As various studies suggest, millennials are postponing marriage till much later in life compared to previous generations, which means people are also delaying their engagement ring purchases. Strangely, Bank of America considers this a plus for the diamond industry.
The first part of the conclusion makes sense: If fewer people are getting married when they’re young, dumb and broke right now, it might negatively impact the ring business in the short term.
But the next step is more questionable. Reps for Bank of America Merrill Lynch think once millennials are older, they’ll have even more money to spend on fatter diamonds, so they will. An explanation from BAML (via Business Insider), based mostly on generalities:
Millennials are postponing marrying until later in life, leading to a decline in weddings over the last 15 years.
However, a larger population of 20-39 year old people in upcoming years should serve as an offset to the wedding rate decline. Assuming the rate of weddings continues to fall by 0.7% over the next six years, weddings should remain relatively flat.
People who opt to get engaged later in life often have greater disposable income to spend on engagement rings, providing a natural comp tailwind for jewelry retailers.
Wouldn’t it just be that some people will still buy cheap rings and some won’t, per usual?
As BI points out, BAML’s logic “assumes that marrying-age millennials will have more discretionary income to spend on rings than their parents did at the time of marriage.” Yeah, sure, bring on all that extra discretionary income. Can’t wait.
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