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Consumers Show Growing Appetite for Larger Lab-Grown Diamonds

April 12, 2023 /

Over the last few years, especially since the COVID lockdowns, consumers’ lab-grown diamond purchases gravitated away from the traditional. At present, they are prefering higher colors and clarities, but even more so towards larger lab-grown diamonds.


Jewelry Sales Decline

In March, jewelry sales by unit declined 5.0% and value sales by 8.8% year over year. Compared to February, jewelry sales declined 12.1%. Performance was completely driven by retail price point.

The $100 to $999 Retail Price Range

This price range represents 49.1% of all units sold and 16.6% of total retail value. Year over year, unit sales declined 8.0% and value was down 8.6%.

The $1,000 to $4,999 Retail Price Range

This price range represents 30.4% of all units sold and 48.9% of all retail value. Year over year, unit sales declined 1.9% and value was down 0.9%.

The $5,000 to $14,999 Retail Price Ranges

This price range represents 3.1% of all units sold and 18.7% of all retail value. Year over year, unit sales declined 5.7% and value was down 7.6%.

The $15,000 and above Retail Price Range

This price range represents 0.5% of all units sold and 15.1% of all retail value. Year over year, unit sales declined 24% and value was down 27.5%.

Two key areas of note. The bread and butter $1,000 to $4,999 price range appears to be stabilizing after weakness in the 2022 Holiday Season. Conversely, the high end of the market shows a significant dip in March and bears watching.

Natural Diamond Jewelry Sales Declining

Sales continued to show year-over-year declines with unit sales off 10.3% and total value sales down 14.0%. Necklaces in the $1,500 to $9.999 price range showed strength with units up 1.4% and value up 1.6%. All other product categories declined.

Lab-Grown Diamond Jewelry: Larger Diamonds

Lab-grown diamond jewelry continued to demonstrate growth with year-over-year unit sales up 57.6% and value up 37.2%. The average retail price for a piece of lab-grown diamond set jewelry declined from $2,740 in March 2022 to $2,405 in March 2023.

Gross profit declined from $1,463 in March 2022 to $1,347 in March 2023. Retailer margins increase from 53.4% in March 2022 to 56.0% in March 2023.

Average carat weight per diamond jewelry item increased from 1.31 in March 2022 to 1.61 in March 2023. The decline in lab-grown cost and prices are clearly encouraging American consumers to purchase larger lab-grown diamonds.

US Jewelry Sales chart - Jan 2020-Mar 2023 - Source Tenoris

Diamond Prices Are Shifting

Polished diamond prices are seeking new footing. While prices of natural diamonds have kept easing since the start of the year, lab grown are seeing a surprising retail price increase.

Natural Diamonds Suffer from Declines

The average retail prices of all sold natural diamonds is still higher than they were a year ago, however, the number of diamonds sold, retailer gross margins, and total value of sales has declined in March 2023.

Year to date, natural diamond sales have been falling behind. By value, US retailer loose diamond sales declined 17.8% in the first quarter of 2023.

By number of stones sold, the decline is 18.6% year over year.

The average retail price per carat of a loose diamond was $7.552, up 3% year over year in March. The rise reflects, among other things, the increase in the average size of loose natural diamonds, up from 1.07 carats in March 2022 to 1.16 carats in March 2023. On a month-over-month basis, The average retail price per carat of a loose diamond sold by US retailers declined 3.4%.

While the price declines were seen in most price ranges, once again two price range areas displayed a significant rise. One is a relatively low-price range, loose retailing for under $1,000. The other is high-end goods, loose with a total price of $50,000-$100,000.

The share of memo goods keeps rising. For the fifth month in a row, the share of memo goods was 20% or higher, up from the 17.8% it averaged in 2022. In March, the share of memo goods rose to 2.8%.

Inventory levels of loose remains fairly steady.

Natural diamonds average price and cost chart Jan 2020-Mar 2023 - Tenoris

Larger Lab-Grown Diamonds Is A Thing

Demand for lab-grown diamonds remains robust. For the first time in many long months, the average retail price rose month over month, up 2.4%.

Partially, this is due to the rise in demand and memo supply, as well as the shift to larger lab-grown diamonds. The average sold loose lab-grown diamond increased from 1.79 carats in February to 1.82 carats in March.

Unit sales were up 50% year-over-year in March, somewhat of a slowdown from the 60% year over year rise in February. By value, sales increased 16%, again, a slowdown from the 19% increase in February. This is primarily a seasonal change, and we currently do not see this is a change in the rising tide that is LG.

The average per carat retail price of lab-grown diamonds declined 1.1% in March versus February.

We stick by our forecast that we are not far from the day when the majority of loose diamonds sold by US specialty retailers will be lab-grown diamonds. At this pace, this will happen within a few months and before the year end.

When will lab-grown diamond sales reach the 50% Tipping point forecast chart - Tenoris Mar 2023

Retailer’s gross margin continued increasing and reached 57.4% in March.

The share of lab-grown diamonds on memo is only increasing. In March, the share of sold memo goods was 63.7% (47.3% in March 2022), while memo goods in inventory climbed to 68% (54% in March 2022). These figures also underscore retailers’ preference to sell their asset items over their memo items.

In March, there was a rise in lab-grown diamond inventory, up 5%. Retailers not only seem to maintain greater confidence in lab-grown diamonds, but they are also realigning their purchases to their expected sells. For example, the share of oval shaped lab-grown diamonds is consistently rising, at the expense of rounds.

In terms of size, inventory of smaller goods weighing one carat and below, is decreasing. Sales of larger lab-grown diamonds, specifically those weighing 4 and 5 carats, are rising.

Lab-grown diamonds price and cost chart Jan 2020-Mar 2023 - Edahn Golan & Tenoris Larger Lab-grown diamonds

If you want to better understand the US jewelry retail landscape, check out this interview. In it, Chris and Edahn discuss Tenoris’ services and provide a live demonstration of the system. They show how to get a deeper and detailed understanding of the market and how it can help improve your business.


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