Lab-Grown Diamonds: What's Next? 💎
While lab-grown diamonds have secured a strong position in the jewelry market, retailers and consultants are debating the next phase of growth—and the risks that come with it.
📌 Zachary’s Jewelers COO Constance Polamalu used the pandemic to explore lab-grown opportunities. Realizing her area lagged behind trends, she noticed growing consumer interest driven by affordability and social media. This shift even benefitted her natural diamond sales—but ultimately prompted her to launch Bloomstone Jewelers, a store dedicated solely to lab-grown diamonds, in April 2024.
“No going back,” she said. “Once consumers get used to big, bold diamonds for less, the genie is out of the bottle.”
📉 The Pricing Problem
Lab-grown diamonds made up 14% of the U.S. jewelry market in 2024, but prices are dropping. According to analytics firm Tenoris, many consumers now view them as the budget-friendly option. Jewelers, however, are still making up to 70% gross margins on lab-grown stones—compared to 40–50% just five years ago.
This raises concerns. As wholesale prices fall and margins stay high, the market is “ripe for disruption,” says Scott Berg of Lee Michaels Fine Jewelry. “There’s too much profit; transparency is coming.”
📉 Retailers are also caught in a pricing trap: They can’t afford to drop lab-grown diamonds due to customer demand—even though loose diamond revenues dropped 7% in 2024, and many sales are moving online where competition is fierce.
💸 The Memo Game
Retailers love memo programs, where they take stones on consignment. Many return them when prices dip—then repurchase at lower rates. This unsustainable practice is being fueled by lab-grown oversupply, experts warn.
👗 Shift to Fashion
Industry giants like Signet are repositioning lab-grown diamonds as fashion jewelry, rather than bridal. Engagement rings are still marketed, but lower-priced fashion pieces (under $1,000) are driving growth. Signet’s lab-grown sales rose 40% in Q4, while Pandora saw a 43% jump in its lab-grown business.
👥 From Boomers to Gen Z
While Gen Z loves lab-grown diamonds to save money, baby boomers are buying 4-carat+ stones to leave room for other luxuries. This democratization is giving retailers access to new demographics—without abandoning tradition.
💍 Emotion vs. Economics
Retailers report that natural diamond engagement rings still carry emotional weight. Some brides see lab-grown as “cheap,” associating lower prices with lower value in romantic symbolism. Still, others are happy to “live their Elizabeth Taylor dreams” with big, bold lab-grown stones.
🏬 Separate but Equal?
Retailers are separating their offerings—physical stores or departments for each type—to reduce confusion. Organizations like Jewelers of America are helping members educate consumers on the difference between the two.
🔮 The Future: 3 Scenarios (McKinsey Report)
- Lab-grown takes over most of the market (except luxury).
- Lab-grown drops so low in price it becomes mere fashion.
- Consumers lose interest in all diamonds—natural or not.
Polamalu offers a hopeful view: “They both chase the same diamond dream… They should be linked but decoupled.”