen the demand, but the right events can help the market recover once more.
Because of these circumstances, technological advancements and sustainability goals are highly encouraged. This will help the industry keep up with the consumers’ expectations.
Lab-grown diamonds will continue to reach ESG standards and thus, be desirable for the youth. They’re made without damaging nature as much as mining does. And no miners were harmed in making them either. It satisfies the noble pursuits of the youth to go green.
Operational excellence and technological advancements will continue to produce ethically sound products. It has gained momentum that will unlikely be slowed, except for a few lockdowns.
Conclusion
To remain relevant in the diamond industry in the age of technology, you’ll need to ride the waves as well or even better than your competitors. The pandemic was harsh on all industries and it plunged the diamond industry into a different kind of low.
But the advancement in technology has given it a chance to bounce back on its feet. Online marketing has allowed the industry to be accessible to younger consumers. People can shop in the safety of their homes.
Moreover, technological advancements have led to the creation of diamonds inside laboratories. Lab-grown diamonds contribute to a greener cause. That’s something that the younger generation of consumers advocates. You can say that part of the industry’s recovery can be attributed to this method.
This also means that technology has made ESG standards more achievable. Technology may have disrupted the diamond industry. But because of that, it’s heading towards a greener and more ethical future.