The recent news that Signet Jewelers (NYSE:SIG) may be facing mounting pressure to explore strategic options, including a potential sale, has raised concerns among investors and industry analysts alike. The 6.9% surge in premarket trading following Select Equity’s disclosure of its 9.7% stake in the company underscores the mounting pressure Signet faces to unlock value for its shareholders. Select Equity’s letter to the board expressed frustration with Signet’s current strategy, which they believe is undervaluing the company. However, one significant area where Signet could be missing a valuable opportunity is in its approach to marketing lab-grown diamonds—an area where it has yet to take full advantage of the growing consumer demand.

The jewelry market is increasingly shaped by younger generations, particularly Millennials and Gen Z, who are not only more eco-conscious but also more open to embracing alternatives to traditional mined diamonds. Lab-grown diamonds, with their promise of sustainability, affordability, and ethical sourcing, have garnered attention as an attractive alternative. However, Signet, despite its massive presence in the industry, has been slow to push lab-grown diamonds in its marketing strategies. In an era where environmental concerns and ethical sourcing have become key values for younger consumers, this hesitation could prove costly.

Lab-grown diamonds have become an essential product for the next generation of consumers who are increasingly vocal about their desire for products that align with their values. They are far more likely to purchase items from companies that champion sustainability and transparency, and lab-grown diamonds offer a compelling narrative of environmental stewardship. Despite this, Signet’s marketing efforts in this space have been lackluster compared to competitors who have fully embraced lab-grown diamonds. By not aggressively marketing these products, Signet risks alienating a crucial demographic that values authenticity and sustainability in their purchasing decisions.

While Signet’s legacy brands, such as Kay, Zales, and Jared, have strong consumer recognition, they are also perceived as traditional players with a focus on mined diamonds. This perception could be limiting the company’s ability to attract younger, eco-conscious buyers. Instead of diversifying its offerings and leading the charge in lab-grown diamond marketing, Signet has continued to lean heavily on its existing inventory of mined diamonds. The growing demand for lab-grown diamonds presents an untapped opportunity for Signet to rebrand itself as a forward-thinking, sustainability-driven company. By not fully capitalizing on this, the company risks falling behind more innovative competitors that are positioning themselves as leaders in the lab-grown diamond space.

The call for a potential sale reflects investor dissatisfaction, but it also highlights a broader strategic misstep—failing to fully embrace the next generation of consumers who are leading the charge for sustainability and ethical consumption. By not aggressively marketing lab-grown diamonds, Signet risks missing a significant opportunity to capture the hearts and wallets of younger buyers. A more forward-thinking approach that positions lab-grown diamonds as an integral part of its brand identity could be the key to rejuvenating Signet’s image, driving long-term growth, and ultimately helping the company realize its true potential—whether independently or as part of a larger acquisition.