Size really does matter in the recession-hit diamond market. As Rebecca Smithers of Observer reports, customers are turning their back on the big rocks.
Diamonds should be forever, but they lost their sparkle during the recession. Now specialist jewellers and diamond merchants are reporting that, while business is slowly picking up, there is a noticeable new trend – consumers have turned their backs on the big rocks in favour of smaller diamond rings.
Last year the industry suffered its worst downturn for years with a slump in demand for luxury items. In the Hatton Garden area of London – where nearly 300 businesses sit cheek-by-jowl in a cluster of streets on the edge of the City – "footfall" has noticeably dropped.
But while people are willing to downsize to smaller stones, they are not prepared to compromise on clarity and colour. Even with the pressures of the recession, retailers say that half-carat diamonds remain a popular size for classic solitaire engagement rings.
Geoffrey Farrow, owner of Raphael, says: "There are fewer people about and those who are around are spending less. A decent one-carat diamond would currently cost upwards of £1,500.
But the smaller stones are, without doubt, much easier to sell and people are tending to go below one carat.
Stones of 0.70, 0.80 and 0.90 of a carat are popular because the price leaps once you go over one."
Farrow says the disappearance of City bonuses has had a clear impact on business: "The City boys have gone and clearly any bonuses are now going into their mortgages. The internet has also adversely affected the small outlets here. We have all had our margins squeezed – it's unbelievable."
So does the fall in demand for big diamonds mean that consumers can negotiate a good price? One jeweller, who did not wish to be named, says: "I think a lot of traders here are trying to put on a brave face and pretend things are better than they really are.
"I am struggling to sell the larger diamonds of one carat-plus. The safe is full of them – they are not shifting. Clearly there are deals to be done, but it is noticeable that no one is even asking for the larger stones."
But other traders claim that, at the very top end of the market, business is "recession-proof" with diamonds holding their own as investments.
Anthony Matthews of Quality Diamonds – which combines an internet business with a Hatton Garden showroom – says business had been brisk over Christmas: "We are regularly selling two-, three- and five-carat diamonds. Recently, for example, we sold a five-carat 'cushion' diamond for £50,000 and a three-carat for £33,000."
He says many City traders are still around, but are buying loose stones, rather than jewellery, as long-term investments.
George Katz of Katz says: "People are definitely hoping to get more for their money and things are generally a bit quieter." But sales of engagement rings at £3,000-£4,000 were holding up well, he adds.
Mersey O'Driscoll, a director of Beverly Hills, says that people who traditionally shopped in Bond Street were coming direct to Hatton Garden. "They'll do their research then come here and expect more for their money."
She says the business had not gone online because "buying an engagement ring is an emotionally charged business. It's important for the woman. It's a big thing which is not the same if you buy from the internet."
On the high street, a spokeswoman for Ernest Jones said that the most popular design for diamond rings was "understated and classic".
In a recent survey of its customers, only a minority said their priority was a big diamond – for 15% of 16- to 29-year-olds and 9% of 30 to 44-year-olds.
But London remained the area of the country where size matters most – and the bigger the stone, the better the ring.
