Lab-grown diamonds provide an option for customers seeking affordability, Brilliant Earth CEO says
Lab-grown diamonds are gaining popularity as consumers make affordability and ethical sourcing a priority.
Brilliant Earth (BRLT) is one of the jewelry companies seeing this trend first-hand. CEO Beth Gerstein said two of the reasons consumers are turning to the lab-made diamonds: affordability, and, the fact that they don't require mining.
The stones have the same physical and chemical properties as mined diamonds, "but without the conflict and questionable ethical practices that are common in some diamond mines," according to Brilliant Earth. And lab-grown diamonds are less expensive than their traditional counterparts.
"They do allow you to get that bigger diamond that you've really had your eye on," Gerstein said.
According to the International Gem Society, a resource for gem professionals, lab-grown diamonds typically cost 30% less when comparing stones with similar qualities, depending on the "targeted size range," and it appears consumers are buying into the lower price point.
In December 2022, lab-grown diamonds accounted for 15.7% of all engagement rings sold in the U.S., nearly double the 2021 figure of 7.9%, per jewelry-industry analytics company Tenoris.
Gerstein said she believes most shoppers don't buy diamonds for their resale value. "They're buying a diamond for the emotional value. It's a symbol of love and commitment and so whether its natural or lab, customers are buying this because of how it makes them feel."
Brilliant Earth sells both lab-grown and traditional diamonds, and despite recent interest in the lab-grown variety, that's not necessarily making a huge dent in the company's bottom line.
Brilliant Earth saw sales drop slightly year-over-year in its fourth-quarter results, to $119 million compared to $121.9 million in 2021. While its total orders increased by 13.7% year-over-year in 2022, the company said in its Q1 2023 outlook that it expects a drop in sales, from $96 million to $94 million. And since the company's IPO in September 2021, shares of Brilliant Earth are down more than 77%.
Still, those results aren't all that surprising, considering that Americans have cut back on discretionary spending: In February, retail sales dropped 0.4%.
In-store customer experience is key: CEO
Brilliant Earth started as a digital-first brand, and is now expanding its physical footprint.
Last quarter, the company opened three showrooms in Palo Alto, Santa Monica and Baltimore, bringing to the 2022 year-end total to 25 locations. In Q1 of 2023, Brilliant Earth plans to open a showroom in Charlotte, North Carolina and then later in the year, to open in Brooklyn, Tampa and Pasadena.
Gerstein said the winning model for jewelry is both digital and physical, "in this space [it's] really about omni-channel." The showrooms "drive conversion," she added.
"They'll [customers] do a lot of research...then they really like coming into the showroom and being able to touch and feel the product...really working one on one with our jewelry specialists is a high touch sale."
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at firstname.lastname@example.org.
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