The jewelry industry’s recent numbers paint a rosy picture. Sales are up, average retail prices have risen, and higher-ticket items are performing well. As the fourth quarter approaches, it’s tempting to conclude that consumers are simply trading up. But Sherry Smith argues it’s not that straightforward.
Smith suggests the biggest story in jewelry today is the diversification of consumer behavior. Affluent consumers continue spending, while lower-income and aspirational buyers are becoming more cautious. Gold price hikes have significantly increased jewelry costs, and lab-grown diamonds allow consumers to buy larger stones for less. These factors coexist, making averages potentially misleading.
A Tale of Two Consumers
Reports from McKinsey & Company and Bain & Company highlight this polarization. McKinsey estimates that roughly 80 percent of luxury market growth between 2023 and 2025 came from price increases, not volume gains. At the same time, approximately 35 percent of aspirational luxury consumers have pulled back or delayed luxury spending.
Bain’s research shows a shrinking global luxury consumer base, dropping from 400 million in 2022 to 340 million in 2025. Yet, big spenders’ share of the personal luxury goods market grew from 30 percent in 2019 to approximately 46 to 47 percent in 2025. This indicates a concentration of growth among fewer, high-value customers.
This trend is reflected in U.S. jewelry sales. Tenoris reported an 8.6 percent increase in jewelry sales during the first half of 2026, with average purchase prices rising 19 percent. However, unit sales at price points below $1,500 continued to decline. Natural diamond jewelry generated revenue growth despite declining units, thanks to higher average prices.
The Lab-Grown Diamond Factor
The Knot’s 2026 Real Weddings Study found that lab-grown diamonds accounted for 61 percent of engagement ring center stones purchased in 2025. The average lab-grown center was 1.9 carats, and the average ring cost $4,600.
Tenoris data reported tells a similar story from actual retail sales. In 2025, sales of finished lab-grown diamond engagement rings increased 31 percent, with units up 30 percent and average retail sale essentially flat. Finished natural diamond engagement-ring sales, meanwhile, declined 4 percent, with both units and average retail sale down approximately 2 percent.
During the first half of 2026, Tenoris reported double-digit revenue growth in lab-grown diamond jewelry. But unlike the broader jewelry market, where higher prices are doing much of the work, average spending per lab-grown purchase was essentially flat. Growth came almost entirely from more units being sold.
Meanwhile, wholesale lab-grown diamond prices declined 14 percent in the first quarter of 2026, according to Tenoris, with 3-carat rounds down 28 percent.
Smith questions what “trading up” means in this context. A customer might buy a 2- or 3-carat lab-grown diamond—once an extravagant purchase—for less than a smaller natural diamond. Another might pay significantly more for the same weight of gold jewelry due to rising gold prices. An affluent customer might genuinely trade up to a more valuable piece.
Smith argues that the key question for retailers isn’t whether consumers are trading up, but “Which consumer?” This distinction is essential as the holiday season approaches.
Identifying Key Customer Segments
Retailers must identify which customers are driving growth. Comparing current sales to previous years isn’t enough. Analyzing the customers behind the numbers is key.
A smaller group of customers may be responsible for a larger share of sales and profits. Understanding their purchasing behavior, whether they’re buying more frequently, purchasing more units, or moving to higher price points, is key.
Tailoring Strategies for Diverse Customers
The most valuable customers should receive personalized communication, merchandise recommendations, and experiences that reflect their importance. Retailers must also pay attention to aspirational luxury consumers, who still represent approximately 50 percent of the luxury market’s value, according to McKinsey.
Bain reports that the luxury’s overall customer base has already contracted significantly as consumers make fewer purchases and increasingly seek smaller indulgences, affordable alternatives, and resale. Retailers should recognize that customers who aren’t spending as much may still value jewelry but have redefined what they’re willing to spend.
Lab-grown diamonds, for example, offer some customers the size, look, and emotional significance they desire at a more affordable price. Others may find a $1,500 gold piece to be their significant purchase, while some are willing to spend more but expect a unique, high-value item in return.
Retailers should also identify customers who have stopped buying. Analyzing purchase frequency, price points with declining unit sales, and customers who haven’t returned can reveal a shrinking customer base, even if average retail sales are rising.
Before the holiday season, retailers should ask critical questions: Who is spending more? Why are they spending more? Who is buying less? And who has stopped buying altogether? These questions can provide valuable insights into the business’s health, beyond what average retail sales reveal.
