Opportunities In The Other Responsible Natural Stone

The world’s diamond mines are rapidly running out of rocks, or at least ones that can profitably be extracted from the ground. A recent analysis by Bain found that a number of mines that supply 29 million carats per year will be fully depleted by 2030.

New supplies are expected to pick up some of the slack, 26 million carats per year worth, but the cost of developing new natural sources may make further development unfeasible given the unpredictable disruption caused by lab-grown diamond alternatives.

Lab-growns, as compared with their natural mined diamond equivalents, sparkle brightly to the next-generation consumers. Environmentally-conscious and socially-minded, as well as leery of marketing messages that don’t ring true, the younger generation is not necessarily buying the “Real Is Rare” narrative promoted by the mining interests.

In fact, Martin Rapaport, chairman of The Rapaport Group, which provides an online diamond trading network, as well as information to the diamond industry, told me, “The idea that we are going to run out of diamonds is nonsense. One of the reasons is recycled diamonds.”

At least for the last 50 years, the U.S. has been the world’s largest importer of polished diamonds, Rapaport believes, though he admits the statistics are hard to come by. Those polished stones are mounted into jewelry that end up in American consumers’ jewelry boxes.

“Nobody trashes diamonds,” says Ben Janowski, jewelry industry expert. “That makes the American jewelry box the greatest untapped diamond ‘mine’ on the planet.”

Historically diamonds have always been recycled, as consumers have pawned or sold jewelry, which was broken up with the bits and pieces sold to the highest bidder. In this way recycled diamonds reentered the diamond jewelry pipeline.

These diamonds are mere commodities, worth pennies on the dollar, as compared to the value when mounted in a piece of jewelry. Rapaport’s Rapnet.com and WP Diamonds are among the largest U.S. recycled diamond traders.

The recycled diamond market got a real boost during the Great Recession. “A lot of retailers survived by buying jewelry off the street,” Janowski says. “A lot of gold jewelry came in with stones, which were broken up and sold on.”

Rapaport believes this is still a huge opportunity for jewelers. “Jewelers can make more money by what they buy, than what they sell,” he says.

“This may be their best market in the future, just given that Baby Boomers are reaching the age where they want to sell off their jewelry to put their grandkids through college, for example.” Rapaport anticipates a continued windfall in people looking to trade in their jewelry for cash.

But in many cases, the whole, i.e. the jewelry piece, is worth more than the sum of the parts. For example, a jeweler might buy a one-carat round diamond ring, but their primary market is for two-carat and above. So rather than put that ring into inventory, they sell it along to a trader like WP Diamonds.

“Jewelers send us lots of random pieces that they don’t want to put into inventory. We buy it from them, and they encourage repeat business by giving the seller a store credit of 10% on top of what they pay for the piece,” explains Andrew Brown, CEO of WP Diamonds.

“And we are buying more now from than we ever bought from consumers, because people have been collecting lots of stuff that they don’t wear or need anymore. They want a few really nice pieces as opposed to 100 everyday pieces,” Brown continues.

To extract the most monetary value out of American’s jewelry boxes, sellers need to find the right buyers, which is getting easier thanks to the internet.

“Sellers need a marketplace where they can find the buyer who wants that needle in a haystack, that particular item with that style. An internet marketplace gives them a much broader market than if you just work with one store,” says Rapaport.

To that end, Rapaport is expanding from trading in diamonds into trading jewelry with auctions starting this fall aimed not just to the trade but to consumers as well. The RealReal also has a wide range of second-hand jewelry offerings.

To date recycled diamonds remain largely an insiders’ trade secret with little consumer awareness or recognition of this alternative to either new mined or lab-grown diamonds.

“There’s a great story here,” Rapaport believes. “There is added-value in recycled diamonds, what I call social value. Recycled diamonds are great for Millennials because there is zero environmental impact. They are the cleanest you are ever going to get.”

It is time for recycled stones to take their rightful place in the consumer market. Of course, elevating recycled diamonds, of which there is an abundant supply, from a commodity to a prestige stone threatens the entire primary jewelry market.

“The Diamond Dream has become an illusion,” writes Chaim Even-Zohar and Pranay Narvekar in the “2018 Diamond Pipeline Report,” speaking to the disruption coming from lab-grown diamonds but could equally apply to recycled diamonds as well.

Janowski told me DeBeers dabbled in the recycled diamond market a few years ago, but backed off as it was negatively impacting the image of diamonds that it worked so hard to build up.

In order to tap the latent potential in recycled diamonds, jewelers and the industry at large must look at the opportunity from the consumers’ perspective. Consumers don’t buy diamond jewelry because of any potential resale value they might get out of that purchase.

They buy diamond jewelry for the meaning represented in the piece. Buying a piece of jewelry with a recycled stone has a potentially strong appeal to the next-generation consumers who are environmentally- and sustainably-conscious. There is added value and meaning in a recycled stone.

As of yet, Rapaport sees this opportunity as one that “is still at the early stages,” unlike lab-grown diamonds which is getting the lion’s share of attention.

One jeweler that is exploiting the recycled diamond opportunity is Brooklyn-based Catbird jewelers.

“After years of looking for responsibly mined stones we came upon a better answer—recycled goods! All of the brilliant cut diamonds in the Catbird collection are recycled,” the website states.

It goes on to explain their appeal. “A recycled or reclaimed diamond is a diamond that was once mined and used in a jewelry setting, and is ready to be repurposed for another piece of jewelry. Diamonds are the hardest naturally occurring substance which makes them perfect candidates for recycling—they can be used more than once without any trace of wear.”

To the value question, Catbird states, “Recycled diamonds are still mined diamonds, which means they are finite and precious, so their value stays relatively the same, recycled or new.”

Given the current state of disruption in the diamond industry anyway, it seems like the perfect time for recycled stones to take their place as an authentic, responsible alternative.

After all, the industry has been telling us for years “A Diamond Is Forever,” so jewelry brands have a prime opportunity to prove it with recycled gems.

Source: Forbes.com

Powered by NewsAPI.org

Keywords:

Diamond • Mining • Mining • Carat (mass) • Carat (mass) • Cost • Natural resource • Research and development • Diamond • Natural resource • Mining • Diamond • Marketing • Martin Rapaport • Diamond • Trade • Information • Diamond • Diamond • Diamond • Diamond • Diamond • Jewellery • Recycling • Diamond • Diamond • Jewellery • Pipeline transport • Diamond • Commodity • Dollar • Jewellery • Diamond • Recycled diamond • Recycled diamond • Market (economics) • Great Recession • Money • Baby boomers • Jewellery • Jewellery • Jewellery • Carat (mass) • Carat (mass) • Andrew Brown (CNN journalist) • Chief executive officer • Jewellery • E-commerce • Trade • Diamond • Trade • Jewellery • Auction • Trade • Consumer • Jewellery • Recycling • Diamond • Trade secret • Environmentalism • Mining • Diamond • Recycling • Millennials • Sustainability • Recycling • Consumer • Recycling • Diamond • Commodity • Rock (geology) • Jewellery • Pipeline transport • Laboratory • Diamond • Diamond • De Beers • Recycled diamond • Diamond • Diamond • Jewellery • Consumer • Consumer • Jewellery • Value (economics) • Diamond • Jewellery • Trade • Jewellery • Recycling • Natural environment • Sustainability • Recycling • Diamond • Recycled diamond • Brooklyn • Catbird • Brilliant (diamond cut) • Gray catbird • Recycling • Diamond • Diamond • Mining • Jewellery • Jewellery • Diamond • Hardness • Recycling • Gray catbird • Recycling • Diamond • Mining • Diamond • Precious metal • Value (economics) • Recycling • Disruptive innovation • Diamond • Recycling • De Beers • Jewellery •