They have high expectations, little money, and quite a few contradictions. Tempted by lab-grown diamonds’ affordability and sustainability claims, can this generation fall in love with natural diamonds?
The future of every business depends on the next generation. Gen Z, the cohort of consumers born between the late-1990s and 2012, is set to earn $33 trillion of income by 2030 and overtake millennials’ spending power by 2031, according to the Bank of America. Moreover, research by consultancy Bain & Company revealed that Gen-Zers make their first luxury purchase when they are 15, while their 30-somethings counterparts began at 19.
Gen Z seems to have high expectations, many questions, little cash — and quite a few contradictions.
Raised in the hyperconnected world of the internet, social media, and mobile phones, Gen Z is on track to be the best-educated generation so far, well versed in sourcing information and cross-checking references. According to a recent study by Pew Research Center, YouTube stands out as the online platform teens use most regularly (with 95% saying they always use it).
Meanwhile, 67% of teenagers also use TikTok, especially girls, followed by Instagram (62%) and Snapchat (59%). Facebook’s popularity is declining.
What does Gen Z care about?
In just 25 years, Gen Z has experienced a global financial crisis in 2008, a pandemic, and a war in Europe. Its sensibilities and interests have been shaped by climate change campaigns, the #MeToo movement, and #BlackLivesMatter.
Gen Z cares for the environment, with 61% perturbed by climate change, while 56% worry about natural disasters, higher than for any other generation, KPMG research found. More than 75% would stop buying from a company with messages perceived as “macho, homophobic and racist,” according to McKinsey & Company.
Additionally, research conducted by social impact consultancy DoSomething Strategic revealed that
47% of Gen Z would not buy from companies whose values did not align with their own. “Companies should be clear about their values because Gen Z, and their growing purchasing power, see it as important,” comments Walker Post, senior strategist at DoSomething Strategic.
Why value is vital
Now tiptoeing into their first jobs, Gen Z is bearing the brunt of high inflation and high interest rates, which makes them budget-minded and potentially willing to sacrifice some of their values. Gen Z sees products as services, favoring access through rental and streaming instead of onerous ownership. And, despite their search for authenticity, they do not mind buying fakes or “dupes”, as they like to call them. Research conducted by The Business Of Fashion in the US reports that 54% of Gen Z strongly agree that buying counterfeit goods is acceptable, and 37% say they would wear them. On TikTok, the hashtag #cartierdupe has reached 18 million views.
How Gen Z values diamonds
Gen Z’s beliefs and contradictions define their relationship with diamonds. “Gen Z generally associates natural, mined diamonds with authenticity, rarity, and exclusiveness. On the other hand, lab-grown diamonds are perceived as more affordable and closely tied to ethical practices and environmental sustainability,” says Federica Levato, senior partner and leader of fashion and luxury at Bain & Company.
At the checkout, though, Gen Z’s beliefs may wobble. “There seems to be a split between the savvy Gen Z that has researched the pricing well and negotiates to get a discount—but because they are values-driven more than value-driven, they will try to get their preferred brand to come down in price to buy from them, or accept a small premium rather than just buying the cheapest product,” says Tobias Kormind, managing director of UK-based retailer 77 Diamonds.
However, Michela Gombacci-Minoli, founder of concierge luxury service Otis On Park, observes that price is a crucial factor for budgets between $500 and $3,500. In that price bracket, “Europeans and Americans want the biggest carat weight they can get for the least possible price,” she says. She adds that price is also why Gen Z switches to lab-grown diamonds. The moment they learn about the sustainability claims and that lab-grown diamonds are chemically and aesthetically identical, the deal is sealed, she says.
In the past, industry experts have highlighted how the macroeconomic environment determines diamond demand. And Post at DoSomething Strategic is pessimistic. “Gen Z feel uncertain that they would be able to obtain economic security in retirement, savings, home ownership and more. Only 15% are confident they could attain economic security,” he says.
Education is essential
Olivia Landau at jeweler The Clear Cut believes that lab-grown diamonds’ rapidly falling prices may make Gen Z reconsider their preferences.
“I posted a four-second video on TikTok, the epicenter of our Gen Z community, saying that you could get a 2-carat diamond for $600,” she says. “The video organically reached a million views, and the comments made me aware of the incredible amount of misinformation about lab-grown diamonds.”
As a result, Landau has invested in educational content about diamonds’ economics and ethics. She is also planning to visit Botswana with the Forbes 30 Under 30 community.
Levato agrees with Landau’s approach to educating Gen Z consumers. “Greater transparency, improvements in addressing ethical concerns, and reducing environmental impact are important factors,” she says. “[An] increase in perceived rarity and long-term value of natural mined diamonds, with further potential appreciation over time, could also prompt Gen-Zers to rethink their stance.”
Image: Shutterstock; David Polak