Diamond prices softened in the second half amid fears the US-China trade war would impact discretionary spending. Sentiment softened as the Dow Jones Industrial Average fell 6% for the year, with concerns that investors would experience a negative wealth effect. Tighter credit in India and rising demand for lab-grown diamonds contributed to the trade’s caution.
To stimulate growth, the industry must amplify its efforts to modernize and navigate the changing consumer landscape, according to the latest issue of the Rapaport Research Report.
Addressing some of the challenges has helped improve diamond-market conditions. The RapNet Diamond Index (RAPI^™) for 1-carat diamonds rose 0.7% in 2018. Good US and Chinese demand in the first six months buoyed the index to its first annual growth since 2011. The 1-carat RAPI fell 2.6% in the second half as weak currencies in India and China slowed trading.

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The Rapaport Research Report, “The Next Diamond Decade,” predicts midstream consolidation will continue.
Suppliers that streamline inventory to shorten their turnaround time for delivery, and that can satisfy selective demand and jewelers’ memo requirements, will have a better chance of surviving. The industry must also improve its compliance with banking and reporting standards, and move toward a more corporate structure. Upgrading the jewelry-shopping experience, with traceable provenance of the diamond journey, and raising the outlay on marketing will further stimulate growth.
These changes became necessary after the 2008 financial crisis. The industry has been slow to react in the decade since, losing market share to tech, as well as Instagram-friendly sectors such as travel and beauty.
To mitigate the uncertainty, the trade must intensify its efforts to engage with consumers. It can do so via improved omni-channel platforms and storytelling across the distribution chain to ensure a better performance in 2019 and beyond.