Signet Jewelers has identified fashion jewellery as the primary avenue for growth in the synthetic-diamond segment, according to CEO Gina Drosos.
During an investor call following the release of Signet’s fiscal first-quarter earnings, Drosos highlighted that revenue from fashion jewellery featuring synthetic diamonds surged by 14% year on year. This growth occurred as the company expanded its offerings in this category. In contrast, total sales of fashion jewellery saw a 6% decline, totalling $552 million.
The production of synthetic diamonds has become more efficient over the past five years, significantly reducing costs. This efficiency has allowed Signet to offer “attractive options for many price-conscious customers that are looking for larger carat options than they can afford in the natural-diamond engagement ring,” Drosos noted.
Despite the growing interest in synthetic diamonds, the average transaction value (ATV) for these products has been largely maintained. While natural diamonds continue to attract consumers seeking long-term value, synthetic diamonds are providing a viable alternative for more budget-conscious buyers.
Drosos pointed out that synthetic-diamond fashion pieces have more than twice the ATV of other fashion jewellery, offering good margins for Signet. She sees significant potential for lab-created diamond (LCD) expansion in segments of the industry that have traditionally seen lower penetration of natural-diamond assortments.
“It’s a trade-up opportunity,” Drosos remarked, noting that engagement-jewellery customers still predominantly prefer natural diamonds. However, synthetics have become a “good choice for more price-conscious customers.”
Both natural and synthetic diamond prices have fallen, and Drosos expects the pricing for lab-created diamonds to continue declining due to significant availability. Retail prices have decreased at a slower rate but remain under pressure.
Signet’s strategic moves include collaborating with De Beers on a marketing campaign promoting natural diamonds. Additionally, the retailer has introduced disclaimers on its websites regarding synthetic diamonds, warning that “their relative abundance may not ensure that the value will hold over time.”
For professional jewellers, these developments indicate Signet’s strategic shift away from using synthetic diamonds in the engagement ring market, focusing instead on fashion jewellery. This shift underscores the changing consumer preferences and cost dynamics in the industry, providing jewellers with opportunities to diversify their product offerings. Balancing the appeal of natural and synthetic diamonds will be essential for addressing different market segments effectively.
