Starry As A Rock

Have you seen Mariah Carey’s new engagement ring yet? If not, perhaps you’ve been living under a rock — which might be roughly the same size as the token of love the pop icon was spotted wearing around town earlier this past week.

A gift from billionaire boyfriend James Packer (who would be Carey’s third husband, in addition to his currently held title as Australia’s fourth-richest man), the stone weighs in at 35 carats and has turned the collective Internet green with envy. It has also sparked a debate over the ever-increasing size of engagement rings and the competitive nature that celebrity diamonds have taken on over the past several decades. How can mere mortals be expected to keep up with the growing, larger-than-life trend of engagement diamonds (and should they even try)?

That very question is linked to the history of the engagement ring itself, while its answer may speak to the jewelry item’s ripple effect in numerous retail verticals.

It’s a pretty widely known fact that the origin of the diamond engagement ring was a marketing campaign launched by De Beers in the 1930s to try and grow sales of diamond rings, which, at the time, were not de rigeur for the soon-to-be-married. What is less known is that De Beers not only manufactured the idea that diamond engagement rings are essential symbols of love and financial solvency but that diamonds themselves are a rare and valuable commodity.

At its core, the true story of the diamond engagement ring is one of supply and demand and emotional manipulation in between — sort of fitting for an object that has come to singularly represent the complexities of human romantic relationships. According to The Atlantic, the world’s largest known deposits of diamonds were discovered in South Africa. The British businessmen who collectively owned the rights to the diamonds immediately recognized that to ensure the continued value of their gems, the flood of diamonds into the world market must be curtailed and access to these diamond mines heavily controlled. They created a cartel, De Beers Consolidated Mines, Ltd., which grew to control nearly every aspect of the diamond trade, from sourcing through retail.

In 1938, The Atlantic article continues, De Beers secured the talents of New York-based ad agency N.W. Ayer to keep diamonds top of mind for Americans in the throws of the Great Depression. Instead of selling a product, the agency set out to embed an idea in the hearts and minds of the American public … and it was phenomenally successful.

For young men, as The Atlantic notes, the message was: Diamonds (and only diamonds) were synonymous with romance, and that the measure of a man’s love (as well as his own personal success) was directly proportional to the size and quality of the diamond he purchased. While young women were to be convinced that courtship concluded, invariably, in a diamond.

And guess what — or rather, who — was smack dab in the middle of the strategy? Celebrities.

According to a memorandum sent from the agency to De Beers, its strategic plan included the practice of gifting large, impressive diamond rings to celebrity couples in exchange for access to the pairs to be used in stories and photographs, which stressed the size of the diamonds in particular. By 1947, the agency was pitching 125 stories a week to national publications around celebrity diamonds, along with pictorial exposés about just how big and glamorous they were. Additionally, the agency launched a series of assemblies in high schools around the country on the virtues of the rocks that celebrities presented to their loved ones.

In the nearly 80 years since the campaign began, not much seems to have changed in the strategy of the diamond industry. Creating a culture of diamond envy based around celebrity nuptials is alive and well today, as evidenced by the most recent announcement, and obligatory sparkling photos, to hit the media. What De Beers may not have expected when it began was just how huge (pun intended) the craze around ever-larger diamond rings would become.

However, as the size of celebrity rings continues to go up, what Americans are actually spending on rings has been steadily decreasing since 2006. In 2014, according to an article from The New York Times (citing a report from Jewelers of America), the average cost of an engagement ring was $4,000. This marked a 25 percent decrease from the benchmark of $5,317.

Where Americans are buying their rings is also shifting in a perhaps unsurprising direction: online. This may be contributing to the decrease in average amount spent, as a ring on an online retail jewelry site — Blue Nile, for example — might cost 20 to 25 percent more at a traditional brick-and-mortar jewelry retailer. Consumers that go for one of the bigger luxury jewelry brands, like Tiffany or Cartier, can expect to pay 40 to 50 percent more, David Wu, a luxury goods analyst at the Telsey Advisory Group in New York, told NYT.

There remain, notwithstanding, mall retailer brand jewelers that continue to do well, as Barron’s recently reported, including Signet, which owns and operates the brands Kay Jewelers, Jared and Zales. The company puts a lot of emphasis on marketing, outspending its closest competitors by an estimated 15 to 20 times. Market analysts see Signet as a sound investment, regardless of recent stumbles, which saw same-store sales growth drop to just 3.3 percent in the third quarter, according to Barron’s. However, Signet hoped to regain much of that momentum in its perennially strong fourth quarter, which sees nearly 40 percent of sales.

Brian Angerame, co-manager of the ClearBridge Mid Cap Core fund, which owns the stock, summed it up nicely, telling Barron’s: “When a 20-something is looking for a ring for his fiancée, where is he going to go? Whose name is going to jump into his head? It’s such an emotional transaction; he’s not going onto jewelers.com.”

Should an aspiring-to-be-married man take the road more traveled (and more affordable) in that regard, he might find himself on the receiving end of another — and not pleasant — “emotional transaction,” as it were, from a disappointed girlfriend who was expecting a ring the size of Mariah’s.