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Russia
By Svetlana Shelest
The hopes of jewelry retailers for good New Year and Christmas sales have come true, with reports of average holiday transactions as either comparable or larger than in 2013. The major concern going into the season was that prices had gone up, prompted by the higher cost of the imported stones, which might have discouraged seasonal shoppers. In her report to the Russian Assay Chamber, Olga Khvatkova, business development deputy director of Kouz, a Kostroma jewelry manufacturer and retailer, said that retailers across the industry raised prices by 20 percent to 30 percent during the holiday season. The price hikes were to cover the increase in retailers’ costs following the decline in the value of the ruble. Consumers responded with a buying frenzy. “There was a new category of customers — those who deemed it wise to buy ‘before prices go up’ and ‘while they still had money to spend,’” said a representative of ADAMAS, Russia’s largest jewelry manufacturer and retailer. Some companies, however, chose to hold the line on prices, among them Kouz and Russia’s polishing giant Kristall Smolensk. Kristall froze its diamond prices for the entire range on offer at its online store until December 31, 2014, giving customers an opportunity to get the best gift deals and to invest in diamonds as a hedge against ongoing currency fluctuations.
ADAMAS, with a network of over 250 retail stores across the country and an assortment of over 30,000 jewelry items, reported promising progress in its online efforts. The company’s online store — http://www.adamas.ru/catalog/— was launched in July 2013, which, as the company’s rep explained, was relatively late even for Russian retail. However, even though the project is still in its early phase, by early 2015, the volume of online sales has matched the total volume of offline sales. As for diamond jewelry sales, online demand is comparable to overall customer preferences, with up to 30 percent of both online and offline shoppers choosing pieces with diamonds. The company is very positive about the potential of online trade in 2015, forecasting steady growth. Although Russian customers are quite conservative in their choices and usually go for the classic pieces, they do appreciate the convenience of digital technologies and have grown to expect any major retailer to offer an online shopping opportunity. “Today, shopping online is the norm,” said the ADAMAS representative, “and we anticipate diamond jewelry to remain the leader in online sales.”
Svetlana Rakhmanina, sales director at Rifesta, a large jewelry maker in Yekaterinburg, said that the company recently added online shopping pages to the website it had launched in 2007. She said that having a website for customers is dictated by this age of information technology. But she added that it is also a very useful management tool that helps “manage all customer and sales-related information, inform our customers of new offers and receive immediate feedback.” A novel project in online diamond retail sales is being developed by 1 Karat, a Moscow company. Its website — http://brilliant24.ru/ — is scheduled to launch in March 2015, after over ten months of development and testing. The business concept is completely new for the market in that the company will offer customers the opportunity to buy certified polished diamonds online and custom order the setting. The finished jewelry piece will be available for pick-up at a partner retail store preselected by the customer. “This process is unique in that it will give our customers maximum protection from possible fraud that is, sadly, a significant risk in online trade. We will offer top-quality stones, maximum safety and the benefit of lower online prices, all in one deal,” said Alexander Kurgansky, director general of 1 Karat. Currently, the company is negotiating partnership deals in Moscow for the launch phase, and is expecting to end 2015 with at least 100 retail partners.
Having mined 36.1 million carats in 2014, according to its preliminary end-of-year report, ALROSA is planning to increase its rough output to 38 million carats in 2015. Botuobinskaya and Karpinskogo-1 pipes will be launched into operation, and mining on Mir, Udachny and Internatsionalny underground mines will be stepped up, as per the company’s strategic development plan. In 2015, ALROSA hopes to keep rough sales at 40 million carats, as in 2014. As for sales revenue projections, ALROSA’s Acting Chief Executive Officer (CEO) Ilya Ryashchin quoted a hopeful 30 percent annual increase in revenue at the preliminary end-of-year meeting in Yakutia. He said that projection is dependent on the currency exchange rate stabilizing at around 45 rubles to one U.S. dollar. It is currently at about 65 rubles to one dollar. Article from the Rapaport Magazine - February 2015. To subscribe click here.
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