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The push towards synthetic diamonds could also be validated by De Beers, the world’s largest diamond producer. Photo / 123RF
Jewelery chain Michael Hill has become Australasia’s first major retailer to become an accredited seller of lab-grown diamonds.
The NZX/ASX-listed chain of stores, which operates 280 stores in New Zealand, Australia and Canada,
started selling lab-grown diamonds in 2020 and has seen sales in this category increase by over 180%.
Michael Hill’s range of lab-grown diamonds are certified to the SCS-007 Jewelery Sustainability Standard under SCS Global Services’ Sustainability Rated Diamond program.
Michael Hill managing director Daniel Bracken said the accreditation was part of the retailer’s ongoing drive towards sustainability.
The retailer said it has noticed a surge in the number of consumers choosing to buy lab-created diamonds, especially among the younger generation.
“We are in the business of celebrating special moments in people’s lives and we know the story behind jewelry. We have a long-standing focus on responsibility and ethical sourcing, and our offering of lab-created diamonds and certified sustainable is an important part of our ongoing commitment to sustainability,” Bracken said.
Under the program, Michael Hill’s lab-grown diamonds can be traced back to their source of manufacture and these producers have committed to climate neutrality, eliminating or offsetting their emissions.
Michael Hill’s financial earnings have improved significantly since 2020.
It is not known if this is the result of his sales of synthetic diamonds. In the year to June 2021, the retailer recorded net profit after tax of A$45.3 million, an increase of 1,300% from A$3.1 million in 2020.
In a recent business update, Michael Hill said sales at its stores have increased by 7% in the current financial year and that it expects pre-tax net profit of between A$60 million and A$63 million. for year 22.
Lab-grown diamonds are quickly becoming popular in the jewelry industry, but are attracting skepticism as to whether they are just a marketing ploy rather than a clean alternative to mined natural diamonds.
Some in the industry believe that creating lab-grown diamonds causes more – if not as much – damage to the environment than traditional diamonds, which take thousands of years to manufacture.
Retail commentator Chris Wilkinson, chief executive of First Retail Group, said Michael Hill’s official move into the lab diamond space was a smart move for the retailer, which operates in the high-end segment. of the jewelry market.
He said his push into the synthetic diamond space mirrored what other major jewelry chains around the world were doing – both for environmental and economic reasons, and could also be validated by entering this market. of De Beers, the largest diamond producer in the world.
“Diamond mining is recognized as having a high impact on the environment, both in terms of extraction and emissions, and this sector has been a target for environmentalists. The scrutiny of how diamonds traditional are obtained becomes a concern for those involved in the trade,” Wilkinson said. said the Messenger.
“We understand that lab-created diamonds are very difficult to distinguish from natural diamonds and typically sell for around 20% less, allowing greater accessibility and expanding the market for brands like Michael Hill.
“In a tightening global economy, where discretionary spending is likely to come under continued pressure, this will help the company and its products maintain relevance and market share,” he said.
Wilkinson said Michael Hill, like its Pascoes competitors, operated in the high-end – not the luxury realm like Partridge, Tiffany or Chanel – of the jewelry market, so opening up to sell lab-grown diamonds as well as mined diamonds would not harm the appeal of the brand. , and would undoubtedly benefit the company’s turnover.
The sustainability debate
Lab-grown diamonds are a good commodity for retailers to sell because they offer much higher margins than mined natural diamonds.
A mined one-carat natural diamond typically sells for between $15,000 and $20,000, while a one-carat lab-grown diamond sells for between $5,000 and $6,000. The prices of lab-grown diamonds are falling as new products come to market.
Both diamonds have the same physical properties – except one is not 3.5 billion years old.
Jane Bell, founder of luxury diamond brand Godavari, said there was a question mark over the actual durability of lab-grown diamonds.
“I think it’s possible that they’re just as damaging as naturally mined diamonds, maybe even more so. They have a different environmental impact, that’s all.
“They have to be formed under high heat and pressure, like natural diamonds in the ground, and to be able to generate that heat and pressure, it takes a lot of energy. In some cases, in less regulated environments, they can be using fossil fuels to generate this energy.
“Typically, lab-grown diamonds are made in factories in China or India where the environmental regulations are not as strict as ours. It’s not so much the stone itself, but the inputs in terms of generation,” Bell said. .
“I’m not convinced that they are necessarily more durable than mined diamonds – that’s just a different issue that comes into play.”
Bell said she believed lab-grown diamonds should be much cheaper than what they were currently available on the market for, and that they could not be considered an investment because they were neither rare nor unique. .
“In people’s minds they compare them to a natural diamond, but a natural diamond is a limited and rare resource, whereas these lab-grown diamonds are generated like a plastic clip – daily – and they can continue to produce it. thousands.
“Synthetic diamonds have the same properties as natural diamonds in the way they reflect light and their hardness, they have a place in jewelry, I just don’t see them as investment jewelry – that’s not necessarily the thing you buy to pass down from generation to generation, it’s what is ultimately purchased as costume jewelry.
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