Brace Yourself, The Decline is Here

Brace Yourself The Decline is Here - Edahn Golan
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After two very buoyant years, the decline everyone knew would hit has finally arrived. It’s not just the slowdown in China, the second largest consumer market, but the US is feeling it as well.

Diamond Retail Sales Declined in May

In May, according to the latest US data by Tenoris, diamond unit sales dropped 24% year over year. In May, there is usually a rise in diamond jewelry retail sales, thanks to Mother’s Day. But contrary to the typical cyclical trend, diamond sales declined compared to April.

The good news is that while the number of sold diamonds fell, the average expenditure on diamonds soared 18.7% year over year to $10,242, or more than $8,000 per carat.

Loose Natural Diamond Retail Price Trend Not DecliningJan 2020 - May 2022 - by Edahn Golan & Tenoris

The drop in unit sales explains the decline in wholesale trade in the past month. Israel’s net polished diamond exports, for example, dropped 64% in May compared to April.

US specialty jewelers’ inventories, which were high compared to past years, declined in May. Their diamond purchases were slashed nearly by half.

Lab-Grown Sold Well

Consumers continued to show interest in lab-grown, increasing their expenditures 32.7%, mainly by purchasing higher-priced items.

The most sought-after diamond item in May was round 1.00-1.04 carat goods. Lab-grown represented 15.2% of sales of this size range by number of items purchased by consumers.

By color and clarity combination, F/VS1 goods topped the list. This is not surprising. Until a year ago, consumers buying lab-grown-set jewelry stuck with traditional GHI color/SI clarity diamonds. By choosing the same traditional color/clarity combination, consumers could buy a diamond that looked the same as a natural one and pocket the difference in cost.

But in the past year, consumers buying lab-grown-set jewelry gravitated away from the typical diamond purchase, preferring instead to maximize their budget by purchasing a better color and clarity diamond.

A Decline in Engagement Ring Sales

Since the start of the year, sales of engagement rings have declined compared to 2021. By number of units sold, this decline was 11.6% in May. This was expected considering that the surge in consumer demand was driven by the drop in COVID-19 cases and the waning down in social distancing.

The surprising finding is that consumer demand for engagement rings set with diamonds fell 14.9% in May. This highlights a growing preference for engagement rings set with other gems.

Natural DER Monthly Unit Sales Decline Jan 2020 - May 2022 by Edahn Golan & Tenoris

A further drill-down in the Tenoris data shows that the decline in diamond engagement ring sales was primarily driven by a drop in demand for natural diamonds. In May alone, sales of engagement rings set with natural diamonds fell 19.7%.

At the same time, sales of engagement rings set with lab-grown surged more than 73%. After a near tripling in sales in 2021, consumer interest in lab-grown-set engagement rings is clearly growing. The sweet spot: the $2,500-$4,499 price range.

Lab-Grown Engagement Ring Monthly Unit Sales Not Declining Jan 2020 - May 2022 - by Edahn Golan & Tenoris.bi

The good news for the natural diamond industry: while the average retail price of lab-grown-set engagement rings rose 9.4%, the price of diamond engagement rings set with natural diamonds leaped 16% year over year.

Putting the Decline in Context

After two fantastic years of rising sales and prices, the expected cool-down is here. This was not only expected, but also reasonable considering the rising cost of fuel, housing, and household products, along with the tanking stock market.

But there is more to it. The taste of American consumers is shifting. One change is the movement away from engagement rings set with diamonds that has emerged this year. While this may be a temporary situation, it is well worth a step up in diamond promotional activity.

Another shift is the slow but continuous gravitation of the American consumer towards lab-grown. From the perspective of the natural diamond industry, the most alarming element about this is the growth in consumer purchases of bridal jewelry set with lab-grown goods.


The looming economic fallout some economists have been warning us about may or may not happen. So far, the American public is spending more in 2022 than it did ever before. Most importantly, jewelry share of wallet – how much consumers are spending on jewelry as a percentage of total expenditures – did not decline. At least not in the first four months of the year.

At the same time, demand for travel is rising, and the delayed weddings of 2020 were held in 2021. The fears that COVID-19 instilled in many hearts, and which drove a rise in spending on diamond jewelry has abated. So, with this in mind, the most logical expectation is that demand for jewelry will decline some.

This is not the end of the world – but it is the end of a wild ride. At least for now.

Wishing all those attending the trade shows in Las Vegas a very successful weekend!

If you are interested in more details on the specific data behind these trends, than by all means, get in touch.

About the Author:

Edahn Golan
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Edahn Golan has 20 years of experience as a diamond industry analyst. He has a unique ability to provide a global view with context to the exclusive granular data he shares. The New York Times, Wall Street Journal, Business Insider, and other leading publications quote him regularly.

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Comments 2
  1. Are there any statistics on margin changes in both Natural and Lab?
    Are margins shrinking in lab created as more Factories are being built or is demand still outweighing supply?

    With less rough material coming from Russia/Alrosa are miners/cutters/retailers adding additional margins due to the lack of supply?

    Also what are typical margins through the entire diamond pipeline?

    As demand declines for natural diamonds when and how much do you think prices will contract? Making it more digestible for buyers on every level?

    1. Post

      Yes, we have margin data as well. Generally, margins are shrinking all along the pipeline. Supply is outpacing demand and the competition for market share is stiff.

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