Prices Jewelry doubled in a year. To survive the crisis, chains are reducing purchases of imported goods, increasing the amount of silver on shelves and closing outlets. The Secret found out how the conservative market changes during a crisis.
Loss of clients
According to the Guild of Jewelers of Russia, prices for jewelry increased by 50% over the year. In July of this year, the analytical company Watcom estimated that traffic in the capital's shopping centers decreased over the year by an average of 6%. The worst situation is in medium and small shopping centers, where traffic fell by almost 17%. In such conditions, players have to reconsider their assortment and close their outlets.
“Now everything depends on the company’s ability to work with low traffic,” says Dmitry Baranov, operating director of the Adamas network. In May, the company managed to return to a slight increase in sales thanks to a targeted loyalty program. “We select the assortment and price offer depending on the location of each specific store. For example, our store on Maroseyka has a completely different inventory from the one on Tverskaya,” explains Baranov.
During 2015, the number of jewelry stores in the country decreased by 25%. Some players have decided to go completely online. Thus, the Russian jewelry brand Alchemia Jewelery closed two of its monobrand stores at the end of 2014 and focused on sales through partner online stores. “Such stores have their own sophisticated audience, which comes just for unusual products, like ours. Refusal from retail outlets and promotion on the Internet played into our hands - now our sales are growing,” admits brand co-founder Igor Komov.
Photo: Artem Geodakyan/TASS
Import substitution
Against the backdrop of falling demand for jewelry, production volumes also decreased. According to estimates by the analytical company BusinesStat, since 2010, production volumes in the country have grown by 27% every year, and in 2014 this figure decreased to 8.4%.
“Everyone has reduced production,” says the first vice president jewelry house“Esthete” Andrey Panferov. - Some twice, some by 10–15%, some by 30%. If we talk about us, we have reduced it by about 20% in actual size.”
At the same time, imports of jewelry also decreased significantly. In the first quarter of this year, its volume was two and a half times less than in the same period in 2014. “Before the crisis, more than 60% of the products in stores were of imported origin - a lot was brought from Southeast Asia, both officially and unofficially. Today, due to the exchange rate, it has become unprofitable to buy imports. I think that by winter there will be an equal share of our and imported products on the market,” continues Panferov. He is confident that those left without imports large networks will turn to domestic producers.
Adamas decided to refuse to cooperate with foreign partners in the network after the cost of $1 exceeded 50 rubles. You can still find imported jewelry on the shelves of retail stores, but their share tends to zero.
“The demand for jewelry in general fell by 45%, and, in particular, for imported products - by 70%,” explains Eduard Utkin, general director of the Guild of Russian Jewelers. - Chains are purchasing more and more from Russian manufacturers - according to my estimates, imports on the market now account for no more than 20%. Imported producers will return to the market when the ruble strengthens. However, so far there are no forecasts for the strengthening of the ruble. I believe import substitution will continue in the next 10-12 years.”
According to Utkin, thanks to the reduction in the cost of work in dollar terms, Russian manufacturers should strengthen their position in foreign markets. If metals and stones all over the world are pegged to the dollar, then the work of the master is pegged to the local currency.
Bet on cheap materials
The ruble began to fall back in 2013, and at the same time the preferences of Russians began to change. Two years ago, silver products became leaders in popularity and have not lost their position since then. Gold products remain in second place. “Of course, silver has also become more expensive, but in silver designer jewelry the price of the material is dissolved in the cost of the work, so an increase in price by one and a half or even two times cannot seriously increase the price of the finished silver product,” says Natalya Bryantseva, founder of the Natalia Bryantseva jewelry brand.
The main share of the jewelry market falls on the middle and low price segment, while luxury products account for only 10%. Market participants predict a decline in the quality of products in inexpensive stores. “Manufacturers in the mass segment will more often make jewelry from gold of the lowest standard, reduce the number of diamonds in products and reduce other characteristics of jewelry that the buyer is not very knowledgeable about,” says Kuzma Kuzmichev, founder of the Yekaterinburg jewelry brand Kozmas.
"Sugar". According to the founder of the company, Svetlana Efremova, the prospects for the niche are obvious: “A lot has changed over the year - if before I had difficulty finding new brands, now I receive messages from young designers consistently once a day.”
However, many market participants are pessimistic. The real market contraction will happen next year. "It's no secret that New Year- the best period for the jewelry industry. Everyone wants to capture him. Based on the conversations we hear at exhibitions, many are planning to close down their jewelry business after the holidays,” concludes Dmitry Baranov.
Cover photo: Artem Geodakyan/TASS
The purchase of mass-produced jewelry, which is sold in chain jewelry stores, cannot be considered an investment instrument, experts say. “On jewelry for consumer consumption in Russia, there is a very large markup by sellers, not to mention taxes. Such jewelry is two to three times more expensive than metals and precious stones, which are used in them,” explains Otkritie Broker analyst Andrey Kochetkov. After purchase, they immediately lose part of the price, which is associated with various markups and production costs, since they can most often be sold based only on the price of the precious metal.
Only certain categories of jewelry may increase in price in the future. “Firstly, these are products with large natural stones, since the cost of stones grows much faster than the cost precious metals“,” lists the general director of the association “Guild of Jewelers of Russia” Eduard Utkin. Stones weighing more than one carat are considered large on the market among precious stones, and among semi-precious ones - from about five carats, the expert clarifies.
The second category is jewelry that is complex in execution and artistic design, which have cultural or historical value, are works of art or antiques. According to Utkin, the cost of products in both cases starts from several hundred thousand rubles, and the value of a unique product can only be fully appreciated after 20-30 years.
Investing in jewelry is a matter for wealthy investors, says Eldiyar Muratov, president of the Singapore Castle Family office. “Investments in jewelery houses are only available to the wealthy and are aimed at preserving capital and achieving significant price appreciation in the future,” he says. By wealthy we mean the public with assets of $5 million or more, the expert clarifies.
However, not the richest investors can bypass the restrictions and make money on jewelry, experts interviewed by RBC are confident. For example, says Andrey Kochetkov, you can try to find jewelry with a lower markup. “If you have the opportunity to visit a country like the UAE, then you can buy gold jewelry from local jewelers at a 10-15% premium over the price of gold on the exchange. It is quite obvious that such a purchase can justify itself in a shorter period of time,” he notes.
Advantages and disadvantages
There are benefits to investing in jewelry. The acquisition price in this case is not volatile and is unlikely to fall. “It will remain constant for some time, and then gradually begin to increase depending on the increase in the cost of stones and metal and the increase in demand from collectors. It’s almost impossible to make a loss here,” says Anna Kokoreva, deputy director of the analytical department at Alpari. In addition, the advantages include the high capital intensity of assets. “Precious items allow you to concentrate a huge amount of money in one small object. Due to their small size and weight, there are no problems with storing them,” says Eldiyar Muratov.
The main disadvantages of investing in jewelry are low market liquidity, a long investment period and a high entry threshold. As in the case of buying paintings, the investment horizon for jewelry is usually 20-30 years, and the cost of jewelry at auctions usually does not fall below $300-400 thousand. “It is difficult to determine the lower entry threshold. At auctions, jewelry can be sold starting from $100 thousand, but during the auction the cost can rise to $2 million,” explains Muratov.
It is also unlikely that such investments will be realized immediately, especially since this process requires special expertise, adds Anna Kokoreva. “To buy a valuable piece of jewelry, you need to spend money on expertise and safe transportation, and to sell it, you need to pay a commission to an auction or other intermediary, and also find a buyer,” she says. The cost of services will depend on the complexity of the examination and transportation. The minimum cost for assessing jewelry, according to the expert, starts from 35 thousand rubles. and higher. The commission to the intermediary can be 0.5-3%.
You can make money by buying jewelry in the short term (one or two years), however, income in this case will depend not on the increase in the historical value of the product, as in the future 10-20 years, but on changes in prices for precious metals and stones, competition among counterparties and, most importantly, on the level of demand for a particular product and the ability to find the right buyer, explains Muratov. Such cases are rare, but they do occur. “An example would be a transaction from one of our clients. An investor purchased a gold ring with a very rare blue diamond for $2.1 million from a private collector (with an 8% discount), and then four months after the purchase put it up for sale at a closed auction and sold it for $2.75 million, earning thus $650 thousand,” says Muratov.
How to choose
The cost of jewelry is influenced by several factors: the name of the jeweler, provenance (history of ownership), uniqueness, characteristics of the stones and the period of manufacture, says Irina Stepanova. “Also, of course, the quality and safety of the product and confirmation of the authenticity of origin are important,” adds Anna Kuchera.
The gemstone greatly influences the cost of jewelry. It is better for an investor to purchase products with rare and high-quality stones, experts advise. According to Irina Stepanova, now the most expensive and in demand are colored diamonds and precious stones such as sapphires, rubies and emeralds. Among diamonds, according to the Fancy Color Research Foundation (FCRF), blue diamonds showed the highest returns over 12 months - their average cost increased by 5.5%. According to Eduard Utkin, in recent years, non-precious stones, such as aquamarines, beryls, tourmalines and turquoise, have also become more expensive. “The price for each stone is different, but, for example, an aquamarine stone 15 years ago cost about $15 per carat, but today they give about $300 for 1 carat of this stone,” he gives an example.
By the way, if an investor wants to focus specifically on a precious stone, then creating custom jewelry can be profitable. To do this, you can purchase an unframed gemstone and find a professional jeweler who will make a masterpiece out of it, says Eldiyar Muratov. “Such a product may turn out to be “one-piece” and have no analogues, which will increase its value. The cost of manufacturing the product in this case will be two to three times less than when purchasing an analogue in jewelry stores. Savings will occur due to a reduction in distributor and brand markups, logistics costs and due to a minimum markup on the purchase of stone and scrap,” notes the expert.
Another point worth paying attention to is the origin of the product. As a rule, decorations with interesting biography rise in price faster than others. In addition, the likelihood of finding a buyer for them among collectors is higher. You can find out the history of jewelry in the jewelry houses themselves and from jewelers, if they keep archives with registration numbers of products and names of customers.
Among the famous jewelry houses, experts name Harry Winston, Buccellati, Van Cleef & Arpels, Graff, Tiffany & Co, Piaget, Cartier, Chopard, Bulgari and Mikimoto. However, experts warn that belonging to a large jewelry house does not guarantee that the price of jewelry will increase. If this is not an exclusive decoration, but a mass product, then, despite famous brand, its price most likely will not change significantly.
Experts advise taking a closer look at the works of individual craftsmen who have created and are still creating unique pieces of jewelry. Thus, among the high-profile acquisitions of recent years in the jewelry market, Knight Frank experts name the sale of jewelry by such authors as Suzanne Belperron, Andrew Grima, Georges Braque, Coco Chanel and Peter Chang.
In addition to recognized masters, you can also pay attention to the products of young, not yet famous jewelers and jewelry companies, advises Eduard Utkin. “Now it is profitable to invest in our young national brands. The cost of their jewelry is still underestimated, since there is no premium for brand fame, while the quality of workmanship and artistic design are at a high level,” the expert notes. Such jewelry, according to the expert, is obviously undervalued and will rise in price within five to seven years. Among young and promising Russian companies, Utkin names, for example, eight companies that took part in the London jewelry exhibition in September 2017: these are the jewelry houses ArgentoV, Ringo, Russian Gems, Chamovsky, Kabarovsky, Treasure House, Echo and Alzena .
An increase in value can also be expected from jewelry associated with certain historical periods - these are products created in the 1900-1920s, as well as in the 1950s, says David Warren, director of Christie's jewelry department in London. According to him , the cost of such jewelry is constantly growing, as they have historical and cultural value and are in demand by collectors.According to Knight Frank, over the past ten years the cost of antique jewelry has increased (by 63%), products created between 1945 and 1975 ( by 73%), as well as Belle Époque jewelry symbol period of European history between the last decades of the 19th century and 1914, by 93%).
Creating a jewelry collection can also have a positive effect on the price. “If you are lucky enough to collect a collection of Patek Philippe watches or Van Cleef brooches from a rare series, this increases its value and demand,” Irina Stepanova gives an example. You can collect not only works by one author, but also products from the same era. “If you combine pieces from the same historical period, when you decide to sell the collection, the pieces will likely be worth more than if you sold them individually,” concludes David Warren. According to him, this is a profitable tactic, however, it is almost impossible to predict with certainty whether the collection will increase in price and by how much.
You should only purchase exclusive jewelry from reliable sellers or directly from well-known jewelers. “Then this product will be accompanied by the necessary certificate of conformity and reputation. In other cases, there is no guarantee that this product is not a replica of the original or even a fake,” warns Andrey Kochetkov. You can monetize the increase in the price of jewelry by selling it privately or through various auctions.
The popularity of jewelry in Russia is growing every day, acquiring a spontaneous character. In the near future, such dynamics will be able to break the record of annual increase in demand for jewelry, which traditionally amounts to 25% per year.
However, consumers should take into account that precious jewelry is not an attractive investment item, being in many respects inferior to bank gold bars. Often, the after-sale value of jewelry is equated only to the cost of precious scrap.
Gold anchor chain
The guides of one of the largest jewelry factories in Russia, Adamas, make an unusual offer to visitors. Everyone is invited to test their strength and try to break a gold chain 0.3 mm thick. Not everyone decides to ruin a piece of jewelry. But an experimental experiment proves that a healthy adult man can break a chain of such thickness. Once the result is established, the jewel is safely sent for melting down.
Based on the stories of the guides, the thicker the chain, the greater the weight and force applied to it it can withstand. Amazingly, once at an exhibition of gold products, in order to demonstrate the quality of their products, employees of the Adamas plant managed to string a “nine” car on a long chain 0.8 mm thick.
This is not the plant's only record. In honor of the celebration of the 850th anniversary of Moscow, a chain 850 m long was made in the chain knitting workshop. It turns out that there is nothing complicated about this, because while the chain is being woven by the machine, it is immediately wound onto a huge reel. The main problem in setting the record was the transportation of the product. The challenge was to move the chain without getting it tangled.
The pattern of the manufactured chain is also of great interest. The anchor pattern is made from round links, and the armor pattern is made from oval curved elements. The pattern is formed by a special program installed on Italian machines. It is worth noting that all the plant’s products are manufactured using imported equipment, the technological characteristics of which contain the know-how of the enterprise and are therefore kept in the strictest confidence.
Purity of gold
A more challenging task is offered to plant visitors in the raw material storage area. Anyone can try to hold a real gold bar in their hands. It turns out that an ordinary person cannot tear a piece of pure gold weighing 12 kg from the table with one hand. Fortunately, jewelry production technology does not require such efforts on the part of workers.
To make the products, the gold bar is placed in a planer, where small curls are separated from it. To prevent future jewelry from being scratched or worn out, other alloy components are added to pure gold in strict proportions, on which the fineness and color of the product depend. The resulting composition is placed first in one and then in another special furnace, in which a new ingot is formed. From this piece of metal, a wire with a diameter of 0.2 to 1.8 mm is drawn, from which chain links are subsequently obtained.
It is worth noting that the technology for manufacturing gold chains at the plant combines the principles of mechanical engineering and metallurgy.
The birth of a new decoration
Depending on the complexity of processing the material and the pattern of the design, the creation of jewelry from the moment of receiving the ingot to the shipment of the finished product to the warehouse takes from one to two months. The result is chains and bracelets weighing 0.3-70 g.
In the days of crimson jackets, the weight of some chains could reach from 100 to 200 g. These types of links, like other jewelry, had to be assembled by hand.
Nowadays, creating a jewelry masterpiece requires well-functioning work at every stage. First, designers draw up a sketch of the future product, on the basis of which master fashion designers make the first sample of the future decoration from brass or silver. The resulting prototype is of great value, since if the first batch of jewelry is successfully sold, the sample will become the standard on the basis of which mass production will be launched.
Then the prototype is placed on a special leg - a sprue - and sent to the rubber mold workshop. There it is lowered into a block of special soft rubber, similar to plasticine. Under pressure from the press, the rubber is vulcanized, and the master receives a rubber mold with a prototype enclosed inside. Then comes one of the most crucial moments. The rubber mold specialist must very carefully cut the resulting product in half to remove the sample.
At the next stage, molten wax is poured into the resulting rubber matrix using special equipment, and as a result of solidification, a certain form of decoration is obtained, for example, a figurine of Christ for crosses. Using the melting sprue leg method, the jeweler places each figurine on a wax cylinder, which is sent to the foundry, where it is filled with a special solution based on fine gypsum.
Further transformations are hidden from human eyes. The gypsum mold is transferred to the oven and subjected to heat treatment (800 degrees). After the wax has completely flowed out, a gold alloy is poured into the freed, cooled cavities. After the metal has hardened, the gypsum flask is carefully washed away with a powerful stream of water. In order not to damage the gold parts, the plaster mold should never be broken or attempted to be split mechanically.
To assemble the finished product from the obtained gold parts, special tools are used: a hair of gold solder and the tongue of a propane torch. In this case, the master must have keen eyesight in order to complete the assembly correctly.
Not all gold glitters
It is worth noting that after separating the finished product from the mold, raw gold it seems dull and inconspicuous. In order for the jewelry to shine, it still has to undergo special processing.
The products are first placed in a mixer with hard plastic granules, then with sand from crushed walnut shells. Then they are washed and polished using special rotating rollers.
Work path strewn with stones
Decorating a product with precious stones makes an unforgettable impression. Using a six-power magnifying glass, the craftsman places the tiny stones into the prepared holes with extreme precision, then bends the microscopic burrs around to hold the stone firmly in place. All operations are performed manually and require special concentration and patience. In one shift, a master can process from 3 to 4 thousand precious stones.
Despite the widespread stereotype that women are more predisposed to small and routine work, it is men who often become jewelers.
To prevent gold from ending up in your pockets
Having once visited a jewelry factory, you can’t help but think about how employees avoid the temptation to take gold with them, and how management manages to control the theft of property.
Adamas managers shared a new method to avoid theft in production. Instead of forcing workers to undress before entering and leaving production, as was the case in Soviet times, plant management keeps records of every gram of jewelry issued for signature.
At the end of the work shift, the employee must return the same amount of gold and stones by weight as he was given at the beginning of the work day. This allows workers to move freely around the production floor while carrying jewelry. At first glance, the gold in an unsightly plastic bowl in the hands of one of the employees looks very funny.
New technologies of ancient craft
About two years ago the plant introduced new technology rhodium plating, on the basis of which, using electrochemical methods, jewelry is coated with rhodium, a precious metal from the platinum group. This technology allows you to increase the strength of the product and give it a snow-white shine.
Several years ago, this innovation was not to the liking of buyers, since after rhodium plating the jewelry looked like ordinary jewelry. Remnants of the Soviet past had an effect, when a person wanted everyone to know that he was wearing gold. According to the president of one of the largest retail chains, Center Jeweler, today’s youth are more loyal to innovations and put the quality of the product at the forefront, rather than public opinion.
Golden mathematics
According to the Russian Guild of Jewelers, income from the retail sale of precious items in the Russian Federation increases annually by 20-25%. Global sales volume in monetary terms is more than 100 billion dollars.
Analysts note that Russian market jewelry has no clear consolidation. The total number of registered enterprises operating in the jewelry industry is about 25 thousand.
According to the study, this area has a pronounced gender identification of clients. About 70% of the buyers are women, and the remaining 30% are men who purchase jewelry for their companions.
In addition, the demand for jewelry is seasonal. Gold products become most in demand during holidays (New Year, Valentine's Day, International Women's Day). Demand wedding rings, for example, increases during the wedding season (spring and autumn).
Experts also note that when buying jewelry, customers are most often guided by emotions, so it is very difficult to predict the next impulsive increase in demand.
According to a sociological survey conducted among Russians, jewelry took fifth place in the top gifts after souvenirs, alcoholic beverages, toys and perfumes. It is noteworthy that precious jewelry has overtaken mobile phones and various gadgets.
At the same time, the most popular, compared to other types of jewelry, were rings and earrings made of precious metals (22% and 18% of total demand).
Demand dynamics
According to the famous Italian jeweler Paola Valentini, the jewelry industry is subject to a certain cyclical nature. So-called macrotrends have a lifespan of about 30 years, and microtrends have a lifespan of about 3 years.
Using the Russian market as an example, a macro-trend can be seen in the falling demand for brooches, which have become less popular. And micro-trends, which are easier to notice due to their short duration, can be traced in the fall in demand for black diamonds. The popularity of this type of stone appeared during the 1990s among criminal gangs and lasted about 3-4 years. Signets with black diamonds were the distinctive sign of one of the gangster groups in the Moscow region. This sign became the fatal mark of local authorities, because of which they were easily identified by their enemies. After the death of the group members, the fashion for black diamonds quickly faded.
Precious metals are always in fashion
Changes in demand over time also affected precious metals. For example, in the early 1990s in Russia, products made of 585 gold, which had a red tint, were especially popular. Over time, Russian consumers switched to yellow foreign metal. And recently, the country has been swept by the fashion for white gold jewelry.
It is also noteworthy that platinum and palladium are still in less demand for Russian consumers. Only two Russian jewelry factories in Krasnoyarsk and Yekaterinburg are engaged in the production of products from these metals. At the same time, there are certain problems with observing the rules for their testing and branding.
A girl's best friend isn't just diamonds
According to the study, diamonds have traditionally remained the most sought-after precious stones, accounting for a third of total jewelry industry sales.
However, recently, jewelers have increasingly begun to use a large palette of stones in the design of products, including aquamarines, garnets, topazes, corals, etc.
Jewelry with richly colored rubies is also becoming increasingly popular.
Jewelry geography
Most jewelry factories in Russia use precious stones from different parts of the world in the manufacture of jewelry. At the same time, many foreign jewelers prefer to work with diamonds made from Yakut diamonds.
Despite the annual increase in demand for foreign jewelry, imports of finished jewelry occupy a small share of the total volume of the Russian jewelry market.
It is worth noting that Russian consumers give preference to domestic products. Therefore, taking advantage of this, some jewelry factories They pass off the foreign raw materials from which their products are made as domestic ones.
Foreign curiosities
The Russian Jewelry Network agency provided data that in 2006, 1.5 million imported jewelry items were sold in Russia. This figure can be compared with the dynamics of Russian jewelry production, but it is worth considering that only crumbs.
Russians are actively buying gold jewelry from much-touted Brazil, bright Thai products with colorful gems, prestigious designer beauties from Italy, as well as delights from world-famous houses - Tiffany, Van Cleef, Cartier. The main import supplier is Italy. Almost fifty percent of imported “overseas” products are produced in Italy, and this amounts to about 5 tons various decorations. Thailand and Türkiye shared second place. European manufacturers of the jewelry industry penetrate the Russian market legally and officially, while Asian factories fill the shelves with their products, sending them to the country in the bags of unknown “shuttles”. Analysts report that the shadowy jewelry market has already exceeded legal imports by 4%, which is visible in customs statistics.
Strict quality control - the choice of Russians
But the East does not have too much influence on the domestic market for jewelry innovations. The majority of Russian residents choose domestic jewelry. About 70% of Russians trust jewelry manufacturers from Russia. It is known that the end buyer is not interested in the names of manufacturers in 50% of cases. Experts expressed the opinion that this situation is due to the sellers’ faith not in the integrity of their compatriot factories, but in the correctness of the work of state control over Russian gold turnover. Expert Sergei Alkhazov said that only in Russia the assay supervision establishes the mark 585 on a ring or other product only in the case when the gold content is several units higher, while the Italians put 585 as a conventional figure. You can buy an Italian curiosity with an honorary mark of 585, and get an item with a real gold content that corresponds, at best, to 500 fineness. Alkhazov also warned that the quality of jewelry from other countries cannot be criticized at all; very often even a stone in jewelry turns out to be half glass.
Abroad, as experts say, concern about the quality of the product rests entirely on the shoulders of the seller. In our country, any scams involving precious metals and expensive stones entail criminal liability, which is ultimately borne by the manufacturer. The only guarantee of the quality of foreign jewelry is the well-known name of the seller. It is worth noting that prices in high-end boutiques, such as Bvlgary, are appropriate.
Tricks of Russian factories
Thanks to good attitude buyers, modern Russian factories do their best to allow some production tricks. They use a tolling scheme, which is currently permitted by law. Domestic jewelers export some of their raw materials to Asian countries, use the cheap labor of partner companies there, and then transport them to Russia finished goods. Subsequently, such a product is presented to Russian consumers as its own, and absolutely legally. It is almost impossible to control the scale of the above phenomenon.
Russian consumers also have their own unique characteristics. Compatriots have a habit of collecting a certain set of jewelry, and ladies from the West simply buy earrings that they like, without thinking or worrying about the fact that she does not have a suitable necklace. But the dominant global trend has already reached Russia. And it’s not about brands and preferences, but about attitude. Previously, jewelry was a real treasure, it was passed from grandmother to granddaughter. Nowadays, jewelry is an ordinary accessory. Jewelry that belongs to the mass market segment does not make any investment sense.
The goal is beauty!
During the Soviet Union, buying jewelry was considered a fairly serious financial investment. An expensive brooch or a massive “engagement ring” belonging to a citizen was at the same time legally considered part of the “gold and currency fund” of a considerable country. In practice, as Sergei Alkhazov explained, this meant an enduring liquidity treasure. The man realized that when buying a product made of gold, he would sell it at a higher price in six months. Jewelry was often in short supply.
The times of the USSR are over, and prices for precious metals have only increased. Currently, only 9% of buyers of gold goods consider such a purchase to be a profitable investment.
Today, you can return a small part of the funds that were invested in decoration at purchasing government offices. In such government agencies, jewelry is accepted at the price of scrap precious metals. The government agency does not have the right to refuse a request to accept a product. You are willing to buy good-looking rings at thrift stores for a little more. There are such shops in large jewelry networks. A merchandiser evaluates a used product and puts it up for sale at a price lower than that of new jewelry. The owner of the ring can oppose the opinion of the merchandiser, demand an increase in price, pay the store the cost of storing the product and wait for the sale of his property.
Pawnshops traditionally price everything they bring in at pennies. In fact, they don’t need the product; it serves as a safety net that the money they borrowed will be returned to them with considerable interest.
If we compare the purchase of jewelry not with existing investment instruments, but with any consumer goods, then the picture is not at all depressing. After a year, a gold ring retains a decent supply of liquidity, which is incomparable to a worn-out mobile phone of an out-of-date model or a worn-out jacket.
How not to make a mistake with investing?
A very expensive piece of jewelry is an excellent investment. Such products are made by both global and domestic brands that specialize in exclusive items. Such organizations include the Sirin company and the jewelry house of Marina Tsoi. Back in 1998, talented and original jewelry artists Maxim Voznesensky and Irina Dorofeeva came up with a unique way of presenting precious jewelry - a kind of theater. Their idea worked great. At the moment, this is the only domestic manufacturing company that competes with global brands at the International Exhibition in Basel. Nine years of work by the innovators of the Jewelry Theater brought the world 10 amazing collections. Many decorations are made by hand, some are made in a single copy.
Production exclusive jewelry very different from mass production, even high-level ones. The jewelry master receives a detailed sketch of the model from the designer, creates an even more thorough drawing himself, and only then begins to work. 750-carat gold is selected for the workpiece, and then the craftsman cuts out all unnecessary parts. No forms are used. One elite model is created from two weeks to several months.
Jewelry is a beautiful investment!
Artist-jeweler Mikhail Voznesensky claims that there are three components that make a piece of jewelry a legitimate investment item: an expensive high-quality stone, professional-level craftsmanship, and decent design. Voznesensky said that there had already been a number of cases when products produced by the Jewelry Theater were resold at much higher than the original price. From an investment point of view, it is more profitable to invest your savings in a large diamond than in any artistic delight. But domestic manufacturers do not offer to buy “just a diamond,” but only a diamond in a setting. However, if the price limits of the stone are very high, this cut is not significant.
A year ago, representatives of the jewelry market sounded the alarm: in the first quarter of 2016, demand for jewelry reached its lowest level since 2008. 7.7 tons of products were sold, that is, 17% less than the year before. This data was published by the World Gold Council.
At the end of 2016, Russian jewelers reduced the use of gold for the manufacture of products by 9.5% compared to a year earlier - to 30,984 tons.
Thus, Nizhny Novgorod jewelers have been significantly losing customers since 2013. The answer is simple - there is no demand. According to Newsnn.ru, the main buyers are now newlyweds who order rings, sometimes even on credit. Market participants say the reason for this is the fall in household incomes. Thus, for January-May 2017, according to Nizhny Novgorodstat, the income of the population Nizhny Novgorod region decreased by 6%.
The owner of the Nizhny Novgorod jewelry studio, Alexander Molyakov, says that the revenue of his boutique fell several times immediately after the new year of 2014. “If you compare how much I earned before 2014 and how much now, it’s 3-4 times less,” he told Newsnn.ru. “Previously, the average bill was around 50-60 thousand rubles, now they don’t even reach 20 thousand.”
Mr. Molyakov also noted that colleagues in other regions have an equally difficult situation. “I communicate with all regions of Russia and always ask everyone “how are you?” And everything is bad for everyone, even in Moscow. Although Moscow, one might say, is a different planet,” he noted.
According to Inkazan.ru, the decline in demand began back in 2014. This happened as a result of the devaluation of the ruble, the introduction of sanctions and a decrease in the state’s export revenues from raw materials, wrote the Golden Council. Since then, the industry has continued to be in a fever: due to the crisis, the average bill and weight of products sold fell, and large players were forced to leave the market. As some market participants noted, only classic items with a single large diamond continued to be sold relatively steadily. Apparently, this even prompted the Russian Ministry of Economic Development to think about lifting the ban on sales of jewelry via the Internet.
And in Rostov, experts suggested that the introduction of paid parking also had a negative impact on jewelry market in the region. As he suggested in a conversation with Rostovgazeta.ru, p. representative of the Shiko jewelry house, the drop in sales became noticeable after the introduction of paid parking in the center, where most of the jewelry stores in Rostov are located. “Of course, there is a glut in the jewelry market, but people have also started to filter out due to the fact that since October 2016 it has become difficult to park in the center. Pedestrian zones have been opened, there are fewer parking spaces, and if there is any, it’s all for a fee. People and they stopped coming to the center to shop,” said the agency’s interlocutor.
Changes in the economy, legal norms, and city structure have affected the quality of products, says a representative of Jewelry Workshop No. 1 in Rostov. “Nowadays, to make jewelry cheaper, they are made hollow, light, the quality is lower, and they are often silent about this. Therefore, buyers need to look at the tags carefully,” the expert notes. If the situation worsens, a further decline in product quality is possible.
The assortment and number of employees in the jewelry market is being reduced. “In recent years, fewer enterprises have begun to close, two or three in a few years. But jobs and assortment are being cut everywhere. In general, production stops, losses do not allow development,” says Alexey Ivanov, director of the Golden Paradise company. He attributes these changes to the impact of high rents for jewelers. “If the state controlled rental prices, it would be better,” the director believes.
In Stavropol According to the leading analyst of the Analyst-Service company Anton Bykov, the decline in retail sales of jewelry began in 2014. In 2015, the decline accelerated by about 15%, in 2016 - up to 30%.
“There is a stratification of consumer society. There is a large market for low-quality “brilliant” products, and there is a market for expensive branded products or custom-made products. The second direction is interesting for those who understand art and have the money to order it, the rest, if they come for jewelry products, they are trying to save money,” Alexey Smolnyakov, owner of the Zlatokuznets jewelry business, commented to NewsTracker.ru.
He notes that all this is happening against the backdrop of a general decline in the number of clients, which is forcing jewelers to look for ways to earn money and do work that they would previously have refused due to simplicity and cheapness. At the same time, according to Smolnyakov, it is now more profitable to purchase custom-made items, since, if all parameters are agreed upon with the master, it can be cheaper than buying a similar item in a boutique.
As told to NewsTracker.ru, jeweler Alexey Kalashnikov , orders have become “lighter” from an average of 4-5 to 2-2.5 grams, and the materials people prefer have become simpler. For example, diamonds have practically disappeared from orders. The fact is that people in the region are ready to pay on average up to 10 thousand rubles for a product, while a couple of years ago this figure was at the level of 20-25 thousand rubles.
The Guild of Jewelers of Russia believes that problem No. 1 is a decline in production and sales, a drop in demand. Over the past three years, the average weight of products made from gold has decreased from 2.6 grams to 1.9 grams, experts say. Exports are falling, in 2016 – minus 34%. Added to these problems are claims from tax authorities who suspect jewelry companies of creating schemes to evade VAT payments. Jewelry companies, in turn, consider these claims to be unlawful. Russian banks are not very willing to give loans, considering the industry to be a high-risk area. Fines and the number of checks on compliance with legislative requirements in the field of regulating the circulation of precious metals and precious stones, in the field of combating money laundering of criminal proceeds, in the field of regulating retail sales of jewelry, in the field of regulating remote sales of jewelry are growing. And this is not a complete list of problems.
It should be noted that the jewelry market was influenced by new legal norms. On January 10, 2016, amendments were made to the law “On combating the legalization (laundering) of proceeds from crime and the financing of terrorism.” And now, when purchasing jewelry worth more than 40 thousand rubles in cash or 100 thousand by card, the buyer is required to present a passport, and the seller must transfer this data to Rosfinmonitoring.
“These are excessive standards today. Nothing prevented those who wanted to launder money from doing so,” says the President of the Chamber of Commerce and Industry Russian Federation Sergey Katyrin. In the program of the RBC TV channel “Business Vector”, he made several proposals for the development of the jewelry industry in the country. The proposals of the President of the Chamber of Commerce and Industry of the Russian Federation, Sergei Katyrin, are aimed at ensuring that the state has as little influence as possible on the development of the industry.
“Most of our proposals do not require any finance at all and are based on the fact that it is necessary not to interfere with the development of the industry and, if possible, remove the obstacles that have arisen today, and it will develop even without any financial support,” the president said Chamber of Commerce and Industry of Russia Sergey Katyrin.
In addition, Russian manufacturers complain about strict government regulation of the export of precious metals and stones, which was laid down in Soviet times. To export goods to the Russian Federation, it is necessary to spend more than 1.5 months obtaining permits, which is much longer than, for example, in China. In this regard, the export of jewelry abroad decreased by 6 times compared to 2013 - from $780 million to $117 million. To reduce costs, some enterprises began to transfer production abroad.
“The fact is that these countries have created more favorable conditions for the production of jewelry, both in terms of taxation and regulation of activities,” explains Mr. Utkin. “For example, the level of taxes in Kyrgyzstan is 2 times less than "with us. And taking into account the fact that we now have a common market, it is more profitable to produce products in Kyrgyzstan or Kazakhstan and sell them in Russia."
The jewelry industry is also a part of the economy, and it is natural that all trends - good or bad - affect it, albeit not immediately, says the president of Almaz-Holding. Flun Gumerov. According to him, due to the crisis in 2014, the market for gold products in weight terms dropped by a little more than 10%. In 2015, the collapse already reached 40%, and in 2016 it ended with a drop of about 12%. Almaz-Holding itself, thanks to a complete restructuring of production, managed to level out Negative consequences and grow to a small height. Now prospects for growth in sales and output are gradually beginning to appear on the market, says Gumerov.
So, In recent years, in the Primorsky Territory, the jewelry business has acquired a colorful regional feature. We are talking about increased interest in noble metals Asian buyers - especially with the arrival of the summer tourist season and the arrival of ocean liners from Asia-Pacific countries. Guests - mainly from China - sweep away the entire “average bill” in an avalanche-like stream: Chinese citizens most of all fell in love with white gold in the middle price range (from 500 to 4000 rubles) and red stones. According to market participants, during the summer months every jewelry shop Vladivostok makes more than 50% of sales from this client segment. Many entrepreneurs negotiate in advance with tour guides for a certain percentage, and they lead potential clients to the desired store. According to the Consulate General of the People's Republic of China in Vladivostok, in 2016, the regional center alone was visited by 420,000 citizens of the Middle Kingdom, this is an all-time record. It's no surprise that trade jewelry received a new impetus: in the center of Vladivostok you can take a jewelry promenade surrounded by signs in Chinese.
In addition, according to According to the Assay Office, in the first quarter of 2017, almost 8 million gold jewelry was produced in Russia. This is 20% more than in the same period last year. For the first time since 2013, the industry is showing growth. It looks like consumer interest is slowly returning and the industry is staying afloat.