A year ago market representatives jewelry sounded the alarm: in the first quarter of 2016, demand for products 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 jewelry house"Shiko", 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, in the field of regulation of retail sales of jewelry, in the field of regulation of remote sales of jewelry. 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 go out to small stature. 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 jewelry business 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, in the summer months, every jewelry store in Vladivostok makes more than 50% of its 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 is not surprising that the jewelry trade has 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.
Over the past 3 years of working with jewelers, I have studied all the ins and outs of this business, so I will be happy to tell you 10 secrets, knowing which you will be able to buy diamond rings at the lowest price and with free home delivery.
And so, let's go in order:
1. Discounts of 30%, 50% or more are fake
Retail stores make every effort to get you to succumb to your emotions and make a purchase here and now. Markup on Jewelry reaches 500%, so they write an inflated old price and put a new one with a discount of at least 80%, but this does not exclude the fact that in a nearby store this product is cheaper even without a discount. Don’t give in to emotions, most likely you will find this product at a price 10-20%, or even 50% lower.
2. Prices in stores are radically different
It is important to understand that stores are wholesale buyers from jewelry manufacturers. Each store has its own wholesale price. For some it is lower, for others it is higher, depending on working conditions. Therefore, you should not be surprised that prices for the same products can differ significantly.
3. How to find the exact same product in another store cheaper
If you like a product in a store, the manager will tell you the manufacturer without any questions. You won’t be able to buy this product directly, since the manufacturers do not work with individuals, but by looking at the article number of this product on the Internet or on the manufacturer’s website, you can easily find out where else you can find this jewelry.
Required: if you choose jewelry in online stores, then compare prices with other online stores. It’s done like this: copy the article number of the product you like, enter it into a search engine and compare who sells this product for how much. By comparing even one product, you can easily understand who has what markup.
For example, let’s take a red gold ring with 1 diamond, price 14,770 rubles:
Now we copy the article, enter it into Yandex search and look at the prices of the same ring on other sites:
This is how you can easily determine who makes what markup on products. And such a markup on absolutely all products in the range.
4. Lifetime warranty, assay supervision and other certificates of conformity
On the one hand this important information, on the other hand, every production today provides a lifetime guarantee, is required to be registered with the Assay Office and has all the necessary certificates. No entrepreneur working with jewelry in Russia can work without these documents. Therefore, if in some place they give it to you for some incredible competitive advantage, then most likely they are trying to divert your attention from the inflated price :)
5. Prices are cheaper in online stores
Over the past 3 years, an endless number of online jewelry stores have appeared. In many of them, the purchasing conditions are much more favorable than in ordinary stores. They can offer free home delivery, fitting upon receipt, and payment by any in a convenient way and many, many other things. If buying jewelry is a conscious step for you, and not a spontaneous purchase, then you can save a lot when buying in an online store. Although be careful with them, sometimes the markup there can be simply cosmic.
6. “Masovka” sells best
The best item sold in jewelry stores is “masovka.” Usually these are unremarkable lightweight products with semiprecious stones, which are already produced by everyone who can. As they say, “our people love all kinds of shit.” But be that as it may, this “shit” sells best, which means most of the store windows are full
precisely these products.
7. Manufacturers steal jewelry designs from each other
Now I will tell you the main secret.
The most expensive thing when creating a new piece of jewelry is its design and 3D model. Small handicraft production cannot afford this luxury, and they stupidly steal 3D models of jewelry, producing exactly that very “masovka”. Accordingly, normal manufacturers employ 3D jewelry designers and come up with new jewelry every month. The birth of new products is very expensive, so manufacturers recoup their costs by producing these products only with precious stones, which increase the cost of new products, and, accordingly, the built-in profit. Therefore, every manufacturer, when releasing new collections, tries to sell their products as early as possible and as much as possible. As soon as his products are copied by others, releasing them with semi-drugs, the manufacturer begins to lose a lot in sales. And the race for new jewelry begins. Businesses are trying to find a balance between new enticements and masking. Everyone is trying to see from each other who is producing what. This is an endless process in jewelry production that reaches the point of paranoia.
8. The more expensive the product, the more the store earns from it
Often stores don’t bother with markups and stupidly multiply the wholesale price by 2 or 3. This creates a huge markup on expensive products. It’s one thing when a product retails for 3,000 rubles, but even a 2,000 ruble markup doesn’t seem terrible. But if a product costs 150 thousand or more than a million, then the margin from one sale can reach incredible sizes. Therefore, if you are buying an expensive product, be sure to ask for an additional discount and be sure that they will give it to you. And if you buy jewelry worth more than a million rubles, the store director or production owner will personally bring it home to you with a bottle of champagne and a bouquet of flowers.
9. Look for new items at jewelry exhibitions
All the latest trendy jewelry can be found at jewelry exhibitions. The largest of them, JUNWEX, takes place every year in September. Most of the stands there are occupied by our Kostroma jewelers.
10. Free delivery to your door
Online stores are often more motivated by service than offline sales stores. They don’t see the client in person and cannot persuade him to buy here and now. Therefore, we are forced to offer additional services that may be convenient for the buyer. And this could be free delivery of the product to your home, the opportunity to try on and reject the product, payment upon receipt and all kinds of gifts. Be sure to study the terms of purchase in the online store. Why adapt to the store and pay more when there are those who offer good conditions and a good price.
P.S.: Let me remind you that I live in the Kostroma region, where more than 1,200 jewelry enterprises operate and which is rightly called the Jewelry Capital. Well, if we translate this into human language, then approximately 9 out of 10 products that you see on the shelves of jewelry stores are products made in Kostroma;)
P.P.S.: Lowest prices for jewelry only in the store
Gold jewelry sold at retail has fallen by a quarter over the past five years, they reported. Rossiyskaya newspaper"in the Guild of Jewelers of Russia.
Russians' taste is improving, and massive chains as a sign of success are gradually going out of fashion. Photo: Victor Vasenin/RG
People are buying increasingly lighter weight products. For example, ball earrings, hollow chains, or actually wire rather than solid rings.
“If five years ago the average weight of gold jewelry was 2.6 grams, now it is 1.9 grams. That is, jewelry has become 27 percent lighter,” says Eduard Utkin, general director of the Guild of Russian Jewelers.
Buyers are saving because incomes have decreased and are not growing. Demand for jewelry has fallen this year, he notes.
Buyers can save money in other ways. Synthetic inserts are widespread on the market. Their use can significantly reduce the cost of products.
Stores regularly offer discounts, sometimes reaching up to 70 percent. Before the New Year, jewelry stores will also sell jewelry at discounts. But it’s not just a matter of saving, experts from Rossiyskaya Gazeta believe.
On the one hand, gold jewelry was a sign of prosperity, but now many do not have the opportunity to buy expensive jewelry, says Elena Topoleva, director of the Social Information Agency. On the other hand, aesthetic preferences have changed. “Wearing massive gold jewelry is no longer so prestigious. This is also an improvement in the taste of our citizens,” she notes.
Over five years, average weight jewelry fell by 27 percent
The economic motives for purchasing jewelry are also changing. “Weight loss may indicate that the population ceases to perceive gold jewelry as an investment instrument,” says Oleg Chernozub, head of the monitoring research department at VTsIOM. The desire to purchase heavy gold jewelry as an emergency insurance policy fades into the background. This means that the population is convinced that the economy is stable, the expert concludes.
People in general are saving less and buying more and more new things, and things that need to be replaced regularly. As a result, gold is being replaced by other goods, such as gadgets.
“Cunning and finely tuned advertising encourages people to constantly update their household appliances and cars. Someone, for example, buys cheap devices, while others chase expensive new products. Moreover, subsequent generations of the same gadgets may be no better than the previous ones,” says Elena Topoleva.
But expanded consumption in exchange for “golden” savings is simply the other extreme. It's not good that people spend extra money on completely unnecessary things. Moreover, such behavior is generally harmful to the planet. "We are stimulating the production of more and more new things that simply litter environment. It’s also worth thinking about this before you buy something,” advises Topoleva.
But if you really want to get some new thing, experts suggest another way. Today there are many opportunities to rent household appliances, furniture, gadgets. You can look, try and evaluate whether the desired item is really necessary or whether it is not worth spending your hard-earned money on something unnecessary.
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. Should you consider jewelry as an investment now? What pitfalls might such investments have? MirFin asked these questions to the experts.
Kuzma Kuzmichev, jewelry designer Kozmas jewelry:
“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 of 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).”
"The simplest, it would seem, way to invest in precious metals is to buy jewelry. The method is both interesting and pleasant. But at the same time, this option has many disadvantages. First of all, the price of jewelry depends relatively little on the fluctuations of the precious metal, since most of the cost is created by the labor of the jeweler. Secondly, the jewelry market is low in liquidity: selling jewelry at a realistic price is quite difficult. That is, if gold, for example, rises 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 cost. 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 during 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.