Diamond sales are regaining some of their glitter this holiday season, after a recessionary slump that pummeled demand and led miners to cut production.
"Christmas last year was so dismal almost anything would be better," says Stephen Silver, owner of the upscale S.H. Silver Fine Jewelry in Menlo Park, Calif.
Retailers are predicting sales to increase by as much as 10 percent from last year, with larger diamonds sold to wealthy clients leading the uptick.
"Last December I was hardly selling any 2-carat diamonds, but today I'm getting demand for 2, 3 or 4 carat diamonds on a daily basis," says Stuart Samuels, president of Premier Gem, a New York wholesaler.
Americans spend about $30 billion each year on diamonds, and about $60 billion on jewelry overall, according to Idex Online, an industry site. Demand for diamonds plunged in the aftermath of the stock market collapse last year, and some experts worried that humbler tastes might make it tough for diamonds to recover. Plus, with an increased focus on environmental sustainability and fair mining practices, a growing number of young shoppers have been turning to diamond alternatives, ranging from synthetically produced diamonds to other gemstones such as sapphires.
Greg Stocker, a radio producer from Philadelphia who recently bought an engagement ring for his girlfriend of seven years, says he never considered anything but a diamond.
"The diamond ring is what women like," says Stocker. "My fiance is not superficial and would have been happy with something out of a Pez dispenser, but I wanted to give her the best of what I could."
Banking on this bump in demand, mining companies have decided to beef up output.
De Beers, the world's largest diamond miner, which once monopolized the world's diamond market and now has a 40 percent market share, says it is reopening mines in Botswana and Canada; De Beers had shut them down earlier this year, and plans to cancel other planned closings.
"Since the end of the first quarter, demand has picked up noticeably," says David Prager, a spokesman for the London-based company, referring to wholesale demand for rough diamonds from polishers around the world.
Still, U.S. consumer demand is far from the glittering levels seen before the market crash, and retailers still have to compete aggressively for shoppers' dollars.
Laurent Landau, a partner at Diamond Ideals.com, a New York-based online retailer, says he's launching local newspaper advertisements and putting the store's nondiamond jewelry on sale for the next month. Not everyone can afford a $5,000 bauble in this economy, and buyers are getting creative on how they use their jewelry budget, says Landau.
Some shoppers have been pouring their budget into pricey bands, and then using cubic zirconias as placeholders until their finances improve. Others have been buying used rings online.
To meet the demand, retailers have started displaying a wider selection of lower-priced jewelry alongside their diamonds.
Rosena Sammi, a jewelry designer who once sold diamond collections to upscale stores such Henri Bendel and Intermix in New York, recently launched a collection made of shiny glass.
"Customers are looking for sparkle, but people aren't as keen to make the investment that diamonds require," says Sammi. "People are being cautious with their holiday shopping."