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Russia
By Anastasia Serdyukova
Although diamond dealers and jewelry makers in Russia speak about the increased demand in the market at the close of 2013, many say the improvement in recent months was due to people buying for the holiday season. The expectations for 2014 are cautious. January is a difficult month in which to draw any conclusions about how the year will go because Russians have public days off for the first ten days of the year, and many are on holiday for half the month. “Demand is in stagnation in general, and it is expected to decline,” said Anton Schepotiev from Moscow-based diamond dealer Almoss. He said that many jewelry makers are experiencing troubles with cash flow and are not able to pay suppliers on time. Everyone is also cautious about where rough prices are headed. “If the price of rough grows slightly and slowly, the situation at the market will be more inspiring,” said Aleksander Maksimov from Yakutia Diamond Company. Demand is moving toward smaller diamonds and lower characteristics. Maksimov said that the best profit margin is with fancy colors because there aren’t many of those in the Russian market.
Jewelry sales volume at the end of 2013 varied from company to company based on location and marketing strategies. Production growth in 2013 was a little over 8 percent from the year before, a decline from year-on-year growth of 10.7 percent in 2012 and 20.4 percent in 2011. “There is certain stagnation at Russia’s jewelry market,” said Andrey Yalunin, director of Ekaterinburg-based Ringo. “This is due to oversupply and a large volume of illegally imported or low-quality items.” Yalunin attributes 27 percent of the increase in his company’s retail sales to expanded marketing efforts designed to reach new markets and promote the originality of the company’s products. “The basic version of a classical design, that is, a mount with a stone, is losing popularity and is being used predominantly for engagement rings,” said Yalunin. “Consumers are looking for something unusual, new. Companies need to be very flexible to meet the demands of their customers.” Aleksandr Ilushenko, the vice-president of the Association of Importers and Jewelry Sellers, said that failures in design and marketing strategy are slowing the development of the Russian mass jewelry market. “Apart from those who produce exclusive jewelry, very few companies position themselves correctly,” he said. “They advertise discounts and deals that target male consumers, while female consumers — and they are the ones making the final choice — want something unusual.” Ilushenko gave the example of Danish company Pandora, which sells in the low to middle price range, attributing its success to its well-marketed concept of its charm bracelet line as “affordable luxury.” When the company came to the Russian market in 2010, many expressed doubt that its jewelry — which was targeted to young people by design yet was too expensive for Russian youth — would attract enough buyers. But today, the company is selling in over 200 stores.
Imported items are conquering bigger parts of the Russian jewelry market, according to Ilushenko. A recent report by the Russian Assay Chamber came to the same conclusion that growth in overall jewelry sales is coming from imported jewelry. The share of imports increased in almost half of retail stores in 2012 and continues to grow, according to the chamber. Reliable import numbers can be hard to come by because there is a great deal of illegal jewelry imports being sold in Russia. One reason for the popularity of imported items may be that one-third of retailers say they are unhappy with the design of Russian items, according to the chamber, while another third complain about domestic jewelry’s quality and price. The top categories where Russian items are losing turf to imported jewelry are gold and silver low-end jewelry and watches.
Sportsmen from around the globe will be presented with 1,254 Olympic medals this month at the 2014 Winter Olympics in Sochi. More than three kilograms of gold, two tons of silver and 700 kilograms of bronze were used to create medals in a “patchwork quilt” design representing the different regions, cultures and ethnicities of Russia, according to Maksim Vayenberg, executive director of Adamas, the Russian jewelry maker minting the medals. “The design shows the contrast of the country, which is the idea of the Sochi 2014 brand,” said Vayenberg, “The medals show sun rays and snow peaks of the mountains, warm seas and ice.” The company tried to make the medals not only beautiful, but durable. They are designed to withstand a load of two tons to the rim and extreme temperature drops without any visual deformation.Article from the Rapaport Magazine - February 2014. To subscribe click here.
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