If we try to epitomize the evaluations and moods reflected by the Russian mass media last November and December, it will be correct to say that jewelry trade in this country is getting the feel of crisis. If two or three months before this period there was a surge in sales (although not in every province), this time jewelry industry participants are openly speaking about decreased demand for their products. For instance, according to the estimates furnished by the jewelry marketers in the City of Syktyvkar, jewelry sales there fell by almost 30 percent. In Tuva, according to the government press service in this Republic, the demand for jewelry starting from last October slumped two or three times. The Komsomolskaya Pravda Daily reports about slight panic in the jewelry stores of Vladimir: “As if diminishing sales were not enough, people now ceased to buy even gold. Sales assistants noticed quite a few couples going to marry who asked them to choose silver wedding rings, not gold”. Four percent of the Russians polled by the ROMIR Research Holding lately refused from buying jewelry they had planned earlier.
There are, however, divergent reports. Quite good sales are indicated by jewelry stores in Volgograd. The Vecherny Krasnoyarsk Daily reports that Krasnoyarsk inhabitants “sacrifice sausages for gold.” Light-weight gold pieces up to two grams are in high demand in Novosibirsk. In the short term, hopes are pinned on the results of the New Year season. However, the buyer in this season expects real and not virtual discounts.
The jewelry market turned to be one of the victims hit by the financial crisis, the Delovoy Petersburg Daily writes. Market participants witnessed a sharp drop in demand. Jewelry sales in large retail networks shrank two times as compared to 2007. Jewelry trade has stalled, the RosYuvelirExport Information Agency reports. Jewelry networks are reluctant to buy wholesale goods beware of flat demand. In this way, says Olga Mironova, General Manager of RosYuvelirExport, they are letting down jewelry manufacturers, many of which experience problems being deprived of a possibility to obtain new credits. According to Andrey Ananov, President of ZAO Russkoye Yuvelirnoye Iskusstvo, jewelry sales of large-scale networks sagged two times by the end of 2008 as compared to 2007. Sergey Dokuchayev, heading the network of OAO Russkiye Samotsvety, believes that jewelry networks are ready to face lower profit margins (usually coming to 5-12 percent) not to lose greatly in their turnover. Dokuchayev estimates the Petersburg jewelry retail market from 10 to 30 billion roubles. The Russian market, according to RosYuvelirExport, weighs 250 billion roubles. Andrey Ananov expects that growth will start only in the autumn of 2009.
According to reports coming from open sources, it seems that jewelry networks in Russia enjoy unprecedented sales upturn, says the Obozrevatel – Vecherny Omsk Daily. However, this growth is short-lived, as experts believe, while jewelry retail players in Omsk are even doubtful if it was ever real. Currently in Russia there are 928 companies and 2 270 individual entrepreneurs engaged in jewelry manufacturing. Retail (wholesale) trade accounts for 5 334 (7 100) agencies and enterprises, including only 50 big companies (less than one percent of their total number), whose output exceeds 50 kilograms of jewelry per month. However, the latters’ share in the Russian jewelry market reaches 18 percent. Today, the Adamas Company remains to be the largest jewelry manufacturer. The second group (8-9 percent of the total number) is composed of companies which turn out from 10 to 50 kilograms of jewelry every month. Their share is approximately 65-70 percent of the total jewelry output on the market. The third group (50 percent) consists of companies making from one to ten kilograms of jewelry. Currently, this market segment is in the process of steady development, but so far the appurtenant companies do not have much influence on the Russian jewelry market. The fourth group (40 percent) is comprised of individual entrepreneurs and artist jewelers working to orders from their customers. They make mainly exclusive things.
In recent years, the jewelry market in Russia enjoyed approximately a 20-to-30-percent annual growth rate. Analysts believed there will be a market glut by 2009, but in 2007 Russia assayed 48.5 million pieces of gold jewelry and 32.6 million pieces of silver items totaling to 360 tons – by 30 percent more than in 2006. According to the forecasts, the Russian jewelry market in 2008 will reach four billion U.S. dollars.
As for Omsk, demand for jewelry is almost falling down in this off-kilter city on the background of otherwise seemingly upbeat jewelry sales across Russia. “We do not observe any specific “sales dynamics” in our jewelry network for our sales stay at the same level,” Andrey Dokuchayev, Regional Director of Yvelirnaya Set 585, says. “Generally speaking, I am surprised to hear reports about sales growth in jewelry networks in Russia.” The colleague’s astonishment is also shared by Victoria Korablina, CEO of the SoyuzYuvelirTorg Boutique: “I have no idea where this information about some surge in jewelry sales in Russia is coming from. Our sales, for instance, dropped 35 percent and in this context Omsk’s reaction is quite logical. Jewelry items belong to luxury things and who can talk about some increase in demand for jewelry when factories in this city are being shut down and their workforce downsized?”
Flun Gumerov, General Director of the Krasnoselsk Jewelry Factory, who is also President of the Almaz Holding chairing the Council of the Jewelers’ Guild in the Central Region of Russia, is convinced that jewelry sales growth in this country is of a short-time character: “Right now there are personnel reductions going on – so far this is the case with large investment companies and banks, but tomorrow this wave will hit the industry too. And first of all demand for non-essential goods will shrink since in winter people cannot do without winter shoes but they can do without a piece of gold on their neck very well. It should be clear to everyone that there will be no more such a growth rate of the jewelry market as it was during the last seven years. Taking into account that it is not real to overcome crisis earlier than in two or three years, we should expect a decreased level of jewelry production and a tougher competition for market outlets between Russian manufacturers and importers.”
One month ago it was already noted that the major accent in promoting jewelry was made not on precious metals, but on polished diamonds. Last November and December, a series of publications were dedicated to a drop in the output of rough diamonds and to the massive campaign advertising jewelry diamonds launched by De Beers. Due to the show business and advertisers now everyone knows that “diamonds are a girl’s best friends.” However, this slogan in crisis time is not the best one, believes Grigory Trusov, President of the Contact-Expert Consulting Company, quoted by PRIME-TASS. He is in favour of a more substantial approach: “Currently, to sell some play or fantasy won’t be as profitable as in the quiet time; diamonds will not be offered as girls’ best friends any more, but as a vehicle to protect one’s wealth in the turmoil because diamonds are always a good currency and in the period of crisis may serve a good insurance policy for people who are trying to save their capital.”
