Jewellery sales are rising across key markets, but a shift toward lab-grown stones, higher gold prices and leaner inventories means that growth at the counter is no longer translating into stronger demand for natural diamonds upstream.
The traditional model that shaped demand across the diamond distribution chain has been fundamentally disrupted.
In the past, strong retail performance created a ripple effect throughout the pipeline. As sales rose, jewellers placed larger orders, lifting polished demand, and manufacturers responded by buying more rough to meet those needs.
The impact was exponential. A modest increase in retail sales translated into a sharper rise in polished demand and an even stronger boost in the rough market, as Pranay Narvekar, partner at Pharos Beam Consultancy, describes in what he calls the bullwhip effect.
That dynamic was most visible in the first quarter, when polished and rough trading typically spiked as jewellers replenished inventory sold during the holiday season.
The cycle is still there, but it is playing out at lower levels, even as retail jewellers continue to report steady sales growth.
In the luxury segment, Richemont reported a 6% year-on-year increase in revenue from its jewellery maisons in the fourth quarter. Kering’s jewellery houses posted an estimated 9% improvement in the same period, while LVMH’s watch and jewellery division edged up 1%.
Among more commercial players, Signet Jewelers and Brilliant Earth are due to report in March, but Birks Group already noted a 12% rise in holiday sales. In the US independent channel, data provider Tenoris estimates overall jewellery sales among speciality jewellers grew 5.6% in 2025.
The positive trend extended internationally. Hong Kong-based Chow Tai Fook reported an 18% increase in sales and Luk Fook posted 26% growth during the October to December period. In India, Titan Company’s jewellery income rose 24% for the quarter, while Australia-based Michael Hill said sales increased 3% in the second half of calendar 2025.
These companies do not represent the entire retail landscape, but they do have a growing market share and benefit from significant marketing muscle. Their results point to a clear improvement in jewellery retail, and it has been some time since growth was this broad based across so many major players.
Why has that not translated into stronger polished and rough sales?
The answer is that while overall jewellery revenue has risen, retail sales of natural diamonds have declined.
Diamonds, both natural and lab-grown, now account for roughly 41% of total jewellery sales, down from about 50% a decade ago, according to Sherry Smith, partner at the Retail Smiths, a jewellery industry advisory, in a recent podcast with National Jeweler.
Several factors contributed to the decline.
First is the steady gain in market share by lab grown diamonds, particularly in bridal. Among more than 10,000 US couples surveyed who married in 2025, 61% chose a lab-grown diamond for their engagement ring, according to The Knot’s Real Weddings Study. As more retail jewellers actively present lab-grown alongside natural, and often lead with it, a growing share of diamond unit sales is shifting away from natural goods.
Second is the resulting issue of segmentation. Lab-grown stones typically sell at a significant discount to natural equivalents. Retailers are presenting both options to align with different consumer budgets, but that has squeezed the 0.50-carat to 1.50-carat natural centre stone segment, as customers opt for larger lab-grown pieces at similar price points.
That shift has made retailers more selective in the natural diamonds they purchase. Demand has gravitated toward larger, higher value stones, narrowing the range of goods that move consistently through the pipeline and leaving mid-size categories under pressure.
Third is the effect of higher gold prices. Gold jewellery was a major driver of overall sales growth last year, particularly among Hong Kong, China and India-based jewellers. As gold has surged, it has absorbed a greater portion of the consumer’s budget within a finished piece. To maintain price points, manufacturers are adjusting designs, often reducing diamond content or using smaller accent stones. The result is fewer natural diamonds embedded in each item sold, even when overall jewellery revenue appears stable or growing.
Another factor is consolidation at retail. There are simply fewer jewellers operating today than there were a decade ago, with the number of jewellery businesses operating in the US declining by about 2% to 3% per year, according to the Jewelers Board of Trade (JBT). Even if the surviving retailers are stronger and more efficient, fewer doors naturally translate into fewer diamond orders.
At the same time, those jewellers are running leaner inventories. The lessons of the pandemic, tighter credit conditions and volatile pricing have pushed retailers to manage stock more cautiously. They are replenishing faster and buying closer to confirmed demand rather than building inventory to hold.
Taken together, these trends explain the disconnect between healthy jewellery sales and weak diamond demand upstream. The industry is not necessarily selling fewer pieces of jewellery, but it is selling fewer natural diamonds per piece, through a smaller and more cautious retail base.
The traditional multiplier effect that once lifted polished and rough when retail performed well has weakened. Growth at the counter no longer guarantees momentum in the midstream or at the mines. Until natural diamonds regain share, value and volume at the retail level, the rest of the diamond supply chain will continue to realign at lower levels. Top of Form