It just so happened that the Russian jewelry market is noted for the dissatisfaction experienced by its buyers towards the available product range: despite the apparent abundance of goods they lack the proper variety. And in terms of design imports are often ahead of domestic jewelry.
The development of the jewelry industry in Russia is influenced by many factors, such as seasonal sales, mass campaigns driven by major players, flawed legislation in Russia, obsolete manufacturing facilities and even, more recently, Russia's entry into the WTO.
Leading positions in the Russian jewelry market in 2012 were occupied by the Central and Southern Federal Districts, their aggregate sales being 43%. Adamas and Krastsvetmet set the pace among jewelry companies with their sales reaching about 11% of total sales in a year, followed by Almaz-Holding, Russkie Samotsvety and Estet.
Despite the positive - on the whole - development of the jewelry market, the past year was marked by a nose-dive in retail sales. During the year, there was observed a steady decline of interest towards jewelry from retail customers. This was felt almost at all major exhibitions held in 2012. According to Rosstat (Russian Federal Service of State Statistics), total retail sales increased by only 8% in the first nine months. In 2011, sales went up twofold – by 16%. The month of November in 2012 turned out to be the “deadest” for jewelry trade in the last decade, and the situation was not improved even during the New Year season.
Among the ways to come out of the crisis, many jewelers considered expansion into new markets (Russia’s Central Federal District was among tried-and-true options). Others talked about introduction of new technologies in manufacturing and sales, about improving the design of goods, more frequent renewal of jewelry collections, the right approach to the product range, and a careful study of consumer preferences.
Jewelry and production statistics suggests that diamonds do not cease to be in demand. In Russia, production of diamond jewelry increased by 13.7% in 2012 compared to 2011 reaching 1.7 million pieces, according to Rosstat. Production of diamond jewelry increased by 14.5% in December 2012 compared to December 2011 and decreased by 3.6% compared to November 2012. The greatest attraction for buyers were rings, including wedding bands. Production of wedding rings from January to December 2012 increased by 1.0% to 741,000 pieces. Production of wedding rings went up by 3.4% in December 2012 compared to December 2011 and by 13.8% compared to November 2012.
Gold and diamond combinations are still the most popular among Russians, according to an online poll conducted by analysts in the study of "Online Jewelry Retail Networks 2012" - almost in all product categories, accounting for at least 40%.
As for silver, production of silver jewelry decreased significantly in the last two years of due to market saturation. During the crisis, many companies survived by increasing production of silver goods, which were eagerly bought, but later it caused a backlash. Significant supply of silver in the market led to a decline in current demand.
Silver jewelry accounts for the largest share in the structure of the jewelry market today - 45%, while gold falls within 27%, palladium - 19% and platinum - 9%.
Experts from NeoAnalitics predict that the gold jewelry market will experience an average growth rate of 6.5%, while the silver jewelry market will grow at a pace of 13-16% in 2012 – 2014.
The Club W online project surveyed affluent consumers belonging to the category of high net worth individuals (HNWI). In Europe, such consumers have fortunes worth about 25 million euros, in the United States it is on average $ 1 million, and in Russia – from 30 million rubles upwards.
According to the survey, almost half of respondents - 47% of rich Russians – used to shop online spending over 30,000 rubles. The average ticket was 3,200 rubles at restaurants, 16,900 rubles at clothing stores, 57,300 rubles at jewelry stores, and 5,200 rubles for wellness and spas. Euromonitor International said that online jewelry sales in Russia accounted for 0.5% in 2012.
IMPORTS AND EXPORTS
Russia is a net importer of jewelry. Imports exceeded exports 7 times in 2007-2011, according to a study released by BusinesStat, Analysis of Jewelry Market in Russia in 2007-2011 and Forecast for 2012-2016. This trens is not expected to reverse in the next five years. Today, Russia is a major importer of jewelry inserts made of precious and semi-precious stones. Currently, the inflow of imported goods enters into direct competition with domestic jewelry in the mass market price range. High taxes and duties levied in Russia on precious raw materials and equipment for jewelry production are facilitating imports to grow. This triggers higher production costs for domestic jewelry bringing them up by 38%. The result is that domestic jewelry turns to be an inevitable loser in price competition with imported goods. According to BusinesStat, Russia’s jewelry exports in 2013-2016 will reach USD 168.99, 195.23, 221.21 and 253.12 million, respectively.
In March 2013, the Discovery Research Group (DRG) completed a survey of the jewelry market in Russia. It was estimated that it totaled 193.3 million pieces of jewelry by volume and 257.9 billion rubles by value in 2012, which is higher than in the previous year by 7.9% and 23.4%, respectively. As predicted by DRG, the market will annually grow by 4.6% in volume and 6.7% in value towards 2017.
Taking into account that Russia is going to enter the WTO in August 2012 and the State Duma recently (in February 2013) received the bill (on liberalization of the jewelry industry) containing amendments to the law on precious metals and stones, market participants are facing enough discussion issues “to sink a ship,” the issues, which were debated over and over long before the above mentioned events and which, however, will not be stopped bandied about after. What kind of troubles will bring the first one? What are the advantages of the second? All the discussions will be focused on one and the most important question - What kind of future is in store for the Russian jewelry industry, and will it be at least a little resembling the one, which every jeweler at least once imagined in his or hers most riotous fantasies? ...
Meanwhile one thing is clear: the jewelry market in Russia has very broad prospects for development and growth due to Russia’s mineral wealth and ancient jewelry traditions known and valued the world over. There is just one “small” thing to do - to understand the many intricate regulatory loopholes.
Veronica Novoselova, Rough&Polished
