The demand for luxury goods in Russia is growing at a hot pace. According to Magram Market Research estimates, the luxury market in 2007 will hit $7.5 billion whereas it was $2.5 billion as early as 2005. In this figure, the company’s experts included jewellery, watches, clothing, shoes, home decor accessories and the turnover of fashionable restaurants. “Today consumers are attracted by exclusive and not by general-purpose articles of luxury, so it is not a simple thing to distinguish the major trends in fashion”, says Anton Prostyakov, a Magram Market Research expert. According to him, business and political elite representatives are the major consumers of luxury goods and services while show business people join them not so often. The greater part of revenues comes to luxury sellers from men in their 40s who buy gifts to their children, wives and girl friends. The second place in this rating is occupied by the so-called career people who go in for luxury out of necessity to sustain their own feeling of success. These are followed by well-heeled women and “gilded youth”.
An indirect proof of growing demand for jewellery articles in Russia is provided by the financial report of Ozon.ru, a Russian online store. As one of the largest online stores in Russia, it doubled its cash receipts in the first six months of 2007 compared with the same period last year. Bernard Luke, Ozon Director General, explains the twofold growth in turnover by increased Internet penetration in Russia. According to Luke, other reasons include the expanded range of commodities (the store is now selling perfumes, cosmetics and jewellery) and the improved logistic and order delivery systems.
The growth is also evidenced by such a phenomenon as the increased number of jewellery stores. In Moscow, this is obvious even to the naked eye. However, the same process is going in Russian provinces. Thus, this year eight jewellery-selling outlets formed a whole “gold triangle” in the centre of Yaroslavl.
Yves Gijrath, a Dutchman, who is organizing Millionaire Fairs in Moscow, shared some of his observations with mass media: In the first place, the Russian luxury market is a rapidly growing segment. This is proved by figures, the so-called statistics, and they do not lie. As a rule, the most expensive purchases happen in Russia. In particular, this is true in terms of automobiles since Russians adore expensive cars. Russia is an attractive country for foreign investors. They prefer to put their money into your country and to do their business here. Secondly, the Russian luxury market is not well studied so far. To come to this market and to develop it, you have to know the consumers and Russia itself.
The same can be said about other segments of the Russian jewellery market. In fact, it is unlikely that there is some large research company, which is deeply involved in studying the jewellery market. Therefore, it is not surprising that the most common point of view in this respect is the following: The demand for jewellery on the part of Russians is indeed highly conservative. Our fellow citizens, particularly in provinces, as before, regard the jewellery as a form of investments for a black day, so they do not bother very much about the outward appearance of a jewellery piece. For every one of them it would be just impossible to be either a jewellery expert or an expert in choosing jewellery articles since they lack information and knowledge, their tastes are not shaped and their preferences are not defined.
The answer given by the executive manager of one of the jewellery networks was indicative in this respect:
- What do people buy more often in your stores today?
- It is not easy to say, they buy everything: chains, bracelets, earrings, rings, pendants with natural gems.
Obviously, from the point of view of further market development it is important to understand not only what people are buying but also what they will buy and what they want to buy.
Unfortunately, we could not find any answers to these questions. The jewellery market here, in distinction, for example, from the food market, is not sufficiently studied and is not being readily studied.
Some companies, for instance Choron Diamond, operate statistics they order, but these studies are closed to public since they are performed on special orders and for particular projects.
It appears that a broad range of consumers buying top class commodities is inaccessible for research. Probably it was not accidental that De Beers, according to mass media reports, after having considered some orders for research of the Russian market declined them and preferred to perform “offensive reconnaissance”.
No better is the situation related to the analysis of middle class buyer behavior. It is not so much because of insufficient information or impossibility to perform research. The problem is that the “middle class” notion in Russia is largely a convenient myth, which is freely interpreted by anyone to suit one’s own purposes.
If we take, for instance, the sufficiently well known project at www.middleclass.ru (Middle class life style) run by the Expert-Data marketing agency (its information is from time to time referred to by Russian mass media), its definition of the Russian middle class will look as follows: “These are people who by virtue of their education and professional qualities have been able to adapt to the environment of modern market economy and managed to provide for their families a consumer level and a life style adequate to modern time”. In terms of money, it means that according to the mentioned project the average income of family members is about $500. Can such middle class be a real buyer of jewellery belonging to the middle price range?
Rough&Polished
