Decline in Australian Retail Diamond Jewellery Sales Raises Concern for Industry Players

Jewellery retailers across Australia are experiencing a decline in sales based on a report released by Retail Edge Consultants based on an approximate 400 independent jewellery stores that indicates sales has decreased by slightly more than 2 per cent (year-on-year comparison).

The decline in sales has been established as a trend as in the decline of sales thus far for 2024 is the third year of decline that began in 2022. Leon Van Megan, the general manager for a retail outlet states that fewer items are being sold by retailers and these few items in general carry a higher retail price.

This figure is derived from average sales data which reflected that despite the lower volume of sales, retailers increased prices by an approximate 4 per cent. Apart from lower sales volume of jewellery (inventory perspective), sales related to loose wholesale diamonds and diamond jewellery which includes engagement rings have also decreased significantly and based on general data estimates, this decline year to year (2022 – 2024), the diamond related sales component has declined by about 23 % in the last 24 months added Van Megan.

Industry players are aware of the fact that the significant decline within the natural diamond sphere which is a large jewellery category has made an impact on the overall jewellery sales performance. Retailers have been observed to be scrambling to optimise diamond inventory as it is a crucial component of managing their overall inventory.

Natural diamonds according to most retailers and diamond dealers/ wholesalers are indeed the biggest driver with regards to accumulation of old stock. Most retailers are in a predicament due to the overstock of diamonds based on the fact that unsold diamonds in the safe are causing an issue with cash flow resulting in retailers being unable to purchase a relevant quantity of other stock items which includes precious metals.

In order to overcome this scenario retailers have indulged in a discount competition resulting in diamond prices sliding to an all-time low.

A special podcast by Rapaport recently which featured Craig Miller (JC Jewels – Melbourne) on the show also revealed that demand for lab grown diamonds in Australia are another cause for stagnant natural diamond inventory. In the show, Miller attributes the rise in demand for lab grown diamonds is due to lower consumer purchase power and the acceptance of lab grown diamonds by consumers who have largely become aware that Lab Grown stones are as good as natural stones.

Most natural diamond industry players are however hopeful that consumers will return to the natural diamond soon enough especially within the diamond engagement ring sector citing that lab grown stones are ‘too cheap for matrimonial commitment’ and that the current trend will be short lived.

However, most retailers globally are in disagreement over the fact that lab grown diamonds will lose their appeal as lab grown diamond jewellery including diamond engagement rings have become a crucial component of retail jewellery business over the last decade.