COVID-19 hit the world like a wild and destructive storm, harming lives and assets as it spread. The diamond and jewelry industry was not spared, and sales dropped significantly – how significantly was anyone’s guess until now. Following are the figures showing just how COVID-19 impacted sales, and how the tide is perhaps starting to turn.
This Is How COVID-19 Impacted Retail
With closed stores and consumers under varying degrees of lockdown as well as social distancing, jewelry retailers had very limited sales during the period. US specialty jewelry retailers saw their sales drop some 82% in the span of just two months.
From estimated sales of $2.65 billion in February, activity dropped to some $470 million in April. This period covers just before the pandemic hit the US and when Valentine’s Day sales spurred consumer demand to the height of the retail crisis.
It should be noted that April is cyclically a slow month for jewelry sales, yet less than half a billion dollars in sales in a month is something we have not seen in decades, since the 1980s.
Following the two-month drop, sales bounced up in May. During the month, sales by specialty jewelers rose to $1.35 billion, up more than 230%, according to our estimates. Sales were helped by the partial removal of activity restrictions, a feeling that the worse is behind us that drove up consumer confidence, and consumer demand ahead of Mother’s Day.
This Is How COVID-19 Impacted LGD
Sales of lab-grown diamonds were also impacted by COVID-19. With a somewhat defined consumer base, demand for this product had its own fluctuations.
Based on our data, sales of loose LGD fell 41% in March and another 40% in April. This brought sales down 65% during the two month period. By volume, sales fell 69% in April compared to February.
The drop, while substantial, unveiled an interesting trend: the average value per sold stone was not only relatively steady, prices actually increased 13% in April vs. February. Revenge buying? Maybe. Consumers felt no need to reduce expenditures on LGD during the pandemic.
Many of the loose stones sold during the period may have been set in stud earrings, an item in rising demand. But to put things in further context, many of the loose sales were set in bridal items. Did bridal fare well during the period?
Not surprising, total sales of LGD-set bridal jewelry dropped 72% during the period as weddings and proposals were postponed. However, just like loose LGD, retail prices of sold items were fairly steady. Here too, the change in retail price was 13%; however, the change was downward. Prices eased down, indicating that younger buyers, especially of LGD, are very price sensitive.
In May, the COVID-19 impact relaxed, and sales of loose rose some 150% compared to April, and bridal sales increased 142%.
This Is How COVID-19 Impacted Wholesale
With limited retail demand, wholesalers found their trading activity practically crushed – but not completely. As COVID-19 hit the US, the severe lockdown in China started to ease, providing traders with a sales venue. Throughout the March-to-May period, exports from Belgium to Hong Kong continued. Although, officially, exports from India were blocked, in practice, cargo flights continued, some carrying diamonds. Their main destination: Hong Kong.
That trade, coupled with some demand from the US, generated some business for the wholesale sector of the diamond market, but not much. In March, trade sank 48%, and then another 95% in April, according to our estimates. In total, trade in April was dragged down 98% compared to February.
As with retail and LGD, wholesale activity was revived in May. Revived? Well, more like sprang back to life. Sales leaped to “just” 38% below February levels.
The Bottom Line
Clearly, COVID-19 impacted the diamond market, leading to a massive loss of revenue. This happened within the context of global shutdowns and a widespread halt in activity.
As sales fell in March and then sank in April, they rebounded in May – perhaps temporarily, as no easing in the pandemic is seen yet in the US.