Millennials are getting married later in life.
And that means that they are buying engagement rings later in life.
At first, millennials' propensity to marry later seems like it could be a bad sign for the diamond ring industry.
However, Bank of America Merrill Lynch's Lorraine Hutchinson and Stephen Albert think that this trend to marry later might actually be good for the jewelry business.
Because if folks get married later in life, then the thinking is that they'll have more money to spend to spend on bigger rings.
Here's BAML (emphasis ours):
Jewelry purchases often mark major life events, most notably engagement and marriage. Millennials are postponing marrying until later in life, leading to a decline in weddings over the last 15 years. However, a larger population of 20-39 year old people in upcoming years should serve as an offset to the wedding rate decline. Assuming the rate of weddings continues to fall by 0.7% over the next six years, weddings should remain relatively flat. People who opt to get engaged later in life often have greater disposable income to spend on engagement rings, providing a natural comp tailwind for jewelry retailers.
Still, we would be remiss not to point out several key assumptions on which this argument relies.
For starters, it assumes that marrying-age millennials will have more discretionary income to spend on rings than their parents did at the time of marriage. Back in 2014, however, there were reports of an increased number of couples buying non-traditional wedding rings, which was partially driven by the fact non-traditional rings were cheaper.
Secondly, this argument assumes that millennials' tastes are the same as their parents' tastes, which may not be the case. In fact, it's widely known in the retail world that millennials prefer "experiences" to things.
So under this assumption — that it's the experience, not the thing millennials value — you could argue that this age group will spend more on the wedding or honeymoon than the actual ring.
But in any case, we'll concede that Bank of America presents an interesting idea that no doubt would be good news for engagement ring retailers if this trend actually materializes.
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