De Beers Insight Report Shows Need For Honest Engagement With Younger Buyers
For diamond jewelry retailers looking for a guide to how to sell to Millennials – those people currently aged 21 to 39 – and members of the so-called Generation Z, currently in the 18-20 age range, the latest De Beers Diamond Insight Report is definitely an excellent start.
"The Millennial and Gen Z generations combined accounted for two-thirds of global diamond jewelry sales in 2017, as diamond jewelry demand reached a new record high of US$82 billion, according to the report. "Millennials, those people currently aged 21 to 39, represent 29% of the world’s population and are the current largest group of diamond consumers, according to the report. They accounted for almost 60% of diamond jewelry demand in the US in 2017 and nearly 80% in China. Gen Z, those currently aged up to 20, is an even larger consumer generation - representing 35% of the world’s population and will come of age as diamond consumers over the coming decades. Despite the generation being a long way from financial maturity, Gen Z is already making its presence felt in the diamond market, with the oldest Gen Z consumers (those currently aged 18 to 20) acquiring 5% of all diamond jewelry pieces in the US last year."
The two generations are important to diamond businesses today because they are bigger than the previous two generations; they will soon have the highest spending power; and they represent more than two-thirds of total diamond jewelry demand value in the four largest diamond consuming countries.
The spending power of Millennials is growing while that of Baby Boomers is declining. Millennial spending power is forecast to overtake Gen X permanently by 20202. The growth in Millennials’ spending power is expected to come both from their own earnings and inheritance. According to World Bank forecasts, Millennials’ collective annual income will exceed US$4 trillion by 2030, while Accenture estimates that they will receive a transfer
of at least US$30 trillion from US Baby Boomers during the next three decades, the report states. Meanwhile, the size and growth in wealth of Chinese Millennials make them a powerful consumer force. The World Bank estimates that the income of Chinese Millennials will overtake that of their US counterparts by 2035.
As for Gen Z, "with its coming of age, is becoming a consumer base worth capitalising on straight away. In the US, they already have US$200 billion in direct buying power and US$1 trillion in direct spending power as they command significantly more influence on household purchases than prior generations."
Among the most interesting elements of the research relates to a lack of trust among the younger generations, who are increasingly skeptical of institutions. Harvard University’s Institute of Politics found that 88% of Millennials said they ‘only sometimes’ or ‘never’ trust the press, and 86% of Millennials said they distrust Wall Street. Millennials were equally dubious of government, with 74% saying they ‘sometimes’ or ‘never’ trust the federal government to do the right thing. Trust in social media is limited and falling over time, as indicated by research from UK telecommunications regulator Ofcom. Gen Z are looking for honesty in communications37. This emphasizes the need for marketing messages to be authentic if they are to be effective.
Millennials’ trust in big business has also declined. Deloitte reports that fewer than half (48%) in 2018 agree that corporations behave ethically, down from nearly two-thirds (65%) in 2017. Similarly, there has been a drop in their belief that business leaders are committed to helping improve society: from 62% in 2017 to 47% in 2018.
The power of so-called influencers is also striking. "Gen Z want to see ‘real’ people like themselves reflected in communications – they have a wide appreciation of beauty and celebrate imperfection. Brands which embrace this in their communications are more likely to be seen as being in touch with consumers. Partnerships between brands and influencers work if the right influencer is chosen and there is a good fit with their aesthetic and follower base. But if not, posting will be less productive. Posts by influencers tagging brands gain much more traction than when brands tag influencers. This is particularly striking in the watches and jewelry category, where brands saw an average of 18 times more engagement on influencer posts than brand posts.
This is just a taster because there is a huge amount of information in the report which concludes: "In future, successful diamond marketers will need to truly align their values with the social consciousness of Millennials and Gen Z, who favor ethical and responsible consumerism and reject gender stereotyping.
"The fast advancement of digital technologies is making it possible for diamond businesses to demonstrate the integrity of their products by tracing them via blockchain technology through their entire journey to the consumer. The ability to show genuine commitment to environmental preservation and fair trade will be an increasingly important way of connecting with the young generations."