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News, Feature Stories, Diamonds, The Great Diamond Debate













The consumer conundrum: ‘Should I buy a lab-grown or natural diamond?’

Jewellers need to take the lab-grown diamond market potential seriously. I’m not saying everyone must dive in with both feet selling lab-grown diamonds – and there is a great range of opinions on the subject.

Key points

• The first question jewellers should ask a customer is, ‘What is important to you in purchasing a diamond?’

• Retailers should tailor their sales approach based on the customer’s answer and their attitude to lab-grown diamonds

• Lab-grown and natural diamonds appeal to different types of customers as they offer different benefits

But as a jewellery store training specialist, I’ve had many conversations with jewellers on both sides of the issue, as well as many in the middle.

Typically customers fall into one of three categories regarding these diamonds: the customer didn’t know about lab-grown diamonds until the jeweller brought it to the customer’s attention, the customer was aware of them through advertising or social media, or the customer had done research and was adamant about buying lab-grown. 

The first of these customers is typically delighted at the cost difference between natural and lab-grown diamonds, which allows them to purchase a larger diamond with the same budget.

It’s easy to understand the benefits, and when sticking to their budget is a high priority, they will likely opt for the lab-grown diamond.

The most important question for any jeweller to ask a customer is, ‘What’s important to you in purchasing a diamond?’

Their answer will reveal their true desire and the jeweller can then deliver a product and service to match the customer’s requirement.

If the customer is aware of the lab-grown product – but hasn’t done further research – they will have many questions for the jeweller.

This is good and an important conversation because it provides the jeweller with the opportunity to create trust, value and a relationship with the customer. How the jeweller handles this customer is key to sales success. 

"The most important question for any jeweller to ask a customer is, ‘What’s important to you in purchasing a diamond?’"

Integrity is key in this conversation. The jeweller should educate the customer, as much as possible, as to the future value, trade-in potential, and production processes of lab-grown diamonds.

It’s important, when speaking with this customer, not to guess or speculate on the future of lab-grown diamonds, which is ambiguous.

For the customer who is adamant about buying a lab-grown diamond, the sales conversation should be straightforward – yet I would still advise retailers to practise full disclosure regarding the future value of the diamond.

Again, asking the question, ‘What’s important to you in purchasing a diamond?’ will confirm the customer’s desires and priorities, as well as give the jeweller a comfortable lead-in to the sale.

The sales scenario

With more and more shoppers seeking lab-grown diamonds, it’s important for retailers to know how to respond – and how to secure the sale.

While it may sound extreme, some US retailers are exclusively selling lab-grown stones with no natural diamonds whatsoever.

De Beers’ Lightbox Jewelry – previously an e-commerce business – is also undertaking a bricks-and-mortar trial with two high-profile US retailers.

Consumers are increasingly becoming aware of lab-grown diamonds from blogs, social media and advertising, and the number of consumers who are passionate about the product is also increasing. Retailers would be wise to take notice.

For retailers who have recently started stocking lab-grown diamonds – or who are considering doing so – here are some sales scenarios:

You respond: “I don’t sell lab-grown diamonds” – If a jeweller asks the key question mentioned previously – ’What’s important to you?’ – they can steer the conversation towards how the benefits of a natural diamond match the customer’s desire.

If the customer wants a ‘big rock’ for the lowest price possible, and the jeweller does not stock lab-grown diamonds, an ‘off-make’ diamond may be the only option. In that situation, the argument of ‘future value’ does not carry the same weight. 

"Nevertheless, once a customer knows about the benefit of a lab-grown diamond – a larger diamond that looks beautiful and has a lower price point – that option becomes very enticing."

Some jewellers may be afraid of the changing diamond market. The sentiment generally sounds like this: ‘We don’t know what the value will be in three years, so how can we give guarantees, trade-ins or buy-backs?’

It’s a very good question – and there’s just cause for trepidation. It seems more lab-grown suppliers and retailers are popping up monthly and we know, based on other items such as televisions, computers and smartphones, that the more ubiquitous the supply, the lower the prices.

Nevertheless, once a customer knows about the benefit of a lab-grown diamond – a larger diamond that looks beautiful and has a lower price point – that option becomes very enticing.

The instant gratification of the purchase and excitement of the moment will most likely prevail over their other considerations, such as the future value of the diamond.

You respond: “I offer both natural and lab-grown diamonds – what are you looking for in a stone?” – This is the camp within which I find an increasing number of jewellers. Some show their natural products first and ‘hide’ the lab-grown diamonds under the counter until the customer asks for them; others display natural and lab-grown diamonds next to each other.


Most members of the ‘both’ group don’t maintain a large stock level of lab-grown diamonds but they do occasionally mention them in advertising and marketing materials.

Often the customer who visits the store specifically asking about lab-grown diamonds ends up purchasing one. If there are no lab-grown diamonds in stock, the customer goes elsewhere – they do not consider a natural diamond as an alternative because they are attracted to the specific attributes of a lab-grown stone.

If the jeweller has developed a relationship with the customer, that opens the door to order diamonds on memo/consignment.

The customer relationship and, again, asking the question – ‘What matters to you?’ – are key; without these elements, retailers are dealing at a transactional level rather than a relational level, making sales success less likely. 

The complex question of 'value'

Often, jewellers are asked questions about buy-back or future trade-in of lab-grown diamonds and their answer has to be: the future is unknown. It is an evolving technology, so at this time jewellers may decide not to offer buy-back or guarantee trade-in value for lab-grown diamonds.

For the most part, customers willingly agree to those terms, because they want to buy a beautiful piece of jewellery for their loved one. The purchase is purely emotional, not based on a future value or investment. Just like with natural diamonds, customers fall in love with lab-grown diamonds in the moment.

The thought of returning the jewellery in the future – or the relationship with their loved one ending – is the furthest thing from their mind.

Additionally, when it comes right down to it, at what price would most jewellers offer to buy back a natural diamond sold to the customer eight years ago? In general, jewellers offer a similar trade-in value to the purchase price – if the customer agrees to buy a significantly larger stone.

"For the most part, customers willingly agree to those terms, because they want to buy a beautiful piece of jewellery for their loved one. The purchase is purely emotional, not based on a future value or investment."

As an outright purchase, however, jewellers usually offer cents on the dollar. When we look at it this way, we are truly comparing apples to apples.

Some have argued that the lower price point or ‘lack of resale value’ precludes lab-grown diamonds from the engagement ring category.

Yet for a jeweller to determine the unsuitability of any gemstone for use in an engagement ring is short-sighted and shows a lack of attention to the customer’s desires. 

I’ve seen engagement rings set with opals, iolite and even citrine, because that was what the customer wanted. In the end, a jeweller is a businessperson; they are in business to make a profit. Supplying customers with what they want provides that profit.

Some customers are adamant about wanting natural diamonds in every piece, from fashion jewellery to their engagement ring, and they will happily pay the higher price natural diamonds command.

Others strictly want fashion jewellery pieces that are more affordable. Give it to them!

Finally, if a customer requests a specific stone for any reason – be it environmental, cost or another factor – a jeweller that values life-long customers would do well to provide them with what they want. 

It’s wise for jewellers to consider how they can offer customers exactly what they’re after, enjoy a healthy margin and keep them from purchasing elsewhere.

Think about it.
 

WATCH Jimmy's OTHER Training VIDEOS

 

'The Great Diamond Debate' Contents » 

The natural diamond industry is facing disruption in every aspect
Sergey Ivanov, CEO of Alrosa
Don’t blame synthetic diamonds for the natural industry’s woes
Garry Holloway, founder of Melbourne’s Holloway Diamonds
Both sides of the diamond debate should verify their claims
Danielle Max, editor in chief IDEX Online

 

 

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ABOUT THE AUTHOR
Jimmy DeGroot

Jimmy DeGroot is a jewellery retail training specialist and speaker. He shares his sales and marketing techniques, developed over 20 years, at jewelrystoretraining.com.

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