Eavesdrop in any jewelry shop today and you’ll likely find the one topic that seems to be on every jewelry maker’s mind is lab-grown diamonds. And for good reason: Consumer surveys conducted by MVI Marketing, a market research and analysis firm for luxury brands, have consistently shown that a majority of consumers are aware of the stones, and that a growing number of them are interested in purchasing them.
Some in the industry have already embraced lab-grown diamonds, citing them as simply a new category that will interest some consumers because of their lower pricepoints. Already major jewelry manufacturers have started incorporating them into their retail stores, including Signet Jewelers, which is carrying them in its Kay Jewelers and Jared stores as well as its James Allen online business, and Richline Group, which has launched a new lab-grown diamond brand it sells in jewelry departments of JCPenney and Macy’s department stores. Richline also offers lab-grown diamonds as an option for shoppers of its Gemvara custom jewelry e-commerce site. Others have shied away, fearful of the potential for fraud and consumer confusion. But one thing is sure: They’re not going away.
“A lot of people are talking about this as a cataclysmic event,” says Marty Hurwitz, CEO of MVI Marketing in Austin, Texas. “I believe it is a massive disruption... It’s the beginning of a choice for consumers. And I’m all for a message going out to consumers to allow them to make a choice. I wish the industry would unify around one message.”
Mark Hanna, chief marketing officer of Richline Group in New York City, agrees. “Lab-growns are a new choice and a new way to create product.” He cites a new website (whylabgrown.com) launched by Richline Group to help educate both consumers and retailers on lab-grown diamonds, explaining how they’re made, how they compare to mined diamonds, and the benefits they offer.
“We’re offering them as a new choice and trying our best to be educational about the stones,” he says.
Part of the story of lab-grown diamonds has always been about their lower pricepoints: Buyers can afford a larger manmade diamond of the same quality as a smaller mined diamond. In the coming year, sustainability and responsible sourcing may enter in that story more, thanks to an initiative by SCS Global Services, a global leader in developing, testing, and certifying standards for sustainable practices.
Earlier this year, the industry came under the scrutiny of the Federal Trade Commission (FTC) because of claims made by several lab-grown diamond manufacturers that their stones were sustainable. As a result, the FTC issued letters to the offending companies, warning them that making unvalidated claims amounted to false advertising, and that they needed to cease and desist.
Shortly after the FTC incident, SCS Global Services was approached by the Lab Grown Diamond Council about an initiative to develop a standard for lab-grown diamonds, so that manufacturers could have a path toward properly declaring their product to be sustainable. SCS started laying the groundwork, and it recently invited growers to participate in a pilot program.
“We have established a framework for the standard,” says Stanley Mathuram, vice president of SCS in Emeryville, California. “Through the [pilot] process, we’ll establish the benchmarks. The purpose of the program [is to] help determine what the final claim is.” He notes that although the program is just starting, they’ve already established the first benchmark: “They have to be climate neutral. They have to ensure that they are able to offset their energy use.”
As part of the process of establishing a baseline for sustainability, SCS will be considering three pillars:
"The new generation of consumers is demanding transparency in the sourcing of everything. The jewelry industry cannot avoid this." —Marty Hurwitz
SCS was accepting grower participants until mid-November. Mathuram anticipates that the company will be done with all of the data collection and on-site audits by the end of March 2020, with the official certifications being announced by mid-April. “The standards will be released then,” he says. “Once the pilot is done, the metrics will have been established and the program will be open to anyone.”
In addition to validating sustainability claims of lab-grown diamond growers, SCS is also welcoming retailers to participate in the program. Mathuram cites two major industry retailers, Helzberg Diamonds and Swarovski, that have committed to selling only certified lab-grown diamonds. “They’re committed to their supply chain,” he says, “and they request that their supply chain meet these requirements of sustainability.”
As the final step of the program, SCS will develop a universal logo or mark that will be incorporated onto the certificate declaring the lab-grown diamonds as sustainably or responsibly produced. Certified growers will also be included in SCS’s green product guide, which is published directly on the company’s website to help jewelers find certified growers.
“I believe that this is a defining component for lab-grown diamond manufacturers,” says Hurwitz. “Consumers want to see a verified chain of custody. They want to understand the labor used to produce the product is not exploited. The retail industry has poo-pooed this for a long time. But the new generation of consumers is demanding transparency in the sourcing of everything. The jewelry industry cannot avoid this.”
In addition to helping jewelers market these stones as sustainable, Hurwitz says that this certification program could also help with the current supply-and-demand problem with lab-grown diamonds.
“There is massive demand and a real supply crunch right now,” Hurwitz explains. “With Signet coming into the market, growers can’t keep up with demand. I could see a two-tiered pricing structure: premium and non-premium. It could be based on size, where it’s grown, or a sustainability claim.” Having lab-grown stones that have been independently certified as sustainable not only could be just what today’s younger consumers want, but could also lead to jewelers being able to command top prices for those stones.
Regardless of what you may think about these stones, the experts are in agreement that these stones aren’t going anywhere. Which is why, whether or not you wind up working with them, it’s imperative that your shop has a screening device to test the diamonds that come through it. If you’re going to sell a consumer a mined diamond, you need to be able to verify that the stone is indeed natural.
When it comes to screening technology, many jewelers have been left confused by the myriad options available to them. “There’s confusion about how they work, how accurate they are, why they are so expensive,” says Harold Dupuy, FGA, vice president, strategic analysis of Stuller Inc. in Lafayette, Louisiana.
"Whatever you’re mounting, it’s based on the public’s tastes and needs. Stop judging the public and trying to impose your thinking on what they do." —Ben Janoski
Before investing in a device, Dupuy recommends jewelers check the evaluations produced by the ASSURE Program that the Diamond Producers Association launched earlier this year. The program was developed to test the performance of diamond verification instruments in a uniform and extensive way. While the program can’t identify the best machine to meet your specific needs, it provides a number of performance results, including false positive rates, false negative rates, accuracy rates, and referral rates. The scorecard results can help jewelers understand the machines, how they work, and how accurate specific devices have been proven to be.
So far the program has tested 24 machines, and the results of those tests can be viewed online (diamond producers.com/assure). Dupuy notes that the results have been varied. “Only one instrument scored 100 percent, and the lowest performer was 51 percent accurate (and is discontinued now). Most had some margin of error.”
If you’re still on the fence about carrying lab-grown diamonds, remember that consumers are aware of them and have started asking their jewelers about them. For many consumers, learning that they can get the same quality of diamond for a lesser price, or a slightly larger diamond for the same price, will be a major deciding factor when they’re ready to make a purchase.
“Lab-grown diamonds have been a hot topic, and more people are selling them,” says Dupuy. “There’s been some negativity pointed at them, but some of that is starting to subside. More people are realizing that it’s just another choice for consumers. And they’ll make the choice, not the retailer.”
Ben Janowski, owner of New York City–based Janos Consultants, also cautions jewelers to remember that, at the end of the day, giving the consumer what they want is what matters most.
“Whatever you’re mounting, it’s based on the public’s taste and needs,” he says. “Stop judging the public and trying to impose your thinking on what they do. The public is not interested in hearing internal arguments of the industry. They want a piece of jewelry.”