In 2008, the Russian jewelry retail market capacity increased by 15% exceeding the mark of $5 billion. However, as the Yuvelirnaya Rossiya Magazine says, general stagnation of consumer demand in the crisis environment in 2009 may cause growth rate flattening. In experts’ opinion, diamond-graced gold jewelry is expected to experience the deepest slump in sales (about 20%).
In recent years, the process of consolidation between major market operators picked up steam. Federal-level operators – such as Yuvelirnaya Set 585, Yashma Zoloto, Almaz Holding, Adamas, and Moscow Jewelry Plant – are joining their forces to edge weaker players out of the market thus bringing closer the time when they will have to compete with each other. In the modern economic environment, the ability to save money and be prompt in meeting customer requests is becoming of prior importance for large jewelry companies, whereas their expansion into provinces and offering a broader range of products are going to be put on the back burner, according to the RBC analysts.
Major marketing strategy elements for small jewelry companies operating in Russian provinces may include revision of jewelry assortment in favor of inexpensive jewelry pieces of modern and way-out design as well as correcting their marketing policies and customer loyalty programs.
The Russian jewelry market is moving from extensive growth to a new pathway in its development, says the Economica I Vremya, a Saint Petersburg business weekly. The start of 2009 made jewelers sacrifice some part of their profit for the sake of replenishing their floating assets. However, their discounts were strictly metered out. In April, they may fade out completely replaced by significant price hikes for most jewelry items and in the first place for gold and diamonds.
Just recently, trading in the luxury segment was considered the most money-making business. However, currently only a few outlets in Moscow and some other cities keep going strong. Expensive brands sagged in the majority of stores. Orders for custom-made designs have declined and elite boutiques are generating fewer payments. As experts point it out, even the “grey” market is under stress: its share is usually assessed by exclusive packaging and accessories sales, which are being dragged.
If we assume that in 2009 the community of VIP clients will survive, then gold jewelry sales in the range from 30,000 to 50,000 roubles can serve as a kind of financial health indicator. The exclusive jewelry market will be the first to give a jingle about economic recovery.
In the crisis period, the medium market segment is the most profit-making. So it has turned into a turf for tough competition between jewelry networks. If earlier jewelry stores were bent on roomier trading areas to showcase a wider jewelry range, now they shun this approach, for customers are tired of trite pieces parroted from cut-and-dried patterns. Such a line-up gives appearance of diversity which fails to attract anyone.
The major accent is now obviously shifted from grand and plush stores to relatively small trading outlets, whose assortment is “sharpened” to suit the tastes of customers in crisis. The latter often makes people buy on impulse if they got locked on some jewelry piece. Someone will buy a gold ring graced with a gem of perfect choice. Others will settle on silver. Sometimes this will not be a single item, but a jewelry set.
The crisis is accelerating transition of the market from extensive growth to a new pathway of its evolution. The winners will be those market participants who will manage to meet the deadline entrenching in their niches and arranging optimal logistic chains. Under crisis, as the Japanese say, there are only two kinds of companies – fast and dead.
