De Beers' Lightbox Chief Reveals 2019 Plans

RAPAPORT... De Beers shocked the industry in May by announcing it would launcha line of fashion jewelry featuring laboratory-grown diamonds. Lightbox Jewelrystarted selling the products online in September, and it's now looking atexpansion options. The main opportunity to develop the business will come oncethe miner has finished building a $94 million synthetic-diamond facility inOregon in 2020. That center will grow about 500,000 carats of rough per year,providing Lightbox with the bulk of its supply and complementing existingproduction from its facility in Ascot, UK. Partners in shine The company is currently only selling the jewelry on its ownwebsite, but plans to enter into partnerships with retailers for online andin-store sales.  A number of retailers have already expressed an interest instocking the product, according to Lightbox managing director Steve Coe, whospoke with Rapaport Magazine earlier this year. "We've started to have some very preliminary discussionswith a few, but as we've made clear from the start, our first step is going tobe to sell this product [through] e-commerce," he says. "Our hope would be thatwe could add a few retailers during 2019. To be honest, it's going to besomewhat limited in 2019, because it's not until our new manufacturing plant inPortland, Oregon, comes online in 2020 that we're really going to havesubstantial volumes that we could roll out to a wider retailer base." Lightbox will probably partner with fewer than 10 retailersin the next year, though those companies will span many more individual stores,he continues. In the long term, heexpects the jewelry to appear at retailers ranging from one-shop independentsto national chains. Colorful future Lightbox's initial focus is the US market, as it has thebiggest consumer base. The brand could expand farther afield once supply hasincreased post-2020, Coe points out. It could also broaden the range of colors it offers, headds. Lightbox currently focuses on white, pink and blue synthetics up to 1carat, and cites its own research showing that consumers consider lab-growndiamonds a fun, everyday product rather than something they'd buy for bigmilestones. That's why it's offering relatively low-cost, colorful fashionjewelry at $800 per carat, rather than targeting the bridal market. Includingthe setting, none of its products retail for more than $1,000. "I would, on a two- to three-year time horizon, imagine usexpanding into certainly different shades of pink and blue," Coe predicts. "Wecan potentially go lighter or darker than the current colors, but also intoother colors. Yellow would be one very obvious opportunity, but also lightgreen [or] violet. There's a number of colors that potentially we could do, and[De Beers' synthetics and industrial-diamond unit] Element Six's scientists arealready starting to look into and consider that." Not all colors are equally creatable. Lightbox workers havealready shown they can produce various pink and blue hues, as well as violetsand light greens, Coe says. Red is harder to do, he notes, so Lightbox isunlikely to offer it for the time being. Lightbox's initial offerings are earrings and necklaces withsimple, classic designs. "The feedback we've had so far has all been very positive,"Coe reports. "It's clearly just a starting point. There's lots of opportunityto develop more interesting designs in the future." The company is working withits external designers on new looks featuring its current line of sizes andcolors, and those products are set to come on the market imminently, he adds.More designs will appear in 2019.(Since this interview, Lightbox has confirmed it would soon introduce bracelets and stackable rings.) Natural diamonds still forever Some traders fear De Beers' entry into synthetics may damagedemand for lower-value categories of natural rough and polished diamonds.However, Coe believes the commercial opportunities it brings are greater thanthe perceived risk that consumers will buy lab-created diamonds instead ofsimilarly priced mined stones. "We very much see Lightbox as an additive opportunity," Coeexplains. "There's a very strong colored element of the product range - pinkand blue stones - so that's clearly something very different to naturaldiamonds. [In addition,] we see this very much focused on more everyday giftingoccasions, self-purchase, teenage daughters. There's very little overlap therewith traditional natural diamonds." Lightbox's impact on the wider market will be minimal foranother simple reason: Its annual production is tiny compared with thewell-over-100 million carats of natural rough diamonds that come out of theground each year, he says. Announcing it's a rival In marketing lab-grown diamonds as a fun, affordableproduct, De Beers is taking a different approach from existing players in thesector, who frequently sell synthetics as a lower-priced alternative for bridalpieces. Lightbox's strategy reflects what consumers have told De Beersresearchers, according to Coe: Diamonds from a machine look great, but they'renot right for engagement rings. "All we're trying to do is put a product in the marketplacethat is what consumers are telling us they want," he says. "That, to us, seemsto be a great route to try and maximize our chances of being commerciallysuccessful. It's up to other lab-grown-diamond suppliers what they do. Mypersonal view would be, I think they're missing an opportunity not getting intothe fashion-jewelry space. But that's not our concern." This article was first published in the December 2018issue of Rapaport Magazine.Images: Lightbox jewelry (above); Steve Coe (inset). (De Beers)