A Time to Heal

The Covid-19 crisis is presenting an opportunity for the market to restart, refresh, and build on its experience of dealing with the diamond-trade slowdown of the past few years.RAPAPORT... In these unprecedented times, it would be foolish to make predictions about diamond-jewelry sales growth. We simply won't have any indication about the true state of consumer demand until at least three months after retail has reopened for business.China is the market furthest away from Covid-19, given that it was the first to deal with the virus. There are encouraging signs of pent-up demand for luxury there, but one shouldn't get too excited. Consumer foot traffic remains light, and there are no tourists to help stimulate sales in neighboring Hong Kong.As of this writing, the US retail sector is trying to unlock its doors, but for the most part remains shut. Even those stores that have opened are operating under strict social distancing guidelines, limiting the number of customers that can enter at one time and focusing more on virtual consultations and curbside pickups. E-commerce has been the one bright spot, emerging as the most effective avenue for making sales in the last two to three months.That online trend and others are likely to linger. Fundamental changes to the way society functions have taken place during the social and economic lockdown. People have been forced to be more remote, accelerating the digitization of society. Yet they also seem to have gained a renewed perspective on what is important in their lives.These developments are contributing to a new normal in the way individuals interact and businesses operate. The changes impact the entire diamond and jewelry supply chain, beginning with retail and filtering through the polished wholesale, diamond manufacturing and mining sectors.The industry needs to understand these trends so it can effectively navigate the recession. It must emerge looking significantly different than it did at the beginning of the crisis, or else face losing market share in the luxury space.We see an opportunity for the market to restart, refresh, and build on its experience of dealing with the diamond-trade slowdown of the past few years.In the May issue of the Rapaport Research Report, we identify five industry trends that were taking shape prior to the current crisis and that have been accelerated in the Covid-19 environment. Those include restoring balance in the supply chain; refreshing the industry's marketing effort; the shift to digital; rethinking trade show attendance; and an emphasis on values.By approaching these developments with even greater urgency, the industry can overcome its current predicament and ensure a recovery that is sustainable in the long term. This article was initially published in the April edition of the Rapaport Research Report. Subscribe here.Image: Shutterstock