RUSSIAN JEWELRY MARKET

OVERVIEW 2009
FOR
ILYAS KUYUMCUSU
 Freelancer Artist Agency is pleased to present you the 2009 Russian jewelry market
overview. This work is devided in 3 parts: the market situation and the influence of the
world crysis on the jewelry consumption, russian consumers’ behaviour and brands
actually presented on the market.

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 russian jewelry market overview 2009

russian jewelry market

the influence of the crysis

russian consumers’
behaviour

brands presented
on the market

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 russian jewelry market
the influence of the crysis
According to the Novaya Gazeta Daily, Russia’s diamond market started to recover only this
spring. Adamas, the largest jewelry network, reached the last-year level in sales in “high” April.
And it boosted its wholesale 30% up already in May (against April).

“We are now getting a very important signal: jewelry is again perceived as an asset without any
corrections for the crisis,” says Pavel Sidorenko, General Manager of Adamas. “This is a bottom
marker. People are again buying and their interest towards eternal values is once again awak-
ened. However, the cumulative demand will still stay below the pre-crisis level for a long time. This
year, the jewelry market will decrease at least by 30% versus 2008. And the currently higher
demand may be due to redistributed shares in the field. Once small outlets closed their share went
to large-scale chains.” So jewelry “heavyweights” intend to grow further. Take, for instance,
Adamas, which optimized its staff in February and plans to open new stores to be once again
manned.

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 russian jewelry market
the influence of the crysis
According to forecasts, gold jewelry sales in 2009 will drop down 30-40%. Those jewelry net-
works, which have no own production lines, will face the greatest difficulties, the Delovoy
Peterburg Daily predicts.
Jewelry marketers say that 2009 will be a complicated year for retail. Thus, the results of its first
three months proved a 30 to 50 percent slump in gold jewelry sales in Russia. Sergey
Dokuchayev, General Manager of OAO Russkiye Samotsvety, predicts a 40-percent contraction in
sales in 2009, whereas Olga Mironova, General Manager of the RosYuvelirExpert Analytic
Agency says it will be 30 percent.

On the backdrop of lowered payment capacity among the population, cheap silver jewelry is shin-
ing as ever greater attraction. According to Step by Step, a marketing agency, the inexpensive
jewelry market may go up by 20 to 25 percent in 2009. Jewelry manufacturers are still cutting
their way through a slack season, Perm’s Business Class Daily informs. According to market play-
ers, the market has notably sagged compared to the previous years. Perm-based jewelers say that
currently there is a 20 to 35 percent decrease in sales, whereas profit margin leveled to zero and
negative levels. Igor Zamorin, General Manager of Shik, a jewelry network, even argues that
sales dropped approximately 40 percent to one year ago.

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 russian market attractiveness

Despite the financial crisis, Russia and China remain attractive markets. Despite a rapid
decrease in domestic output of watches (by10-15% per year) and the reduction of the market
in whole (now less than 45-50% russians wear wrist watches), the russian watch market grew
in terms of value thanks to the increasing share of imported products, according to experts. In
recent years the demand for jewellery grew about 20%per year.

According to different estimates,the percentage of imported watch products on the

market exceeds 70-80%. at the same time a large portion of these imported products is
counterfeited. In whole, despite the expected decrease in demand, the russian watch market
remains quite attractive for international players of this industry. according to the russian state
statistics Committee, the 2007 watch market exceeded $850 million. The russian jewellery
retail market in 2007 equalled $4.3-4.5 billion. The recent years’ growth rates are about 20%.

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 russian consumers’ behaviour

The nowadays Russia, along with China and India, is one of the most attractive countries for the
jewelry business. Moreover, Russia turns to be the centre of the market for the goods of luxury
class. According to sociological research published in press, more than 13 percent of Russia’s pop-
ulation is permanent buyers of mass jewelry goods that cost 100 – 200 US dollars; less than 1
percent is the buyers that could afford themselves the jewelry goods that cost more than 3 thou-
sand US dollars. The leaders in the last mentioned position are the citizens that live in Moscow,
Surgut, Khanty-Mansiysk and Urengoy.

The Russian luxury jewelry market is already formed. Unlike in the U.S., pique diamonds are not
sold on it. Russian people basically demand better quality products. Quite a lot of fancy-cut dia-
monds are sold. Round diamonds are traditionally preferred.

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 russian consumers’ behaviour
RusJewellerExpert agency conducted the poll during the Junwex jewelry exhibition in St.
Petersburg this year. While answering the question whether the crisis influenced their decision to
purchase jewellery, 69% of the respondents said it had no influence. only 4% of the respondents
indicated jewellery purchase as good investment. 31% of the respondents plan to reduce expenses
including 5% reporting that “It’s not time for buying jewellery”.
The economic situation has had the least influence on jewellery purchases
by female employees, but has more influenced the reduction of consumer activity of managers,
both men and women. The crisis has affected the mood neither of youths under 20 years old, nor
people over 50 years old: they plan to purchase jewellery to the same extent. Their purchases
constitute 5% and 16% of all sales respectively.

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 russian consumers’ behaviour

The attitude of consumers to brands has also considerably changed: for a long time the famous
brand influenced a purchase decisions of no more than 1% of the respondents. Now this figure
has grown to 37%. The most frequent consumer complaint (60%) was dissatisfaction with sales-
persons’ work quality. for example, the respondents specified a low level of professional knowl-
edge, unfriendliness, obtrusiveness, haughtiness – “they look at what you wear”. other com-
plaints concerned the product range offered by shops (32%) including poor variety, outdated or
uninteresting design, lack of products for young people and exclusive articles, a limited range of
sizes. also complaints were made with regard to lack of confidence in product quality, concealed
information about real manufacturers.

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 russian consumers’ behaviour

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 russian consumers’ behaviour

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 russian consumers’ behaviour

1 Euro = 46,17 Rub. 1 US Dollar = 32,69 Rub

August 2009
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 russian consumers’ behaviour

1 Euro = 46,17 Rub. 1 US Dollar = 32,69 Rub

August 2009
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 jewelry brands on russian market
Jewelry brands presented on russian market can be devived in 3 classes:

world top brands

big russian jewelry houses

emerging russian designers

Russian luxury jewelry market is already formed and can boasts a big quantity of monobrand of
worldwide famous haute joaillerie houses such as Cartier, Pomellato, Bulgari, Van Cleef & Arpels,
De Grisogono, Chaumet, Tiffany, Graff etc. These brands consider russian market as a very impor-
tant one and usually present their collections in Moscow and St.Petersburg alongside with Paris,
Milan, London and New York
Russian consumers got one specific in comparison with europians, they are absolutely obbsessed
with the brands, so very often the brand obsession it is not only the question of style, but the ques-
tion of a social status.

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 big russian jewelry houses
and russian jewellery identity
Russian jewelry art is traditional and has a long history. Historically large-scale jewelry production
centers formed in Yekaterinburg, St. Petersburg, Moscow, and Kostroma. These cities are still the
headquarters for over 80 % of the jewelry sector companies. Prospective jewelers obtain profes-
sional education in colleges of St. Petersburg, Moscow, and Kostroma. The elite of jewelry design-
ers degrees from the St. Petersburg Mukhin University of Arts and the University of Design. There
are a lot of famous big jewelry houses suche as: Russkij Samotsvety, Zarina, Sadko, Estet etc.

Russian jewelry combines the understated elegance of the West with the bright luxury of the East.
The subtle art of the jeweler becomes the tool for creating magical jewelry, baubles, jewel boxes,
dolls, watches and Orthodox icons and samovars.

Until the time Russia was a monarchy, it was known for its jewelry, which was a bright contrast to
subdued and even prim Victorian and other West European jewelry of the time. Not only was
Russian jewelryopulent and luxurious, it was also a fine example of master craftsmanship. Jewelry
from Russia was synonymous with innovative design and unique ideas - think of gemstone stud-
ded Easter eggs, the painstakingly carved Matrushka dolls, or even religious icons ornamented
with Byzantine filigree work. Russian jewelry also depicts unusual themes. Birds are a frequent
motif, because they stand for love, permanence, and protection.
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 new russian designers:
ananov
Appeared in the market in early 90s of the XX century. It is hardly the only Russian World jewelry brand. It is associated
completely with its founder and owner Andrei Ananov. Being a stage director by his first speciality A. Ananov professional-
ly controls the information flow. He is an author of several biography books, film and TV stories, numerous articles and
interviews dedicated to his own extravagant adventures in upper spheres and certainly containing ingenious essays about
the jewelry work. “Andrei Ananov is the most famous jeweller of Russia. Moreover, he is a social phenomenon symbolizing
our life of last decades, nearly a literary character with stories of stage direction, underground jewelry work, the rush of a
young capitalist and the confidence of the new Russian wealth… A. Ananov: my goal is not money, the goal is to go down
in the in the Russian history as the great Russian jeweller” .

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 new russian designers:
kabirski
German Kbirski represents one of the youngest Russian jewelry brands. People in the industry started to talk about Kabirski
for the first time in the year 2000.
His rings, necklaces, chokers, earrings, and bracelets are totally unlike anything one would find within the Russian school.
German Kabirski is more about today’s trend of globalization. He plays with geometric shapes and uses these forms in
building the concept of his brand. He works with materials that many other jewelry designers would view as unworthy of
their attention. He has no nationality in his art, however he has his own face and style.

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