The crisis has seriously affected jewelry market Russia. During a period of declining purchasing power, buyers are not, to put it mildly, first of all thinking about buying expensive jewelry. And it is in such conditions that it is especially interesting to find out an expert’s opinion on the trends in the development of the segment, and on the most promising niches.
The jewelry market needs to be analyzed in the context of the situation in the consumer market as a whole. In 2017, against the background of improving macroeconomic indicators and the strengthening of the ruble exchange rate, a feeling of market stabilization was formed, and the level of negativity in consumers’ assessment of their prospects decreased. At the same time, there are no sufficient grounds for an upward breakthrough and a significant increase in sales in consumer markets.
According to a study by Fashion Consulting Group, imports of jewelry into Russia continue to decline, and according to the results of three quarters of 2016, they even decreased by about a quarter compared to the very low indicators of the previous year. The increase in the cost of imported products, which occurred for Russian buyers after the depreciation of the ruble, forced some players who produced products abroad to consider options for transferring production to Russian territory and to look for local manufacturers. There is hope that the rollback of imports will free up space in the market for local producers. In addition, due to the difficult economic situation, as well as the state policy of promoting projects under the “Made in Russia” brand, the loyalty of Russians to local products is growing.
Over the past 3 years, Russian jewelry retailers and brands have been testing new projects and carefully studying local production opportunities, especially in the middle segment, where consumers are expecting something more unconventional. If in 2013 about 65-70% of jewelry in Russia were foreign products, then in 2015 this share began to decrease noticeably in favor of Russian goods. The Guild of Jewelers gives an optimistic estimate that more than three-quarters of the products on the market now are domestically produced.
However, despite the decrease in the share of imports, against the backdrop of a sharp drop in the purchasing power of the population compared to the pre-crisis period and, accordingly, a catastrophic drop in demand for jewelry products, Russian manufacturers suffered no less than buyers of imported goods: production volumes decreased by almost half Russia (-45% gold and -20-30% silver). There has been an outflow of buyers from mid-price segment brands to budget segment brands.
How much has the jewelry market as a whole been affected by the crisis?
Volume and dynamics of the gold jewelry market, tons, 2012-2016
During the peak of the crisis in 2015, the demand for gold jewelry in Russia rolled back 14 years - the market (in currency equivalent) decreased by 43% compared to 2014. In 2016 The decline in demand continued - sales fell by another 11% compared to 2015.
Volume and dynamics of the jewelry market, rub., 2012-2016Q4/2017F
The jewelry market (including gold jewelry) is experiencing negative dynamics: 2015 showed a decrease of almost half and reached the lowest level in the last 10 years. In 2016, the market fell by another 18% and amounted to $172.2 billion. The forecast for 2017 is stabilization to 3% under an optimistic scenario and a decrease to -10% under a pessimistic scenario.
Specifics of the jewelry market in Russia 2016
Until recently, the jewelry market was strongly influenced by the “post-Soviet legacy.” Only a small number of foreign jewelry companies, represented in single- and multi-brand stores, exclusively in large cities, were able to gain a foothold in the market over the last decade.
- The market was formed by large “historical” brands capitalizing on the reputation of Soviet-era manufacturing plants;
- The dynamics of development are slow and inert. Models created back in the 70s - for example, Bismarck chains - are still popular.
- Simplified specifics Russian market jewelry in comparison with the European market can be described as “conservative demand”. The products and collections on the shelves reflect the population’s love for demonstrative decorativeness on the one hand and for tradition and classics on the other.
- High-quality expensive jewelry is not perceived as an adequate replacement for jewelry, even for everyday and daytime use.
- Unlike the European market, wearing jewelry every day is the norm from school age.
About 40% of the jewelry market is accounted for by large players
At the moment, there are top 7 players on the jewelry market in Russia, which together occupy 32% of the market. The largest jewelry network In terms of revenue for 2016, the Adamas chain is the largest - 11.6 billion rubles. and 6.7% of the total market. Pandora takes second place with revenue of 8.6 billion rubles, third place goes to Moscow Jewelry Factory, 8.3 billion rubles. respectively. Also, luxury segment brands account for another 10% of the market; they enter the retail market through such large distributors as Mercury Group, Jamilco, Cosmos Gold, Bosco di Ciliegi.
Key trends in the consumer market
- A natural “movement into silver” and an increase in supply in the category of lightweight gold products. A repetition of demand fluctuations that were observed during the 2008 crisis. Buyers who do not view jewelry as an investment, but buy it as an accessory jewelry, pay more attention to silver products. The range and variety of silver jewelry increases during a period of declining purchasing power
- Relatively stable demand for niche offers. Such products of original design, clearly targeted at a specific target audience, always find their buyer. Jewelry in which you can express your individuality is the result of careful selection and in a crisis has a more stable demand.
- Carte blanche for the Russian manufacturer. The work of foreign jewelers has become more expensive due to changes in the exchange rate in Russia, so they do not see any special prospects for selling their products in Russia, and are temporarily giving way to Russian manufacturers.
- Most trading enterprises have adopted the concentration of efforts on special price offers and assortment optimization as the basis of their marketing policy. The number of intermediary companies between the manufacturer and the retail operator has been reduced. Retail companies are actively developing their own brands and are gradually ousting brands that do not have distribution networks from the mass market.
It has been declining since 2015 due to declining household incomes, low consumer activity and a propensity to save money amid currency fluctuations, as well as pronounced competition from electronics (for example, young people increasingly prefer to purchase smartphones instead of jewelry) and perfumes and cosmetics ( Jewelry is less often perceived as an expensive, profitable investment).
According to a study by the website Ssia, the turnover of jewelry under the brands MYUZ, Pandora, Tous and Swarowski in 2017 amounted to about 19.2 billion rubles. Of these, the largest share falls on MUZ and Pandora (49% and 42%). The turnover of the Tous brand in 2017 was estimated at 1 billion rubles, which amounted to about 5.6% of the total turnover of the above brands. The Tous brand is most widely represented in the cities of the Southern Federal District: Krasnodar, Sochi, Anapa and Rostov-on-Don.
Volume and dynamics of the Russian jewelry market
The volume of jewelry consumption in 2017 amounted to 224.7 tons, remaining at the 2016 level. The demand for jewelry has been declining since 2015, which is associated with a decrease in household incomes and a decrease in the target audience (young people under 30 are practically not interested in jewelry, preferring to buy smartphones, tablets and other electronics). In recent years, attitudes towards jewelry have changed significantly: the population perceives them less and less as a luxury item or expensive decoration and considers them, first of all, as accessories that should emphasize the individuality and style of the owner. For this reason, price is a deciding factor in the choice of jewelry, resulting in an increase in the demand for silver jewelry and a decrease in the consumption of gold items.
In the medium term, jewelry consumption is expected to decline by 1-2% annually due to changing consumer preferences, growing demand for alternative and often more affordable products (perfumes and cosmetics, costume jewelry, non-standard jewelry made from non-standard materials). precious metals and other materials).
Volume of jewelry consumption in the Russian Federation in 2013-2017. and forecast for 2018-2025, tons (within the base development scenario)
Jewelry market structure: production, export, import, consumption
The jewelry market is dominated by Russian-made products: in 2016 it accounted for about 75.9%; at the end of 2017, its share increased to 76.9%, which is associated with a reduction in import supplies, primarily from Armenia.
Dynamics and structure of the jewelry market in 2013-2017. and forecast until 2025, tons (within the base development scenario)
Consumption structure by federal districts of the Russian Federation
At the end of 2017, the largest consumer of jewelry remains the Central Federal District with a share of 28.2% in volume terms. The second place with a share of 16.7% is occupied by the North Caucasus Federal District, the third is the Southern Federal District (11.9%).
Structure of jewelry consumption by federal districts in 2013 – 2017, in physical terms
Jewelry Market: Development Forecast
It is expected that in the medium term, jewelry consumption will decrease by 1-2% annually, mainly due to a reduction in the number of potential buyers in the face of changes in consumer preferences (young people under 30 in most cases do not consider purchasing jewelry, preferring to spend money on gadgets, travel or inexpensive accessories).
Representatives of the older generation have traditionally invested money in the purchase of jewelry. Partly because the list of tools for preserving and increasing money during the Soviet period and the turbulent 1990s was very limited. Is it worth considering now? Jewelry as an investment? What pitfalls might such investments have? MirFin asked these questions to the experts.
Kuzma Kuzmichev, Kozmas jewelry designer:
“There is indeed a decline in demand for gold jewelry. This is due, first of all, to a sharp increase in the price of gold by almost 2 times. Secondly, the costs of jewelry production have increased: all raw materials and equipment are imported, and accordingly, prices for consumables are rising along with exchange rates.Today, it is more interesting for the buyer to order jewelry by providing the jeweler with his own raw materials - in this case the price will be favorable.
There is no point in considering jewelry as an investment, since it is very difficult to determine artistic value finished product, in addition to the material component (raw materials). The assessment will always be different. Therefore, credit institutions do not consider jewelry as collateral, and pawn shops accept them as scrap. Exceptions include auctions and antique jewelry."
Alexey Grodno, head of the global markets department of the Nizhny Novgorod head office of Sberbank PJSC:
“Precious metals should be clearly separated: in the form of jewelry, in bars and in coins.
The cost of jewelry is based on the price of the precious metal from which it is made, but the production and sales component is very large. Therefore, investing in jewelry is the worst investment option.
Ingots - their value depends entirely on the world price, plus, in accordance with the tax legislation of the Russian Federation, value added tax, plus a small bank margin. VAT largely kills investor interest in bullion.
Coins. It is worth clarifying that we are talking about investment coins, the price of which, according to Russian law, does not include VAT. The cost of coins is closest to the price of precious metals on the world market."
Alexander Gladnev, marketing communications consultant:
“When selling it to a pawn shop, a piece of jewelry is valued at scrap value. Therefore, when purchasing jewelry in a jewelry store for investment purposes, you should pay attention not to beauty, but to the weight of the product and jewelry inserts. The only possibility of a successful investment in this way is to track seasonal fluctuations prices and promotions jewelry stores.
A variety of stones can be used in jewelry, having different investment attractiveness. The most famous and therefore the most liquid precious stones are diamonds; from this point of view, their investment attractiveness can be compared with silver, gold and platinum. Currently, the price of diamonds has reached a 4-year low and is showing a further downward trend, which opens up investment prospects (but also involves high risk).”
“It would seem that the simplest way to invest in precious metals is to buy jewelry. The method is both interesting and pleasant. But this option has many disadvantages. First of all, the price of jewelry depends relatively little on the fluctuations of the precious metal itself, so how most of the value is created by the work of a jeweler. Secondly, the jewelry market is not very liquid: it is quite difficult to sell jewelry at a real price. That is, if gold, for example, grows by 15%, this may not affect the price of jewelry made from that same gold at all In short, the option of investing in jewelry is quite risky.
If you nevertheless decide to engage in this type of investment, then among jewelry only exclusive items, not cheaper than 150,000 rubles, can bring significant profit. These are products of the largest jewelry houses, and, as a rule, limited edition items. Antique jewelry can also bring a stable income, but only if it has high artistic value, and better yet, if it also has historical value.”
Alexander Arsky, Ph.D., Associate Professor, Department of Marketing and Logistics, Financial University under the Government of the Russian Federation:
"Investing in gold jewelry may not be worth it. It should be understood that gold decoration- this is, first of all, the work of a master jeweler, a product aimed at meeting current demand, satisfying trends that have developed in terms of fashion. Naturally, in 10-15 years, and this is precisely the period of long-term investment, gold jewelry purchased earlier will “go out of fashion,” and accordingly, gold jewelry will be difficult to sell on the market at the required price. It is worth considering that the cost of a gold product includes the cost of the “brand”, the jeweler’s labor, trade margins and customs payments with excise tax (if the products are imported). All this makes investing in gold products almost unprofitable in modern conditions.
A current area of investment is the acquisition of “pure gold” in bullion. However, storage costs must be taken into account when investing. Gold bars are not stored in the nightstand. And storing it in a bank safe deposit box or purchasing a home safe requires costs that must be taken into account when investing."
Sergey Kashin, financial analyst, president of Global Investment Corporation:
“Is it worth considering the purchase of jewelry as a means of investment? Definitely worth it, especially if it concerns precious stones. This type of investment has always been and will be a “safe haven” compared to investments in currency, stocks or real estate. If you pay attention to the chart of precious stones stones, then even in times of crisis (1998, 2008, 2014) the price holds, trembles, but holds. On average, the annual increase ranges from 6 to 12%, depending on the type of stone."
Read about the prospects for investing in precious metals and impersonal metal accounts.
Scientists never cease to repeat that the supply of precious metals and stones on Earth is limited. This is probably why their price only increases over time.
It is useful to know that the cost of 1 gram of gold contained in jewelry, much inferior to the price of gold bullion or gold bank coins.
The reason lies in the quality, and more specifically in the sample of gold. For casting gold bars and bank coins, pure pure gold of the highest standard (999.9) is used, but for the manufacture of jewelry they use alloys that lower the gold standard to (585).
The question arises, what is more profitable to invest money in: buying jewelry or gold bank bars and coins?
According to sociological surveys, approximately 15% of Russians find investing in jewelry profitable.
According to experts, investing in jewelry is justified only if, in addition to cost, it also has cultural or historical value, or is a work of art or antique.
In any case, by investing your money in the purchase of jewelry, you protect your money from inflation, since prices for precious metals and stones have very high growth rates. Another plus is that jewelry does not wear out much and, compared to other investments, has greater safety.
Exclusive jewelry as an investment object
Jewelry is always in price, so it is not surprising that most people invest in exclusive products with precious stones. Such jewelry can be not only necklaces, earrings, bracelets, brooches, but also watches and cufflinks.
The main thing in this principle is not even the metal used for the product (silver, gold, platinum), but the quality and degree of complexity of the work. The item being purchased must be a work of art, which guarantees its owner profit in the future. But you need to purchase jewelry only in official establishments, otherwise you can buy a fake.
Investments in jewelry as insurance against a crisis
Options for resolving the issue how to save money during a crisis? There are several, depending on the amount you need to save, as well as your desire to take risks. Investing in gold is considered a not so new way. This is a fairly risk-free, reliable method. At the same time, the option of reducing the price of gold on the international market is practically impossible, since countries have long been trying to escape the dollar impasse, and, as an alternative, choose gold.
But jewelry made of gold will not only be a reliable investment, which will not require huge initial funds, but it will also be a much more profitable financial investment compared to plain gold, since the cost of the jewelry includes the work of making the jewelry, which regularly increases, as well as and gold itself is rising in price. You should be careful when choosing gold jewelry as an investment - don't stop at large quantities stones, since if you have to sell gold, most often the stones are simply removed, and also try to find out the manufacturer and make sure of its reliability, name recognition and quality of products.
Wealthy Russians have always viewed the purchase of jewelry as one of effective ways investing money. This type of investment, of course, is inferior in popularity to purchasing real estate and bank deposits, but the interest in jewelry in Russia is so great that in 2016 it entered the top 10 countries with the greatest demand for gold jewelry. According to Irina Stepanova, executive director of the Sotheby’s representative office in the Russian Federation, in recent years, interest in expensive jewelry and rare diamonds is partly due to turbulence in the economy.
Of course, they invest in jewelry not only in Russia. Along with other luxury items (antique furniture, Chinese ceramics, collectible watches, vintage cars, etc.), jewelry is included in the Knight Frank Luxury Index. Over the past year they have risen in price by 4%, over 5 years - by 49%, over 10 years - by 142%. Among Knight Frank's top ten luxury goods, jewelry is second only to classic cars in terms of profitability over a long investment horizon, and.
What is easier to make money on?
Not all jewelry is suitable for investment. Mass-produced products are usually not suitable for these purposes; it only makes sense to invest in products that meet a number of criteria. When buying jewelry, experienced investors follow rules much the same as when buying art. Not all paintings will rise in price in the future, but you can safely invest in works by top artists and universally recognized masterpieces.
Experts say that ordinary jewelry designed for mass buyers is not an investment instrument. The products that fill the windows of chain jewelry stores are sold at a very high markup, not to mention taxation. According to Otkritie Broker analyst Andrey Kochetkov, such jewelry costs 2-3 times more than the precious metal and precious stones from which they are made. After purchase, jewelry immediately loses value, since upon resale it will not be possible to compensate for various markups - they will only look at the cost of the material and artistic value, if any.
Only certain categories of jewelry can increase in price in the future. According to the General Director of the Guild of Russian Jewelers Eduard Utkin, these include:
- Jewelry decorated with large natural stones. It makes sense to invest in them, since stones rise in price much faster than precious metals. Large gemstones are considered to be from 1 carat and semi-precious from 5 carats.
- With the second category everything is more complicated. Only a specialist will be able to assess the complexity of making jewelry and determine the potential for price growth of a product that is of historical value or a piece of modern art.
In any case, such investments involve expenses amounting to hundreds of thousands of rubles. If we are talking about a product of the 21st century, then perhaps it will only be appreciated in 20–30 years. Rarely does anyone manage to make quick money in this field.
According to the president of Singapore Castle Family office, Eldiyar Muratov, investing in jewelry is a privilege for wealthy investors. This is done only by the wealthy public, who are not concerned with immediate benefits, but expect to earn good money in the future. By rich investors, Eldiyar Muratov means people who manage $5 million or more of their own funds.
However, not all experts agree with Eldiyar Muratov. For example, Andrey Kochetkov claims that you can make money on relatively inexpensive products intended for the mass consumer. One of the options involves taking a train to the UAE. In the Emirates, a large assortment of gold jewelry is always on sale, which by weight is only 10–15% more expensive than scrap gold. Such an investment can bring profit quite quickly.
Advantages and disadvantages
It is not without reason that jewelry has been used for many centuries as a tool for savings. Their prices rarely show a sharp rise, but almost never fall. Usually, after purchase, it remains constant for some time, and then gradually increases depending on the dynamics of prices for stones and precious metals, as well as on how interesting the product is to collectors. It is almost impossible to lose money on such investments. Another plus is the high capital intensity of assets. Expensive jewelry solves the problem of concentrating a large amount of money in a small item. A safe the size of a shoebox can store a fortune.
Main disadvantages: low market liquidity, long investment horizon, prohibitively high entry threshold for many. The optimal investment horizon is approximately the same as at 20–30 years. In order to have enough funds to purchase a suitable item at an auction, it is advisable to have $300–400 thousand. The exact amount that may be required is difficult to determine. It happens that bidding starts at $100 thousand, but in the process of competition for the possession of a promising lot, the bar rises to $2 million.
It is very difficult to sell jewelry profitably and quickly, since prices rise slowly, and the associated costs are high: you have to pay a commission to an auction or other intermediary. The purchase also involves serious expenses: you need to pay for the examination and ensure safe transportation. The appraisal of the jewelry will cost at least 35 thousand rubles, the commission to the intermediary will be 0.5–3%.
According to Muratov, you can make money on jewelry within one to two years. The profit in this case does not come from the fact that the jewelry becomes more valuable from a historical point of view (you need to wait 10–20 years for this), but from the rise in price of precious metals and stones, increased demand and the ability to find a buyer. It is rare to succeed in such a business; it requires a certain amount of luck.
One of Singapore Castle's clients recently made good money by reselling a gold ring with a rare blue diamond. He bought this jewelry from a private collector for $2.1 million, and during the bargaining process the price was reduced by 8% from the original. After 4 months, the investor sold the ring at a closed auction for $2.75 million, the profit exceeded $500 thousand.
Nuances of choice
Among the factors influencing the cost of jewelry are: the name of the jeweler, uniqueness, history of ownership, characteristics of the stones and time of manufacture. The quality of the product, of course, must be at its best. The cost of jewelry is largely determined by the gemstone. When purchasing, an investor should pay close attention to its uniqueness and quality.
Irina Stepanova claims that there is now a good demand for colored diamonds, emeralds, sapphires and rubies. Also recently, non-precious stones have become more expensive: beryl, aquamarine, turquoise and tourmaline. The dynamics of them can be traced differently, but some stones seriously increase in price. For example, 15 years ago a carat of aquamarine cost $15, but now it costs about $300.
According to Muratov, if an investor wants to make money on rising prices gemstone, then it might make sense to order jewelry from professionals. This is not difficult to do: you need to buy a stone without a setting and find a jeweler whose work is in demand on the market. An exclusive product will be easier to sell for good price. The cost of work will be 2-3 times less than if you buy a similar decoration in a store. Savings will be achieved due to the absence of an intermediary and logistics costs. The total cost of the stone, precious metal and work is always less than the finished product in the store.
Another important nuance- origin of the product. Usually the jewelry worn famous personalities, rise in price faster, and there is greater interest in them from collectors. You can get information about the history of jewelry from jewelers. Jewelry houses usually keep archives; it is often possible to find the customer by the registration number of the product.
As for jewelry houses, Buccellati, Bulgari, Cartier, Chopard, Harry Winston, Graff, Mikimoto, Piaget, Tiffany & Co and Van Cleef & Arpels are now popular. However, not all products of these companies become more expensive every year. Appreciated exclusive jewelry, and the cost of mass products does not change much over time.
Experts recommend not letting the work of individual masters, known for their unique works, out of sight. In recent years, jewelry from Georges Braque, Peter Chang, Coco Chanel, Andrew Grima and Suzanne Belperron have been highly valued on the jewelry market.
In addition to the creations of recognized masters, the products of young jewelers are very promising. In particular, experts recommend investing in young Russian brands. So far their cost is underestimated, since wide popularity has not yet come, but the quality of work and artistic design are sometimes at a very high level. Such jewelry is clearly undervalued and will become much more expensive in 5-7 years. As examples of promising companies, Eduard Utkin cites participants in the international jewelry exhibition that was recently held in London. These are "Russian Gems" jewelry houses: Ringo, Argentov, Kabarovsky, Chamovsky, Echo, Treasure House and Aldzen.
Jewelry that became widely known during certain historical periods can also become significantly more expensive: for example, in 1900–1920. or in the 1950s. Such jewelry is constantly increasing in price because it has cultural and historical value and is in demand by wealthy collectors. According to Knight Frank, in the last decade, antique jewelry has risen in price by 63%, products created in 1945-1975. - by 73%, products of the Belle Epoque (1971-1914) - by 93%.
When selling jewelry, collectors are in a more advantageous position. For example, if there are several Van Cleef brooches from a rare series, then such a collection can be sold for more than all the items individually. It makes sense to collect not only the creations of one author, but also jewelry of one era. By selling all the jewelry from one historical period at once, you will probably earn more. But the search for a buyer may take a long time.