Today Russian are ready to plank down an average of 3 000 to 5 000 roubles for jewellery. Experts perceive this as an expansion opening for manufacturers and sellers. According to Olga Mironova, General Director of RosYuvelirExpert, a Russian information agency, “the fact that in Europe one hundred dollars are considered as an initial demand level and that Russia has reached this notch gives hope for a qualitative change in the jewellery consumption pattern.” “The growth of purchasing capacity implicitly serves to bring the jewellery purchasing culture to a higher level,” Olga Mironova explains. “We may hope that buying high-quality original items, consumers will strain after jewels belonging to another level. May be they will stop to associate jewellery with just a combination of metals and inserts, which can be bought at sales being offered at a one-item price for two or the whole year round with a 50% or 70% discount.” According to a survey performed by RosYuvelirExpert in team with the Gortis Consulting Company, if a couple of years ago the major buyers at jewellery stores were people aged 45 and older, nowadays buyers are rapidly getting younger. The most active among them are 25-year-olds. This is a generation of buyers, which, according to the surveyors, want “everything and now” though they do not trust any traditional advertisements and are loyal to a certain brand. “Buyers are not only getting younger, they are cosmopolitan and evidently because of this ratings started to include manufacturers from Italy, Turkey and Brazil,” explains Olga Mironova. “The main thing for Russian manufacturers is to hold the middle class.” If a couple of years ago, jewellery were chosen by gold weight, prices and discounts, today, according to the surveyors, emotions are the leading factor.
Meanwhile, the retail jewellery market makes its players to win new territories and low-income buyers ever more actively, RBC noted. Only sales in Moscow are able to maintain a required cash flow to medium-segment sellers. The example of Altyn, the only network positioned as a discounter, shows that the majority of purchases were made by the audience, which choosing between a 500-rouble ring and a 600-rouble ring will buy the first because it is 100 roubles cheaper. “We analyzed the demand and found out that we are faced with a new style of consumption,” says Pavel Sidorenko, one of the owners of the Adamas Jewelry Company. “The buyer wants to save money and to have pleasure not so much from what is bought but from the discount.” Besides the consumers’ wish to come to the democratic market segment, there are market reasons for this: for some time already, the gold price in the world market is going up and Moscow jewellers predict that manufacturers and sellers will have to lift prices at least by 20% until the end of this year. Under such circumstances, selling non-expensive products is a good way to stay afloat.
Network trade is targeted at medium buyers and it involves mass consumption products. I do not want to use the “consumer goods” expression but this is actually the case, says Sergey Bogomolov, Deputy CEO for Commerce of OAO Yuvelirnaya Torgovlya Severo-Zapada. “We are much more interested in perspective buyers, i.e. in people who stick to high fashion and purchase original things. It is of much more interest and much more profitable to sell high price goods spending similar labour at similar labour costs. Our sales network is now trying to operate in boutique format and it goes not bad. An expensive store involves particular design of its trade hall, coffee and a possibility to view an item through a magnifying glass without any haste and under special lights listening to expert explanations.
…I am just convinced that in two or three years the Russian jewellery market will have several major operators, while the rest will face difficult times. As for our domestic jewellery factories, after Russia will join the WTO they will most probably be closed. The point is that in this country, whole cities rely on such factories. Try, for instance, to shut down production at the Village of Krasnoye-on-Volga, which has the only enterprise, a jewellery factory, bearing quite a lot of municipal duties and maintaining a sewage treatment works, a kindergarten, a school, a hospital at its own expense and besides being the major payer to the local budget. This is why their products are expensive, because their prime and overhead costs include everything. Then, our jewellers pay 18% more for their gold and our workforce is expensive. Today the jewellery industry features an average salary of approximately $700. Most factories will not survive under such conditions… If we are to name the WTO enemies in this country, then we have to name our jewellery factories. The point is that they will not be able to adapt immediately. For example, you are more probable to put on a Tissot watch than Chaika and to buy a Sony TV set, not Temp or Raduga. Unfortunately, we shall have to fall out of habit of wearing Russian jewellery. The situation will be like anywhere else in the world, globalization.”
All the jewellery retailers admit that the time for their consolidation in the market has already come, RBC says. Today the market leaders – Adamas, Jewellery Network 585, the Moscow Jewellery Plant and Yashma-Zoloto – are working in team to squeeze out petty players out of the market and approximating the time when they will grapple with each other. The only niche to house small companies for a while belongs to exclusive designer items like, for instance, those made by Valentin Yudashkin’s Fashion House. However, the luxury segment in the Russian jewellery industry is far from being the most promising. It is already quite well represented by such world famous names as Chopard, Cartier, Tiffany and Carrera у Carrera. It is unlikely that our jewellers will be able to compete with them today and even tomorrow. They belong to quite different weight categories.
