Oksana Senatorova has long been known in the Russian jewelry community as an expert in the jewelry market, publisher of the Jewelry Trade Navigator magazine, organizer of the Best Jewelry Store of the Year competition, curator of professional events and industry workshops on sales in the jewelry sector, as well as an active blogger. She was given credit for her achievements and merits with a Carl Fabergé Memorial Foundation award.
During her visit to the Junwex New Russian Style exhibition held in May in St. Petersburg, Oksana Senatorova answered the Rough&Polished correspondent’s questions.
What’s new and interesting going on in the jewelry trade now?
I can’t represent all the members of the industry but the mass market only, as I have been managing sales in the manufacturing company of the Adamant brand for a year and a half. This includes the jewelry assortment like chains, wedding rings, cross necklaces, that can be purchased in any jewelry store. These are the most sought-after jewelry items. Compared with the pre-pandemic period (if a five-year retrospective is appropriate), the sales have declined markedly. It would seem that the demand for such basic jewelry items should be stable, and it remains stable, but the value of orders has decreased. I did not work for this company during the best times for the industry and the country, but as for the regional retail (the basis of jewelry manufacturing and imports in our country), there have always been large owners having 5 to 10 or 20 stores (owned or leased), and they are the favorite customers of any supplier working in Kostroma, Moscow, St. Petersburg, or Yekaterinburg. And now, they closed their stores, at least, about a third of their stores. There is a tendency for store optimizations and closures now. There are people who have left the market altogether, which is sad, and the Guild of Jewelers regularly informs about this. And the result is that, for example, out of ten stores, the owner closed four because sometimes, renting a store is unprofitable, or it is more profitable to rent out the premises. But in these closed stores, unsold jewelry items remained that are transferred to the stores still working or to the warehouses. It’s a pity, because rather often, these are good, high-quality jewelry goods selected with your own hands. But I can say, even if these goods have been kept for two years and remelted, sometimes the jewelry owner has no losses, and maybe even earns some money. In most cases, these jewelry goods end up on the shelves, and in response to some companies’ offers to purchase new and fashionable jewelry items from them, they can hear “Well, we have so many jewelry goods, you’d better tell us where to find a buyer....”
Demand has declined and the average lead time is also becoming longer; substocking used to take three months, now it can take six months. And this results in the ‘battle for survival’ for suppliers. The price has already been brought to absurd levels: if you add up the cost of work, rent of premises, electricity bills, payroll fund, tax payments, and include at least some profit, the price at which companies sell their goods sometimes does not come close to a minimum profitable figure. It is clear that suppliers also have difficult times, as they need to pay salaries, taxes, etc.; I must admit, this is a difficult market.
When we see ads about sales and up to 50-percent discounts (in the 585*Golden chain, for example), does this mean selling at a low profit or at a loss? And sometimes, there are even amazing discounts on diamond jewelry pieces.
Diamond jewelry generally needs a long time to be sold; it may happen that diamond jewelry pieces remain unclaimed by buyers for up to two to three years. The seller sees when they were purchased and at what price. But the prices were different at that time. And it seems that jewelry goods, probably, can be sold at a discount. Such self-deception occurs, because the value of ruble at that time was different, as well as the purchasing power, the exchange rate of the currency and the metal price... But everyone needs to survive, close their cash gaps and satisfy their needs, which is of utmost importance.
And secondly, you always - even in the best years - need to make a markup first, and only then offer a discount. Marketing has always been like this. Diamonds are fairly ‘long-term’ and durable goods, and in most cases, their turnover is low.
I wonder what is happening in federal chains?
There exists, for example, the Sunlight jewelry retail chain with its trend aimed at increasing the number of stores. They have incredible growth rates equal to additional 200 to 300 stores per year, for example. The Sokolov jewelry chain has the same indicators.
Is this a success?
Most likely, it is. Probably, federal chains have good analysts, programmers, financiers who are the professionals having high-quality education. But regarding regional retail, I got the impression that the federal chains come to the places left by the regional players. And it’s not always clear why it happened so. Maybe, buyers are expected to come by habit to those places where there were jewelry stores? The trend is a decrease in regional jewelry retailers and an increase in large federal store chains. Sunlight is a vivid example of this. And you must admit that 200 stores opened during a year is a big number.
Another trend is worth mentioning: the transition from brick and mortar retail to online stores. Like never before, there is a great number of clients requesting jewelry goods for sale on marketplaces. All types of jewelry goods can be sold on marketplace platforms - and first of all, these are Wildberries (WB) and Ozon.
The talk is not only about basic jewelry - any jewelry items in any price category. Rather, the request for unique jewelry becomes important.
Another new thing is that the Chinese companies brought their collections to the May edition of the New Russian Style exhibition held in St. Petersburg. And a huge number of customers from China took part in it.
The Adamant jewelry company was among the participants in the New Russian Style exhibition in St. Petersburg, what are the results?
It depends on how the ‘optics are set’ - optimistically or realistically. We took part in the trade show, had meetings with our clients, improved our contacts, and although there are customers who did not select the jewelry items during the trade show, we agreed to do this in the near future.
I walked around the exhibition, looked at the jewelry displayed in show-cases, but didn’t see anything that was new. All companies usually prepare for the September edition of the trade show, and before that, exhibitions are used for maintaining contacts, and not for big sales and commercial success. But there are companies and people that I simply like, because I run a magazine and I like jewelry.
As for brands, my approach is purely subjective and I do not pretend to be an expert. For example, I like Ringo and the people working in the company. I like the Style Avenue company - they are importers, I like their unusual combination and a riot of colors. But these are just my personal preferences. Maxim Demidov made an interesting display of jewelry...
Going through the mass segment displayed: what is now in great demand with jewelry consumers? What trends can be highlighted?
Now, the trend is towards lighter-weight and cheaper jewelry; a kind of minimalization.
Fashion jewelry is in demand. Many jewelry companies make it, and fashion jewelry goods have very comparable prices. Maybe, the explanation is that people take the fashion jewelry easier, its design is eye-catching and it is more in trend, it looks brighter and more attractive. Well, classic jewelry pieces are expected to always find their buyer.
Many junior companies have appeared and their silver pieces are interesting. A new option is that small-size 17-facet diamonds in silver settings (very budget-friendly ones) are in demand. It is clear that the presentation is of importance to young audiences; it works when even an inexpensive, small piece of jewelry is displayed in a nice way and presented brightly, in a box and is nicely packed. The packaging can be comparable to the jewelry piece in price, but the cost of the jewelry item itself increases by an order of magnitude. Young people love colorful, ‘fairytale’ presentation - with nice cards and wishes.
You keep relations with jewelry organizations - such as the Jewelers Guild - that have now become more active, they establish contacts with government agencies that oversee the industry, as well as hold meetings, discuss legislation, taxation, etc. Does this have a real effect?
Of course, the fact that the jewelry industry is alive and requires attention matters. There was a difficult situation with introducing the payment of the VAT by all the companies. Now, we see a reverse situation, including the easing of some requirements, and special conditions are provided. This is despite the fact that the state doesn’t care for the jewelry industry very much as it does not produce basic necessities to people, which explains the attitude “Well, does the jewelry industry still exist? It’s surprising, but all right then.”
Anyway, a balance is required. It is impossible to make everyone happy, have jobs, and pay no taxes. We live in the country engaged in the Special Military Operation, and the unprecedented sanctions have been imposed on our country, which are having an impact, no matter what anyone says. This means we need money that comes from taxes. And therefore, the strict laws of the market apply: those who are weaker exit the market, those who survive keep on working, and they reduce production, cut jobs, close stores, and optimize their production and trade. Officials cannot even have aby incentive to subsidize the jewelry industry because the country needs funds for defense.
Nevertheless, the Guild of Jewelers keeps on doing its work, and documents are prepared, examinations and grading are carried out, but if the reaction from the authorities is weak and does not accord with our desires, it’s not the right time for this now. The state needs the tax revenues, and we must be realistic to understand this.
Today, the survival is for those who accumulated resources during prosperous times and do not have loans. Such companies are currently cutting costs and have no plans of exiting the market.
The same is true for those whose businesses’ inertia and margins of safety are sufficient for a confident position in the market and also for stable growth. This is exactly the Sunlight’s position now.
How important are the competitions for the best jewelry and do they stimulate the development of the industry?
I don’t know exactly, but as far as I’m concerned, it’s nice to be appreciated and praised. In any case, professionals should be duly appreciated and celebrated, especially those associated with creative work.
Of course, it’s good that jewelry competitions are still held. This is an old tradition that reminds us of stability. We need traditions as the support during difficult times.
Galina Semyonova for Rough&Polished
