Despite Falling Prices, Consumers Still Clamor for Lab-grown Diamonds

RETAILERS WHO SELL lab-grown diamonds say their customers realize the price is falling and their engagement rings have no trade-in value.

They want them anyway.

“For a lab-grown diamond buyer, it’s all about price,” says Jeremy Auslander of Roxbury Jewelers in Beverly Hills. “The customer looks at a 1-carat natural diamond for $5,000 and a 3-carat lab grown for $2,000 and says, ‘Why would I pay more than double for something one-third the size?’”

Retailers and experts disagree about whether falling prices cause concern among consumers. James Doggett of Doggett Jewelry in Kingston, NH, says he’s grateful he decided not to sell lab-grown diamonds. “I am so glad I don’t have to explain to clients why their stones have dropped in value like stocks in the Great Depression,” he says.

On the other hand, Krystal Shiklanian of Radiant Fine Jewelry in Plymouth, MI, sells about 90% lab-grown diamonds and says her customers don’t care about future value. “Hands down, it’s all about the price. It’s difficult to change their mind from lab to natural.”

De Beers, which disrupted the lab-grown market when it launched Lightbox Jewelry with an $800 per carat standard in 2018, dropped its retail price to $500 per carat this year. The highest-quality Lightbox 2-carat lab-grown diamond now retails for around 10 percent of an equivalent size and quality natural diamond. De Beers also announced in May that Lightbox will stop manufacturing lab-grown diamonds for jewelry and convert production at its Gresham, OR, factory to industrial diamonds for technology applications.

“I initially thought that the introduction of Lightbox by De Beers was genius,” says Jon Walp, general manager of Long Jewelers in Virginia Beach, VA. “Devalue lab diamonds but sell them because there will always be a market for low cost while at the same time enhancing the value of natural diamonds. I didn’t know that the public would accept lab diamonds so readily or that other producers would quickly flood the market.”

Walp says he didn’t want to sell lab-grown diamonds at first but felt he had no choice. Now 40% of diamond sales are lab. “When you have a client looking to spend $15,000 and you can make three to four times the profit, it’s hard to turn that money down. The problem is that even though our margins on lab-grown sales are very positive, we are concerned that they will affect overall volume. I guess we’ll just have to sell even bigger ones to make up the deficit!”

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Grant Mobley, jewelry and watch editor for the Natural Diamond Council, says despite the widespread demand for lab-grown diamonds, consumers can no longer ignore how low the price is. “For me, it’s not about one thing prevailing over the other,” he says. “They are different products and their value reflects that. Fewer are seeing them as comparable options. The customer for lab-grown and what lab-grown is purchased for is entirely different in the same way that lab-grown ruby is not the same thing as natural.”

Dorothy Vodicka’s mixed feelings are shared by many of INSTORE’s Brain Squad retailers who responded to a June survey about selling lab-grown diamonds. She believes that lab-grown diamonds are an easy sale now but may come back to haunt retailers in the future. “I think they are not good for the industry, but customers want them, especially as center stones or bigger stud earrings,” she says.

She tells customers she expects the price of lab-grown diamonds to go down and the price of better-quality natural diamonds to go up. “So, purchase lab if you want something beautiful and much less expensive; purchase natural if you want a valuable heirloom for your children and grandchildren.”

Many retailers are putting their qualms in writing, while some are asking customers to acknowledge in writing that they understand the situation. Tim Bodis of Diamond Designs by Bodis in Rice Lake, WI, sells more than 90% natural diamonds. If customers opt for lab-grown, they are asked to sign a letter stating Diamond Designs will not take them back in trade, and the price may not hold over time.

Denise Oros of Linnea Jewelers of La Grange, IL, says she includes a detailed receipt with the purchase of lab-grown diamonds to avoid appraisal issues. “With the pinballing prices, we no longer offer trade-ins on any lab-grown products, but we sell the pants off of them for travel jewelry and great fashion pieces with complete disclosure,” Oros says.

To explain what’s happening to their customers, some retailers compare lab-grown diamonds to a TV, a computer or a cell phone, items that won’t hold their value after purchase.

Doug Meadows of David Douglas Diamonds & Jewelry in Marietta, GA,…