Jewellery Russia 7 by JUNWEX

J E W EL L ER Y RUS SI A

№ (7) September, 2011

Official REPRESENTATIVE in Russia

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Russia Should Use Its Advantage Russian Customer’s Portrait in the Exhibition Interior Russian Watch Salon JUNWEX Watch

JEW ELLERY RUSSI A

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DISTRIBUTION OF THE MAGAZINE

Frequency

 99% of jewellery retailers and wholesalers of Russia



7 issues a year

Circulation 

14 000 copies



116 pages

 The fairs of jewellery RUSSIA Exhibition Programme

The most distributed B2B magazine on the jewellery market of Russia Advertisement space First cover Second cover Third cover Fourth cover First page advertisement Two pages advertisement Full page advertisement 1/2 page advertisement 1/3 page advertisement

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You can place in our magazine: • Full page advertisement: we can produce the comprehensive model • Editorial article, interview: assistance in article writing • “News” Section: article about novelties, manufacturing, congratulations, etc. International Department Tel.: +7 812 303-98-60 Fax: +7 812 320-80-99 E-mail: jewellery@junwex.com

Dear Reader, W

e would like to present the latest issue of the international edition of the JUNWEX Jewellery Russia Magazine – a project of RESTEC JUNWEX Media-Holding, Jewellery Russia Publishing House and Russian Jewellery Trade Club. This issue includes the most interesting and up-to-date information for the international jewellery market: analytical reviews comprehensively characterizing jewellery business in Russia and articles about operational experience of foreign companies on the Russian market, as well as interviews with representatives of the industry reflecting prospects of cooperation with foreign partners. JUNWEX Jewellery Russia, established by the Russian Jewellery Trade Club and RusJewellerExpert Consulting Agency, is the most distributed and reliable В2В edition in the Russian jewellery market. The target audience of the magazine comprises investors, CEOs, commercial directors, top managers, heads of sales departments, commodity researchers, jewellery enterprises of small, medium and large scale, and everybody who is interested in further development of business in the jewellery industry. The magazine JUNWEX Jewellery Russia is distributed: • to a database of members of the Russian Jewellery Trade Club including more than 7000 most significant jewellery stores in Russia; • to a database including all manufacturing enterprises from the jewellery industry; • to participants and visitors accredited at all Jewellery Russia Programme Exhibitions; • to a list of VIPs (state officials, regional administrations, business elite); • to subscribers. The materials of this edition represent a comprehensive range of information relevant for jewellery business. JUNWEX Jewellery Russia is a professional tool for establishing partner relations and effective promotion of business. We are sure that every reader of the English edition of Jewellery Russia Magazine will find on its pages not only interesting, but also necessary and helpful information regarding the Russian jewellery market.

Jewellery Russia Publishing House is a recognized leader in the market of mass-media industry in terms of circulation: 2,500,000 hard-copies of B2B JUNWEX Jewellery Russia magazine annually, and this figure is constantly increasing. It also publishes B2C “The Best Adornments in Russia” magazine (155,000 copies, 8 issues per year) presenting key information about the latest trends in the jewellery industry.

Editorial

Market JUNWEX – Jewellery Russia Magazine is the official media partner of CIBJO (World Jewellery Confederation) in Russia EDITORIAL BOARD V. Budny, Head of Jewellery Russia Programme B. Borisov, First Deputy Director of Russia Assay Office O. Mironova, General Director of RusJewellerExpert Consulting Agency A. Gorynya, Chairman of Russian North West Union of Jewellers G. Kovaleva, Chairman of Judges of a Jewellery Contest within the Jewellery Russia Programme G. Cavalieri, President of CIBJO D. Percossi Papi, Jewellery Designer, Italy T. Noskova, Deputy Chief Editor V. Puryguin, Director of Jewellers Guild GOLDEN RING of RUSSIA K. Avakyan, President of FORMIKA Company V. Meshalkin, Federal Jewellery Holding GOLDEN STANDART ESTABLISHER Russian Jewellery Trade Club RusJewelleryExpert Consulting Agency EDITORIAL STAFF V. Budny, Publisher T. Noskova, Editor-in-Chief I. Fedorova, Script Editor Y. Runova, International Department Editor A. Dobrov, Art Director D. Becetskaya, Designer V. Revelisov-Krumer, Project Director E. Popova, Photographer (Photo Studio JUNWEX) L. Lebedeva, Proofreader D. Ivanova, Subscription Department D. Popova, Circulation Department ADDRESS 12 Petrozavodskaya St., St.Petersburg, 197110, Russia Tel.: + 7 812 303-98-60, +7 812 320-80-99 E-mail: jewellery@junwex.com www.junwex.com Printed by ScanWeb OY, Korjalankatu 27, 45 130, Kouvola, Finland. 5 000 copies. Materials are not returned and not reviewed. All rights reserved. No part of this publication may be reproduced in any form without the written permission of Jewellery Russia Magazine. Reference to the journal is required. Jewellery Russia Magazine is registered by Federal Service for Supervision of Legislation in Mass Communications and Protection of Cultural Heritage in the Russia’s North-West Federal District. Registration Certificate PI #FC2 - 8476.

4 8

Should International Jewellery Companies Work in Russia? Russia Should Use Its Advantage

Analytics

10 12

Wedding Rings Russian Silverware Market under Crisis Conditions

Events

JEWELLERY RUSSIA Exhibition Programme

Russian Watch Salon JUNWEX WATCH

New Russian Style: History and Present Time

Russian Jewellery Trade Club

Russian Jewellery Trade Club presents …

Jewellery sales: Monitoring by Regions

Statistics

17 20 24

The Russian Customer’s Portrait in the Exhibition Interior These Stylish Men Women’s Logic

Experience

ATA Carnet: Customs White Elephant

4 Market JUNWEX magazine

RusJewellerExpert Consulting Agency:

Should International Jewellery Companies Work in Russia? Should international jewellery companies work in Russia if, according to assessment by the exhibitors of the leading Russian jewellery forum JUNWEX Moscow, the customs duties exceed the cost of participation in the trade show itself, and Carnet ATA is something that local officials won’t recognize? For this reason during the previous five years the trade show has lost the national pavilions of Italian, French, Hong-Kong, Indian, Turkish, Chinese and other jewellery associations. RusJewellerExpert Consulting Agency considers that still they should participate as Russia is a country of opportunities. The first to come for division of a new pie – a large distribution market of Russia – will be the winner. The developing Russian jewellery market is one of the free areas in the world for successful business nowadays.

any things are changing in Russia, though maybe not as quickly as one would like. The political situation is improving, including with regard to the main domestic problem seen in officials and bureaucracy. The coming elections in Russia guarantee the authorities’ interest in economic stability. Contrary to the common fears of the near crisis, the economic situation is improving (it’s no coincidence that there are traditional sayings characterizing the contradictory nature of the Russian soul). The population’s purchasing capacity is growing. The credit policy is improving. The middle class is being formed. These are confirmed by an 83% increase in real estate sales in the first half of 2011. Sales of deluxe cars have grown by 60%. In no other country one can meet so many expensive cars per kilometre of roads as in Russia. The customs and tax laws are being liberalized. Thanks to a successful work of the Customs Union “Kazakhstan-Russia-Belarus”, there are new opportunities for optimizing custom payments while importing jewellery collections. Custom duties for imported jewellery equipment have been cancelled. Russia is close to joining the WTO.

The first to come for division of a new pie – a large distribution market of Russia – will be the winner. The developing Russian jewellery market is one of the free areas in the world for successful business nowadays. In the post-Soviet period the country’s jewellery market grew quite rapidly. It was thanks to the fact that jewellery manufacturing had not developed widely in the Soviet Union. Only when free entrepreneurship was allowed, the number of jewellery manufacturers grew quickly for five years to near 1500 enterprises processing tens of tons of precious metal. Starting from 2000 the annual growth in the jewellery industry output in Russia was 20–30%, and by 2006 the output of manufactured jewellery products exceeded the combined output of all the ex-USSR republics. The maximum growth in retail jewellery sales was achieved by 2007 and during the two years preceding the crisis (2007–2008) it exceeded 25–30%. The pre-crisis autumn of 2008 was distinguished by a boost in demand for jewellery up to 90% compared to usual figures. This also characterises a special approach of Russians to jewellery helping the majority of the country’s population to secure their savings. Although, why only Russians? During the times of the Great Depression in the USA, one and a

Market 5

Pre-Crisis Jewellery Output during 2007–2008: 2007

Gold

Silver

130.32

223.24

1550

Billion roubles

201.99

7.813

Billion USD (average exchange rate 25.5516)

7. 905

0.305

Tons assayed (according to the Russian Assay Office) Roubles per gram (retail average)

TOTAL: market volume in 2007 was 8.21 billion USD (209.81 billion roubles).

2008 Tons assayed (according to the Russian Assay Office) Roubles per gram (retail average) Billion roubles Billion USD (average exchange rate 24.8740)

Gold

Silver

127.49

289.87

1700

216.733

11.595

8.713

0.466

TOTAL: market volume in 2008 was 9.18 billion USD (228.33 billion roubles).

Jewellery Output during the Crisis of 2009–2010: 2009

Gold

Silver

Tons assayed (according to the Russian Assay Office)

68,23

224,98

Roubles per gram (retail average)

1800

Billion roubles

122.814

15.749

Billion USD (average exchange rate 31.7669)

3.86

0.495

TOTAL: market volume in 2009 was 4.35 billion USD (138.56 billion roubles).

2010

Gold

Silver

Tons assayed (according to the Russian Assay Office)

76.60

246.84

Roubles per gram (retail average)

2000

Billion roubles

153.2

22.216

Billion USD (average exchange rate 30.3765)

5.043

0.731

TOTAL: market volume in 2010 was 5.77 billion USD (175.42 billion roubles). half times more jewellery was sold than in the good years. The crisis of 2007–2008 stopped the market development. In particular, the manufacturing of gold products was affected. At the same time a range of enterprises were able to adapt to the changed demand and take the lead. Such plants

as Diamant, Topaz, Adamant, Platina, Aquamarine and Jewellers of the Northern Capital caught up with the previous leaders by converting the difficulties into success. Gold products made by them considerably decreased in weight, but their number did not drop. It is thanks to these new leaders that the number of gold articles made in Russia

6 Market JUNWEX magazine

in 2010, at the background of nearly twofold decrease in used gold, went down only by 25%. At the same time the number of manufactured silver articles in the same period grew by 26%. This was certainly facilitated by rich resources of the country and available opportunities for the jewellery business growth. According to Rajesh Gandhi, one of the Indian entrepreneurs which came to the Russian jewellery market, who set up the now famous Choron Diamond jewellery manufacturing plant, “No other country can boast such opportunities for the jewellery business growth!” And he is right. The things that developed for centuries in the West have been generated in Russia for three years. Russia expects not only ready collections of new design. Here one can still start from scratch, which is difficult and often simply unreal on the other markets. The results of 2010 - 2011 show that the jewellery industry in Russia enjoys higher growth rates than the recovery of any other domestic industry sector. This year seems more optimistic. The successful participation of over seven hundred Russian jewellery companies in the February trade show

According to data provided to RusJewellerExpert Consulting Agency, in the first half of 2011 the Russian Assay Office assayed 1.18 million imported gold articles. The overall weight of the imported gold products was 3.28 tons. In 2010 there were imported 1.18 million articles weighing 4.81 tons. Therefore, only for the first half of the year the last year’s annual figures were practically achieved. If this trend is preserved, this year will yield practically a twofold increase in the number of imported gold articles. In the segment of silver products, the percentage of imported products remains at the last year’s level. In the first half of 2011, the assay offices assayed 5.65 million imported silver articles weighing a total of 34.23 tons. It is worth remembering that for the whole of 2010 the number of imported silver articles was 11.38 million with a total weight of 34.23 tons.

JUNWEX St. Petersburg 2011 evidenced good business expectations for the year. The trade show JUNWEX Moscow last September held at the most popular and significant venue for business development in the downtown of Moscow (VVC, former VDNKh) was one of the five largest jewellery events in the world. The results of the first half of 2011 evidence that the market is growing and its opportunities are expanding. The situation is optimized by the government’s trend toward a new industrial policy and modernization of manufacturing. International players have also got the feel of the market. The JUNWEX Moscow trade show to be held from 17 to 23 September 2011 will have exhibiting jewellery companies from ten countries of the world. The event will also present within the Russian Watch Salon such famous international watch brands as Aerowatch, Appella, Auguste Reymond, Cover, Continental, Edox, GC, Emporio Armani, D&G, Moschino, Chronotech, Anne Klein, Diesel, Guess, Casio, Citizen, Orient, Boss, Cavalli, Tissot, Seiko, L’Duchen, Jacques Lemans, etc. The optimistic expectations of international players on the Russian market are confirmed by a 30% increase of imported products assayed by the Assay Office in 2011. Russian customers show an increased demand for jewellery of Italian design, precious stones of many colours from Brazil, diverse supply terms offered by Turkish suppliers, products from China, Hong-Kong and Thailand. There is quite a serious motivation for operating in Russia. The organizers of the “Jewellery Russia” Programme including the leading jewellery trade shows united under the JUNWEX brand in St. Petersburg (in February) and in Moscow (in May and September) for the first time provide wide opportunities for international participation in the Russian shows in 2012. In connection with this and taking into account the global schedule of events, the dates will be reconsidered for these trade shows which have been previously planned to coincide with leading industry events in Hong-Kong, Las Vegas and Vicenza. This was done in the previous years in order to support the domestic manufacturer’s growth. However, nowadays the Russian jewellery industry is able to compete with international partners. We welcome new international exhibitors and invite national associations of jewellers, trade media, dealers and distributors of international brands.

YOUR GATEWAY INTO THE RUSSIAN JEWELLERY MARKET

EVENTS CALENDAR XX International Jewellery Forum

XI International Jewellery Show

VIII Jewellery Wholesale Trade Fair

JUNWEX

Junwex

Junwex Moscow

St. Petersburg 1–5 February, 2012 LENEXPO, St. Petersburg

New Russian Style 30 May – 3 June, 2012 All-Russian Exhibition Centre, Moscow

Junwex WATCH

15–19 September, 2012 All-Russian Exhibition Centre, Moscow

For further information and participation conditions please visit our website — www.junwex.com Do you want to exhibit? Please call +7 812 303 98 60 or e-mail: jewellery@junwex.com Do you want to visit? Please call +7 812 235 83 83, +7 812 320 93 11 or e-mail: club@restec.ru

Media-Holding RESTEC JUNWEX | www.junwex.com

8 Market JUNWEX magazine

Russia Should Use

Its Advantages

Exclusive Interview of Moti Orenstein, Leviev Group’s Jewellery Division Manager — How do you assess the current state of the jewellery business in the world? — A rapid increase in the prices for raw diamonds and gold, alongside the growing level of salaries in China and India resulted in a significant decrease in the monthly number of jewellery orders. Therefore, nowadays the global capacity for jewellery manufacturing exceeds the demand. — In your opinion, what is of higher priority for Russia’s future: development of diamond mining and sale of raw diamonds or development of domestic stonecutting and jewellery manufacturing? — Russia is rich in resources, gold and diamonds. There are technologies and enterprises for diamond processing. Output of domestic manufacturers should certainly increase compared to imports. This would also provide new jobs. Therefore, I think that development of jewellery manufacturing is the most promising for Russia.

Russia is a country with large gold and diamond resources and relatively low level of salaries compared to Europe and the USA, and should use its advantages to become a leading jewellery exporter on the international market.

— Are there chances for Russia to catch up with the global level in jewellery manufacturing? — There are many qualified jewellery specialists in Russia, which facilitates organization of mass production of jewellery. But such manufacturing enterprises should be developed in cities distanced from the capital, in regions where salaries are lower than in Moscow and there is a better offer of human resources. If the required quality of products is achieved and production costs are lowered, I see big chances for Russia to export products to Europe and America. But this will be possible only of the customs clearance procedure for exports is simplified. Russia is a country with large gold and diamond resources and relatively low level of salaries compared to Europe and the USA, and should use its advantages to become a leading jewellery exporter on the international market. Nowadays export activities are very complicated for Russian companies, they are associated with overcoming considerable bureaucratic barriers, extensive document processing and do not provide sufficient opportunities for free trade between countries. It is worth noting that exports from India and China, which are currently the largest manufacturers in the world, are much simpler.

Market 9

— In your opinion, what measures should the Russian government take to create optimal conditions for further development of the domestic jewellery industry? — Simplifying the bureaucratic system is the first condition for development of jewellery manufacturing in Russia. The country should be open for the world market, considerably decrease the taxes and simplify the customs procedures. I would like to reiterate that a country possessing such natural resources including precious metals and diamonds should use these advantages for development of jewellery manufacturing including exportation. — If we look at the Indian and Chinese expansion on the international jewellery market, in your opinion, which of these countries will win to become the leader on the world market? — Manufacturing in India is mainly oriented toward the American market characterized by demand for products of medium quality of 14 carat gold or lower, as well as articles with diamonds of low quality. The Chinese products are mainly intended for the European markets which require articles of 750 standard gold and high-quality diamonds and are very sensitive to high quality of making. The future does not look very optimistic for the economies of Europe and America, and the changes in them will show who is to become the market leader. It is worth noting that the domestic markets of India and China have grown for the recent years, therefore, a very large part of manufacturers oriented toward exports will consider the needs of the domestic market. — Do you think jewellery has lost its positions compared to products of other consumer markets actively using advertising and promotional techniques? — The market of exclusive jewellery is a more closed one. It has been opened and started to develop quite recently. I have no doubts that if the economic situation improves, promotion and advertising campaigns in this industry will be of adequate extent. — Are there any prospects for international investments in the Russian jewellery retail? — The Russian bureaucracy and business practices prevent international investors from entering

the Russian market. I think it will remain the same in the near future. — What form (large retail chains, boutiques, small shops, outlets in large shopping and leisure centres, etc.) will the jewellery retail take in the future? — In each Western country usually there is a small number of large federal chains and a great number of private family shops. — What diamonds enjoy the highest demand nowadays? It is worth noting that the global jewellery market requires diamonds weighing up to 0.3 carat. Jewellery purchase is regarded mainly as acquiring a fashionable accessory, not as financial investment. For example, they use diamonds of high quality in Japan, of medium quality in France, Spain and Italy, and of low quality in the USA. To compensate for the price increase on the world diamond market, diamonds of lower quality are starting to be used in manufacturing. But further growth of jewellery prices is inevitable.

The country should be open for the world market, considerably decrease the taxes and simplify the customs procedures.

10 Analytics JUNWEX magazine

Wedding Rings:

Demand for Originality

They consider that the tradition of exchanging wedding rings during a wedding ceremony originated in the ancient Greece. Since those times in the whole world a ring as symbol of the unity of souls and eternal love is worn on the ring finger because the artery passing through it goes straight to the heart and the ancient Greeks called it “the line of life”. It is certain that from the times of Homer, Plato and Aristotle life has changed greatly, however, wedding rings are still an indispensable attribute of the wedding ceremony. Nowadays brides and bridegrooms usually put on their fingers gold rings, although recently the traditional shapes, colours and design of these models have not been following the dogma. Materials, decorative elements and colour tinges may vary, but the main thing is mutual feelings symbolized by these rings. Also, it is important that the newlyweds like them.

he Primossa company specializing in production and sales of wedding rings annually conducts marketing research based on the sales results of its products in all regions (the network of the company’s regular customers has expanded from Vladivostok to Kaliningrad and from Yakutsk to Krasnodar). The company’s researchers observe an increased demand for wedding rings. The Russian government’s recent policy has been aimed at active support to young families and boosting birth rates aided by the stabilization of people’s incomes. Consequently, the number of weddings has increased. A great role is played by availability of extensive information in the mass media regarding the global wedding fashion, emergence of specialty showrooms and development of the global wedding industry. The current buyers of wedding rings want the product to be an interesting article

and not only a part of the wedding ceremony; this is a general tendency characteristic of the nowadays jewellery market. However, the consumer demand also demonstrates certain local differences conditioned by several main factors: level of living in the region, location and consumer audience of a shop, local traditions, etc. “In southern regions they prefer wide, ornamented and showy models, says S.A. Zherdev, General Director, Primossa. In central Russia, on the contrary, narrower and lighter rings are sold better. The Ural region is more active this season: jewellery shops order from us collections with diamonds and two alloy wedding rings. The customers from Siberia have also appraised the models with diamonds. As to two alloy rings, they sell well in all regions”. Thanks to a quite complex technique of diffuse welding interesting articles are made as if composed of gold layers of different colours. As a result of final finishing, original exclusive articles are

Analytics 11

Wedding rings sales by Primossa (annual sales for 2005-2010)

14.00

13.13

12.00 10.00

9.86

10.57

8.84

8.00

8.40 7.46

7.40 6.00 4.00

6.57

10.02

6.91

5.99

4.85

2.00 0.00

January February

March

April

May

obtained. Their cost is certainly several times higher due to labour intensity, but nowadays consumers understand that wedding rings is a value for long years of joint living and one should not save on them. When presented by Primossa on the Russian market, this novelty found recognition both among young people and people of the older generation. Thanks to a wide variety of colours and different shapes of articles the choice of such collections is practically unlimited. There is a growing demand for rings of distinct design versus conventional, and this has become an important incentive for development of the domestic segment of wedding jewellery fashion. If previously you could see only classical models in shop windows, now the offered range of articles is truly huge.

June

July

August September October November December

12 Analytics Название раздела JUNWEX magazine JUNWEX magazine

Russian Silverware Market

under Crisis Conditions Severnaya Chern

The financial crisis shaking the world in the recent years could not but affect Russia’s economy including the jewellery business.

ince 2008 a decreasing demand for consumer products has affected practically all industries. Beside common economic reasons for demand reduction (unstable socioeconomic situation of the population due to reduction of incomes) the jewellery industry faced another serious problem: growing prices for precious metals. The silverware market located within the jewellery industry’s boundaries experiences similar difficulties. At the same time, we th i n k that despite a great similarity to the j e w e l l e r y m a r ket , the silverware market has numerous differences. And the crisis here is conditioned by deeper reasons than the global financial and economic situation. Understanding these d i fferences may help finding a way out of the current difficult situation.

Silverware and Jewellery The jewellery industry and the silverware market have many things in common: • resources (they work with precious metals, mainly gold and silver); • legal regulations (they are governed by the same legal regulations); • manufacturers (the majority of silverware manufacturers also make silver jewellery); • retail (silverware is usually sold at jewellery shops); • problems (due to the above similarities they experience the same difficulties). As a result, silverware is a sort of subsector of the jewellery industry. What are the differences between the jewellery industry and the silverware market? Customers In our opinion, the customers purchasing silverware and customers purchasing jewellery differ very much. In 70% of cases silverware is a family purchase that is decided jointly. Even when silverware is purchased as gift for a certain celebration, the decision is rarely taken alone. Jewellery is an individual thing and its purchase is quite rarely discussed in a family (except high-cost jewellery). Silverware is more often purchased by couples, men and women at the age of 20 to 40 years. Compared to women, men buy silverware more often than jewellery. Purpose Even from their names it is clear that jewellery is purchased to adorn its owners while silverware is for household improvement.

НазваниеAnalytics раздела 13

Silverware is associated with health, traditions, prosperity and beauty while jewellery is associated with beauty, wealth and prestige. Therefore, silverware is a family purchase, while buying jewellery is, as a rule, individual. In our opinion, the key notion in this case is tradition. The tradition of adorning oneself emerged at the dawn of the humanity and is unlikely to vanish even in the long run: it can only change or transform. But women, as well as men, will always adorn themselves. As to the tradition of using silverware for household purposes, it is certainly younger, especially in Russia. For a long time the use of silverware was limited to few selected groups: initially the tsars and nobility, then high-rank officials. And only in the years preceding the crisis the circle of silverware amateurs started to extend in Russia thanks to improvement in citizens’ incomes and formation of the middle class. Percentage in imports At present the percentage of the imported silverware, according to our data, is considerably lower than the percentage of products sold by domestic manufacturers. There are two-three exporters on the market while even large Russian manufacturers are in a greater number. Their sales are higher too. In the recent years the assortment of Russian manufacturers has considerably expanded, especially among relatively cheap large-size silverware (jars, vases, trays). It is this segment that the majority of foreign manufacturers target. In 2007, silver jars were made by four domestic manufacturers: Severnaya Chern, Msterskiy Yuvelir, Russkie Samotsvety and Kubachi masters, and their products considerably differed from each other, and from the Italian analogues. The market has been supplied now with inexpensive jars of smooth silver made by Krasnaya Presnya and Krasnoselskiy Yuvelirprom. The largest importer of Italian companies’ products is a silverware manufacturer ZAO Intersilverlina (Argenta brand). From all the Krasnaya Presnya

variety of silverware, accessories and interior items only silver rattles are likely to be fully the monopoly of Italian and Portuguese manufacturers. The situation may change if China starts to manufacture quality silverware: it would be difficult to compete. But this risk applies to all economic sectors. However, taking into account that the traditions of silverware in China are not strong, according to our sources, this is unlikely to happen. Russia’s entry into the WTO will intensify the competition on the domestic silverware market. But this process will also affect all spheres of the economy, we are unable to influence it and it is not worth to cover it in detail. Crisis: Reasons and Consequences As noted at the start of the article, both the global situation and situation in Russia have dramatically affected the silverware market. As a consequence, the demand has considerably decreased and, consequently, silverware sales. This resulted in: • staff cuts both by manufacturers and sales companies. One can hardly find an entity which has not resorted to this unpopular measure to preserve the entire business; • manufacturers’ shut-down. According to our sources, at least two medium-sized manufacturers have fully stopped manufacturing (we hope that temporarily) and other two are close to it; • reduction of retail outlets specializing in silverware; • rapid decrease in output by large manufacturers. All these negative consequences are conditioned by quite objective factors which, in our opinion, require detailed consideration. Silver Price Growth on the World’s Exchanges. In early April of 2011, the price for silver reached its maximum for the last thirty years and neared the psychologically critical level of 40 USD per ounce. According to specialists, this could attract additional speculative capital to the market. In principle, this is exactly what

Argenta

The situation may change if China starts to manufacture quality silverware: it would be difficult to compete.

14 Analytics Название раздела JUNWEX magazine JUNWEX magazine

Msterskiy Yuvelir

happened: the critical level was surpassed at once and at the end of April the price for silver exceeded 48 USD per ounce. According to experts, the main reasons conditioning further silver price growth are as follows: • growth of global macroeconomic, currency and geopolitical risks, especially after the fall of the property and equity markets; • historical role of silver as money and means of investment; • reduction of resources in silver deposits for the recent hundred years, as, unlike gold, it is not practically recycled due to a lower cost and, like oil, disappears forever after industrial use; • considerable industrial demand for silver thanks to the economic growth in such countries as China, India and Brazil; • high and growing demand for capital investment, especially at the background of surging prices for gold; • underestimation of silver versus gold, as the historical correlation of 1:15 is far from the current proportion of 1:40. Loss of Traditions for Use of Silverware in Russia. In our opinion, this problem is most critical in Russia. Indeed, in the century when the majority of the active urban population, in order to save time, prefer using plastic forks in fast-foods, it might seem out of place to speak about furthering silverware traditions. Silverware is, first of all, a family value supposing a quiet, satisfied state of the society and soul. Unfortunately the modern society does not pay much attention to such values: • a considerable part of the population instead of a nice dinner with friends with expensive tableware would prefer to chat in social networks as people do not want to meet due a catastrophic lack of time; • the first options considered as gifts for a wedding or birthday are home appliances, and as personal purchase are IPods and IPhones or tours abroad because these are all the time on the TV ads;

• instead of traditional family values the mass media openly propagates free love while many associate silverware with family silver, i.e. related to the notion of family. Undoubtedly each time period has its own traditions and peculiarities. The opinion that the times of silverware have passed may stand to reason. However, the tastes and traditions of the society do not appear on their own. They are established by the society itself, and recently advertising and primarily TV ads have played a great role in this. Crisis: Solution Available The first two reasons for the crisis on the silverware market (global financial crisis and silver price growth) are quite objective, are interrelated to a certain extent and cannot be eliminated within one country or one industry. Therefore, in this article we just mention them briefly. As to the third reason (loss of interest in silverware), all concerned parties should make their best efforts to solve this problem: 1. government — as any state is interested in strengthening family values in its territory that logically should lead to growth in healthy native population. The state should be also interested in jobs created by silverware plants. 2. public jeweller organizations (associations, guilds and unions) — as the very purpose of these organizations is to assist its members, and the majority of silverware manufacturers (as noted above) are active players on the jewellery market. 3. silverware manufacturers as in the end they are most interested in demand for silverware and, consequently, in its promotion on the market. 4. silverware retailers and wholesalers. What is actually going on? The government’s policy for strengthening family values is practically limited to increasing the maternity capital which is unlikely to be spent on silverware. The government is unlikely to provide any assistance to silverware manufacturers on a country scale as, unlike the car industry, the number of the employed in silverware manufacturing is incommensurably lower and does not influence

Название раздела 15

the general situation in the country. Some support is provided to enterprises manufacturing silverware in the framework of folk handicrafts. However, firstly, we know no more than three such plants from all manufacturers; secondly, this assistance, except for VAT exemption, remains quite insignificant. The jeweller associations and guilds are oriented toward solving issues of the jewellery industry primarily related to jewellery (its manufacturing, importationexportation, sales). And as there are no separate unions of silverware manufacturers, the issues related to this market are not duly solved. Although silverware retailers and wholesalers are equally concerned with demand for silverware as manufacturers, they, firstly, have lesser funds, and secondly, more flexible to the market changes. It is simpler for them to change the merchandise depending on the demand than to make any additional investments in promoting the tradition of silverware use. As they are rather varied and disunited it seems quite problematic to organize them. Therefore, the silverware manufacturers remain face-to-face with their problems and under the current conditions not only have to buy silver, generate design, manufacture and sell products to a retailer, but also to convince potential customers that they need silverware. While the manufacturers more or less cope with their main tasks, practically none of them take care of silverware promotion. The concern is not about advertising of products made by a certain plant, but about a largescale campaign for promoting silverware in the society and reviving the traditions of silverware use. In our opinion, it is the silverware manufacturers who can undertake this function by joining their efforts. Otherwise the demand for silverware in Russia will considerably decrease in the coming years. Certainly, Russians will not cease to buy silverware completely, as some families keep these traditions without external influence, and are still likely to give silver spoons as gift to newborns. But, if no attempt is made to change the situation, the general trend will be deplorable. We think that such promotional campaign should be extended in time for at least a year,

Analytics 15

Antenori

be aired on the central television channels with involvement of manufacturers, showbiz stars, sportsmen, politicians, statesmen, etc. It might be a sort of a show or simply on different channels in different programs celebrities may tell or recollect something about silverware, or it may be something like public service advertising, or all these together, according to what is available.. It is important, in our opinion, that it is not late yet to retrieve the potential customer for the silverware market. Advertising is a very powerful instrument to influence the minds of Russians and it is high time to use it with good intentions. In fact, we suggest advertising not something like tobacco, alcohol, or a vacuum cleaner costing 150,000 roubles, but a product related to such eternal family values as beauty, traditions and health. Certainly, silverware is much more expensive than tableware of cupronickel or stainless steel.

16 Analytics Название раздела JUNWEX magazine JUNWEX magazine

For the last year the retail price for silverware products more than doubled, thus significantly reducing the number of potential customers. But looking around, one sees that every third car costs at least several tens of salaries of its owner. But people find money to buy cars because several times a day they see advertisements telling them that a car means status, comfort, convenience, etc. In our opinion, the same can be said about silverware, only it’s even more useful!

We do not pretend to provide a large-scale study of the silverware market peculiarities or the absolute truth in detecting the reasons for the crisis on the silverware market and suggesting solutions to overcome it. We only express our position on the issue that we are not indifferent to and our opinions on possibilities for solving it. We believe that it’s high time to actively bring back customers to this market. Yuri S. Shpinev General Director of silverspoons.ru webshop PhD (Law)

www.silverspoons.ru — leading webshop of silver tableware in Russia

Severnaya Chern

Statistics 17

The Russian Customer’s Portrait

in the Exhibition Interior Segmentation of customers is one of the most important marketing directions in the activity of any sales company. However, even taking into account the fact that many retail chains or separate shops collect their own database concerning this issue, an objective assessment of the situation on the jewellery consumer market can be made only accounting for information on sales at a trade fair. This information helps to track global trends in the demand evolution and changes in the portrait of the typical customer. Based on extensive experience of market research and professional analysis of its results, RusJewellerExpert Consulting Agency would like to present a “current summary” from “hot spots” of sales.

ndoubtedly, the majority of the jewellers’ target audience are women (74.1%), while men make up 25.9%. This proportion with insignificant fluctuations has been maintained for years and one can suppose that it was the same in the past centuries during which nobody conducted market research, and that it will remain such in the future. Women like jewellery and want to possess them. Full stop. But despite the fact that women are not indifferent to jewellery at any age, the majority of female customers (and customers overall) belong to the age group from 40 to 50 years old. This tendency is also quite understandable: this is the age at which people achieve a certain social status and level of prosperity when many everyday problems have been solved, children have grown up and live on their own, while there’s still a lot of life energy, wishes, creative and career aspirations. The percentage of customers in the age group of 30-40 years old is slightly lower (30.5%). It is also one of the most active consumer groups including ambitious, aspiring people who establish the surrounding reality and their personality, trying to keep up with time everywhere and always. Subconsciously

they perceive jewellery as a certain tool for achieving their aims and very often purchase this or that piece of jewellery merely for practical reasons. A small age group (14.4%) comprises young people at the age of 20 to 30 years. And the most uninterested in buying jewellery are teenagers up to 20 years old (4%). The latter are even less than pensioners whose percentage is 14.2%. Taking into account this fact, one can suppose that it’s not only the matter of low incomes characteristic of teenagers to a certain extent, but rather a consequence of low prestige of jewellery among teenagers. One can incite envy in their friends with help of a new mobile phone or an up-to-date gadget, but a ring with a precious stone won’t do for this purpose. At the same time this consumer group is huge and one should not disregard it. The topic of jewellery gifts should be widely advertised and promoted. Jewellery companies should use the experience of their colleagues who introduced such marketing techniques on the other consumer markets! The question about where customers prefer to purchase jewellery and watches allowed multiple answers. But the majority of the respondents (53.7%) confirmed the known fact: at a trade fair

But despite the fact that women are not indifferent to jewellery at any age, the majority of female customers (and customers overall) belong to the age group from 40 to 50 years old.

18 Statistics JUNWEX magazine

Preferred places for purchasing jewellery 10.3% brand catalogue

13.6%

12.8% nearest shop

Internet

42.8% shop of good reputation

53.7% trade fair

35.8% large jewellery retail chain

10.1% shop within a hypermarket

What is a guarantee of quality for the customer? shop’s membership in the Russian Jewellery Trade Club shop reputation presence of Russian hallmark manufacturer’s image unspecified

directly from manufacturers. This is likely to be related to a wish to save on the retail mark-up and more confidence in the quality of products offered there. 42.8% of the respondents would purchase jewellery from a shop of good reputation, 35.8% would choose a large retail chain An insignificant part of consumers prefer to purchase jewellery at a nearby shop on their way, the majority of these being men of 40–50 years. The conclusion is obvious: the owner of a jewellery showroom should pay more attention to his/her business reputation than to its location. As to purchasing jewellery abroad, this phenomenon is not so common to compete with domestic retail. And although residents of Moscow often travel abroad on business or for leisure, only 10.1% of the fair visitors report purchasing jewellery abroad. Therefore, for foreign companies wishing to sell their products to Russians it would make more sense to enter the Russian market. A significantly larger group of the respondents are ready to purchase jewellery on the web (13.6%) and by a brand catalogue through a shop (10.3%). The analysis also demonstrates another aspect of “remote” retail: its success is possible only if there is a stationary shop representing a sort of guarantee for customers that the products are of good quality and will be received. The topic of actively developing relationship between the potential consumer audience and jewellery retail on the web deserves special attention and will be covered in another article. As can be seen, the customers’ portraits can often be intuitively understood, but only after they have been detected by analysis.

Statistics 19

Is it convenient to purchase by a catalogue at a shop?

32.7% Yes, it’s convenient

All you need is ...

67.3% No, it’s inconvenient

Reasons that make purchase by a catalogue convenient shop guarantees quality and receipt of products shop arranges order and delivering shop professionally assists in the right product selection unspecified

Reasons that make purchase by a catalogue inconvenient it’s better if you visit several shops yourself an article is not always true to the image

junwex.com

you cannot touch it or try it on unspecified

20 Название раздела JUNWEX magazine

These Stylish Men For the first time the RusJewellerExpert Consulting Agency has conducted consumer demand research aimed at detecting gender preferences of Russian consumers with regard to jewellery. As it is known, the difference between the perceptions of jewellery by the two genders is that women expect a jewellery article to be beautiful and follow current fashion trends, while men opt for the practical and laconic. For men, a jewellery article is a way to emphasize their status, and for women, it is one more chance to increase their attractiveness.

Statistics 21

he research involved 527 men who attended the JUNWEX St. Petersburg 2011 exhibition. The prevailing age category of the respondents was from 30 to 40 years (32.2%). Visitors at the age of 20 to 30 years made up 25.9%, from 40 to 50 years – somewhat less (25.2%). According to the social status the respondents were employees (21%), medium-level managers (19.5%), top-level managers (18%) and workers (13.3%). Schoolchildren, students, pensioners and unemployed together made up 28.2%. It is pleasant to note that the majority of the interviewed men have jewellery articles, willingly purchase them or receive them as gifts. The differences are only noted in the number of possessed jewellery articles. As a rule, it’s two-three articles (41.2%). One jewellery article is in the possession of 17.4% of the respondents, four-five articles are in the possession of 15.3%. The fact of possessing over five jewellery articles was recognized by 11.6% of the respondents. No jewellery articles in their possession were reported by 12.6% visitors of the show who participated in this study. The last figure should be taken quite optimistically by the industry’s representatives: in fact these are potential consumers and canvassing them is an excellent opportunity to increase sales. As to the assortment preferences of men, the first place in popularity belongs to rings and signet rings which belong to 47.7% of the respondents. The second place (44%) is deservedly held by chains that represent a jewellery article traditionally favoured by Russian men. The suppliers of products to the Russian market should take into account that only 33.4% of the responding men, unlike the majority of women, wear chains with pendants both of religious and secular character, therefore the stake should be made on the volume and plaiting. Only 42.6% of the respondents reported possessing wedding rings, moreover, not all married men wear them. According to personal observations only one of each ten married men wears a wedding ring. The reasons for this may be subjective (unwillingness to show marital status, etc.) and objective (professional activities, hot weather, discomfort felt in connection with certain properties: materials, shapes, design of this product, etc.). For example, one of the respondents during an interview reported to have worn a ring of a famous Russian company, but had had to stop wearing it

despite liking it very much. The problem was that on the internal side of the ring there was engraved a text of a prayer, and moisture daily accumulating in the letter hollows finally resulted in skin irritation. It seems that jewellery manufacturers would undoubtedly benefit from an increase in the number of men who routinely wear this “symbol of fidelity”. And for this purpose manufacturers should think about making rings that would maximally exclude the objective factors such as discomfort from use. The fifth place in jewellery preferences is held by bracelets (18.9%). Unfortunately such important attributes of a successful and elegant man as cuff links and tie clips occupy an insignificant place among jewellery of modern men: 15% and 12% respectively. In our opinion, jewellery suppliers working on the Russian market should pay more attention to promoting such products, thus stimulating demand for them. One more observation based on the results of the study is that despite the fact that St. Petersburg is one of the megalopolises attentively following the global fashion changes, the residents of St. Petersburg are not too concerned with the image component of their status. For example, watches that are probably the most indicative and prestigious of men’s accessories were looked for at the show by only 4% of the respondents, chains were sought by 6.5%, bracelets — by 5.6%, tie clips — by 2%, cuff links — by1%. The majority of men (53%) came to the show to look for a gift for their girlfriend, wife, mother or child, while 11% were looking for wedding rings. Speaking about a gift for the beloved woman, the respondents preferred jewellery with precious stones (51.2%) or diamonds (27.2%). The situation concerning financial planning of a jewellery purchase in the male and female audiences were similar. Approximately 30% of male respondents planned to spend from 3,000 to 10,000 roubles, a somewhat lower number of men (24%) — from 10,000 to 20,000 roubles and 18% — from 20,000 to 40,000 roubles. The percentage of men capable and willing to purchase expensive jewellery for the amount over 100,000 roubles was quite significant — 5% (in women this percentage was much lower). Men planning a purchase over 100,000 roubles were mainly interested in design and manufacturer’s brand. There was noted a certain tendency: those who came to the

The first place in popularity belongs to rings and signet rings which belong to 47.7% of the respondents.

The second place (44%) is deservedly held by chains that represent a jewellery article traditionally favoured by Russian men.

22 Statistics JUNWEX magazine

Price range for menâ&#x20AC;&#x2122;s planned purchase

4.6%

over 100 thousand RUR

9.7%

8.7% 60 to 100 thousand RUR

up to 3 thousand RUR

40 to 60 thousand RUR

30% 3 to 10 thousand RUR

18% 20 to 40 thousand RUR

24% 10 to 20 thousand RUR

show to buy expensive jewellery were already in the possession of more than four jewellery articles. The exclusion was only one respondent who recognized possessing only one chain. And he decided to compensate this lack by purchasing an engraved signet ring of white or yellow gold at the show. One more potential VIP client came to buy a gift for children â&#x20AC;&#x201D; an enamelled silver icon. In whole, the study demonstrated that the consumer demand on the Russian jewellery market was observed in all price categories providing each exhibitor with an opportunity to find its customer. In menâ&#x20AC;&#x2122;s preferences for precious metals the leading position is held by yellow gold (52.5%), then goes white gold (34.4%) and silver (26.2%). Despite the fact that the visitor questionnaire allows the choice of several options, the respondents considered as not very

Jewellery article that men plan to buy at the exhibition accessories 4%

5% earrings

religious articles 2%

2% tie clip 5% bracelet 2% pendant 5% chain 1% cufflinks 5% ring 2% signet ring

42% gift for a woman

wedding ring

13%

other

gift for a man

Statistics 23

attractive the products of red gold (7.3%) and platinum (5.6%), while palladium and steel are still considered as something exotic, only 2% of the respondents planned to purchase such products. It is rather interesting that many visitors of the show looking for silver products were ready to spend over 100,000 roubles. It is clear that the customers did not mean jewellery, but silverware and interior items. The majority of the interviewed men (70.2%) specified design as factor influencing jewellery selection, with such factors as price and quality trailing far behind. Fashion trends are followed only by 3.9% of the respondents. Menâ&#x20AC;&#x2122;s tastes mainly lie in the area of jewellery with precious stones (38.0%) and diamonds (24%). This pattern is somewhat different from shows in Moscow where diamonds hold the first place.

Number of jewellery articles in possession of men attending the exhibition

2.2%

11.6%

unspecified

over five

12.6% none

15.3% four-five

17.4% one

40.9% two-three

Types of jewellery belonging to men other 14.3%

27.4%

unspecified 7.7%

religious articles

42.60%

1% screw-back earrings 9.7% image products 5.6% earring 12% tie clip

wedding ring

47.7%

18.9% bracelet

ring and/or signet ring

5.8% pendant

15%

44%

chain

cufflinks

24 Statistics JUNWEX magazine

Women’s Logic

he research conducted by RusJewellerExpert Consulting Agency involved 565 women. The questionnaire showed that the main part of the female audience at the show was represented by women from 20 to 30 years (28.8%), students (12.3%) or employees (25.9%). A slightly lesser group was made up by ladies of 30–40 years (26.2%), the majority of which were medium-level managers (15.2%). The third in number was the group of women of 40–50 years: private entrepreneurs (8.1%) or top-level managers (6.8%). If one follows a straightforward logic, it might be supposed that the lesser is the number of jewellery articles a woman has, the more she desires to purchase them. However, as known, women’s logic is unpredictable and contradictory. According to the research results, the majority of female visitors to the show (41%) possess over ten jewellery articles, 31.4% — over five, and 16.5% could not even remember how many jewellery articles exactly they have, evidencing that it’s not a luxury for them, but an indispensable element in creating their image: each day a different one. Practically all interviewed women have rings and earrings (80.9% and 80.2% respectively), chains are worn by 60.4% of female visitors, bracelets — by 46.4%, pendants — by 45.5%. Russian ladies think that rings cannot be many, and they are right: the fashion is on their side. For example, the recent show in Istanbul demonstrated a new seasonal trend: globally famous fashion designers suggest wearing vivid and showy rings on each finger and even in two rows! And the majority of Russian women, participating in the study conducted by the RusJewellerExpert Consulting Agency, planned to purchase at the show their next ring (36.6%) or a set of earrings (35.5%). The research showed that there is a special demand for jewellery sets with stones of different colour ranges: as a blue dress requires sapphires, while red hair and a new hairstyle can be well emphasized by emeralds… It has been noted that if a woman has a small number of jewellery articles, she first tends to buy articles with diamonds, and then proceeds to extending

Statistics 25

Number of jewellery articles in possession of women attending the exhibition 0.8% None

16.5% Not counted

10.3% Up to three

31.4% Over five

41% Over ten

Types of jewellery belonging to women 90% 80% 70% 60% 50% 40% 30% 20%

other

religious articles

watch

screw-back earrings

image products

brooch

necklace

bracelet

pendant

chain

bead necklace

ring

wedding ring

earrings

10%

Products that are to be purchased or have been purchased at the exhibition 40% 35% 30% 25% 20% 15% 10%

other

tableware

watch

bead necklace

religious articles

screw-back earrings

earrings

tie clip

bracelet

pendant

chain

cufflinks

ring

brooch

necklace

the colour range of her jewellery and buy several sets of different colours in order to vary them to match her wear and mood. The third place after rings and earrings is held by bracelets (11.5%). Despite the fact that St. Petersburg and Moscow are cities with numerous opportunities for showing off an evening dress, underlining it with an exquisite brooch or necklace, these types of jewellery attract only 4% of female customers. There is still an increased demand for silverware among the Russian women who do not forget their role in taking care of home. Care for health, beauty and comfort is the reason for 5% of women to visit the show. While Russian men regard a jewellery article mainly as ideal gift, the majority of women (80%) plan to purchase jewellery for themselves: only a third of female visitors were looking for gifts. It is interesting that they regarded cuff links, tie clips and religious articles as gifts for men. There is one more significant aspect: unlike men who knew exactly what kind of jewellery they were going to buy at the show, many women responded evasively: “I have not decided it yet”. This does not mean that this category (8% of the respondents) includes only inexperienced customers who are guided mainly by the accessible price for products. Even after a long selection and comparison of several models of expensive rings at the stand of one company, a lady may purchase an exclusive bracelet at another stand simply because the salesperson here was more convincing: made a compliment at the right time, emphasized unique qualities of the article, demonstrated the rare beauty of a stone, found a “zest” making this bracelet a representation of her dream… And one should keep in mind that the best means of stimulating any purchase is advertising: as a rule they dream of a brand” article so that they could say to friends while demonstrating the article: this is a famous brand! The leading position in consumer preferences of precious metals belongs to yellow gold which is liked by 50.5% of female visitors of the show. After some years on the peak of popularity, white gold has moved

26 Statistics JUNWEX magazine

For whom women plan to purchase a gift at the exhibition 17.1% For a woman

15.8%

For a man

79.8%

For oneself

Metal preferences 60%

50%

40%

30%

20%

10%

0% white gold yellow gold

red gold

silver

platinum

palladium

steel

other

Purchase-influencing factors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

price

quality

manufacturer’s reputation

design

fashion

from the second place to the third (31.4), letting its place to silver (35%). The remaining metals and alloys trail far behind the leading three places: for example, only 8% want to buy products of red gold and preferably in combination with gold of other colours. As to wedding rings, the study showed that about 40% of Russian women chose rings with diamonds for their wedding. At the same time with regard to other types of jewellery the focus has shifted to colour precious stones. Ladies wanted to buy rings and earrings with precious stones twice as often as with diamonds: in yellow gold (50.5%), white gold (31.4%) and silver (34.9%). About 10% of women think themselves as pearl amateurs, while 7% of the respondents prefer jewellery without stones. Jewellery sellers are always interested in the question of the “mean purchase amount”. In particular, the majority of women (36.9%) are ready to spend on jewellery at the show from 3,000 to 10,000 roubles, 24.0% — from 10,000 to 20,000 roubles, 14.7% — from 20,000 to 40,000 roubles, and 8% — from 40,000 to 60,000 roubles. Expenses from 60,000 to 100,000 roubles could be afforded by 3% of women visiting the show. The crossover study showed that those planning to spend 3,000–10,000 roubles were looking for products of yellow gold, silver and palladium. Female purchasers in the group of 10,000–20,000 roubles were selecting an article of white gold, while in the group of 20,000–40,000 roubles — jewellery of platinum and white gold. It is worth noting that VIP clients purchasing expensive jewellery planned to buy products of red gold. According to the research results there are quite many differences between the approaches of men and women to buying jewellery. But also there were similar opinions with regard to criteria determining the choice. Both emotional women and pragmatic men specified design as main factor (81.8%) and only then price and quality (27.1% and 26% respectively). Fashion trends determine the choice of jewellery only in 5% of cases. They truly say that the jewellery fashion is the most conservative.

Russian Jewellery Trade Club Official Representative of CIBJO in Russia

Welcome to the Jewellery Shows of RESTEC JUNWEX!

2012 The leading public organisation — Russian Jewellery Trade (RJT) Club invites you to visit the international jewellery exhibitions in Russia: Jewellery Exhibition

XX International Jewellery Forum

XI International Jewellery Show

VIII Jewellery Wholesale Trade Fair

JUNWEX

Junwex

Junwex Moscow

Ekaterinburg 17-20 November, 2011 WTC Atrium Palace Hotel, Ekaterinburg

St. Petersburg 1-5 February, 2012 LENEXPO, St. Petersburg

New Russian Style 30 May - 3 June, 2012 All-Russian Exhibition Centre, Moscow

Junwex WATCH

15-19 September, 2012 All-Russian Exhibition Centre, Moscow

The RJT Club will provide you with: • Visa support • • Special offers for accommodation in hotels of St.-Petersburg, Moscow, Ekaterinburg • Matchmaking • Interpreter’s service • Contact us: Russian Jewellery Trade Club Tel. +7 812 235 8383, +7 812 320 93 11 E-mail: club@rjexpert.ru • Website: www.junwex.com

28 Experience JUNWEX magazine

АТА Carnet:

Customs «White Elephant»

In 2000 the Chamber of Industry and Commerce of the Russian Federation became a member of the international network of associated states-guarantees of WFTU (the World Federation of Trade Unions) in the International Chamber of Commerce in Paris and issued the first Russian ATA carnet — international import goods certificate. Allover the world this system has been successfully operating for more than forty years, but in Russia it is still exotic. The ATA carnet system operates in 66 countries of the world where more than 300 000 ATA carnets to the total amount of over $12 billion are issued every year. As for Russia, the ATA carnets issued every year are few dozens only.

ith the development of international trade Russian businessmen have faced an increased need in short-term export of goods for trade fairs, exhibitions, and other events in order to seek for orders and to expand outlet. For the purpose of simplifying the clearance procedure for exhibition cargos the ATA system was introduced. Its suggests duty free shortterm export of the goods for one year, if they are covered by unified international customs document. Those goods that have been exported under the ATA carnet are prohibited for sale, and they must be returned back before the allowed duration of short-term export has expired. In theory, this system allows the Russian businessmen to participate in the European and world cooperation wider and on more convenient conditions,

thereby making the procedure of customs clearance for the exported goods cheaper and as quick and accessible as possible. However, even ten years after the ATA carnets have been implemented in Russia, in practice they are still a wonder. Businessmen participating in foreign exhibitions continue to persuade the Customs to allow them using this instrument for clearance of the short-term imported goods, and, in response, hear about certain alleged difficulties and necessity to submit more extra documents. This acute question is regularly raised at the meetings of the Public Advising Council of the Russian Federal Customs Service, things, however, are still where they started. Such a sluggishness results in Russia occupying the last place over the world with respect to the number of the ATA carnets issued.

Experience 29

It is unnecessary to speak about the importance of exhibition activities for the development of the state economy and its role in the performance of the tasks for Russia in the foreign market. Moreover, in the near future such events of the world level as the Olympic Games, Football World Cup, etc., are in store for our country. Therefore, an ever growing flow of the shortterm imported cargos will be passing through the customs. Thus, for example, during the Olympic Games in Beijing more than a half of all cargos were imported under the ATA carnets. The reason lies in the fact that domestic and foreign businessmen do not see many advantages of implementation of the ATA carnets within Russia. Since, when they import the products under the ATA carnets in other countries they have to fill in only one document. In Russia they are requested, beside that document, to attach cargo customs declaration. Till today, the customs officials continue to pretend that all exhibition goods do not differ from all others, that is why the exhibition participants have to complete two declarations — to import and export the products, that also makes the clearance procedure more complicated. The Chamber of Industry and Commerce of the Russian Federation issues the ATA carnets based on the Decree of the Government of the Russian Federation under No. 1084 dd. November 2, 1995 «Concerning ratification by the Russian Federation of the ATA Carnet Customs Convention for shortterm import of goods dd. December 6, 1961 and the Convention of Short-Tem Import dd. June 26, 1990 with attachment of some schedules», and also in accordance with the Regulation of the Chamber of Industry and Commerce of the Russian Federation «Concerning the procedure for drawing, certification and issuing the ATA carnets» dd. March 18, 1999.

Initially, the Decree of the Government of the Russian Federation charged the Chamber of Industry and Commerce of the Russian Federation with the functions of organizing warranting and issuing the ATA carnets. In the beginning of 2000s four customs bodies were authorized to make customs clearance by using the ATA carnet, and thereafter their list was enlarged up to forty. By today this authority has been granted to 170 customs stations (the total number of customs in Russia is 700). Russia has not much time before it becomes a member of the World Trade Organization. And ones of those who will be first “subject to the attack”, will be customs officers who will have to work in accordance with the new international standards. It means that the active and wide implementation of the ATA Carnet System in our country is a necessary step for the preparation of Russia for the integration in the all-European procedure of customs clearance for the cargos. In this connection, we feel sure that the situation will change for the better. Because, according to the President of the Russian Federation D.A. Medvedev, “our common economic area with the European Union “will be based on the principles of united safety, liberty of people, capitals and goods to move under the unified technical standards».

“Our common economic area with the European Union “will be based on the principles of united safety, liberty of people, capitals and goods to move under the unified technical standards.”

| | JUNWEX WATCH

30 Название раздела JUNWEX magazine

Moscow | V V C, Pavillon 75, Hall С, 1 floor

The success of the steps taken by RESTEC JUNWEX Media- Holding for development of the watch market is guaranteed by the following factors:  venue — All-Russia Exhibition Centre (V V C) (according to the state policy and strategic development of Moscow, the federal authorities position V V C in the foreseeable future as venue for displaying the best products and services of the Russian market — this fact convinces of stability for a watch show in this territory);  large scale and good reputation of the Junwex Moscow trade show, its optimal dates;  one-hundred percent participation in the Junwex Moscow trade show of Russian manufacturers of precious watches and domestic watch manufacturers of non-precious watches;  final stage of Russia’s entry to the WTO and elimination of problems in the sphere of customs clearance;  high level of management and professional experience of the organizer – RESTEC Exhibition Company, one of the three leaders of the Russian exhibition business.  the Russian Watch Salon presents more than 150 watch brands including such famous international brands as Aerowatch, Appella, Auguste Reymond, Cover, Continental, Edox, GC, Emporio Armani, D&G, Moschino, Chronotech, Anne Klein, Diesel, Guess, Casio, Citizen, Orient, Boss, Cavalli, Tissot, Seiko, L’Duchen, Jacques Lemans, etc.

Russian Watch Salon The watch section of the trade show is promoted in the format of a separate event under the name JUNWEX Watch which already in 2011 in anticipation of Russia’s joining the WTO is destined to fulfil the following tasks:  to display new offer of domestic watches to owners of specialty watch shops and large jewellery retail chains;  to acquaint wholesalers and end consumers with top international watch brands that have not been presented in Russia yet;  to present new shop equipment for retail chains and equipment for the reviving domestic watch industry;  to assist in increasing the competitive attractiveness of watches at the background of products from other consumer markets by active and comprehensive promotional campaigns using all media channels and information resources as well as with help of large-scale PR activities in mass media.

The opening

of the Russian Watch Salon coincides with the first issue of the JUNWEX Watch trade magazine covering all areas and activities of the watch market.

17–21 September 2011

It Is High Time for JUNWEX Watch Having thoroughly analyzed the Russian watch market which is in a quite complex situation due to the stagnation of the earlier held watch exhibitions, RESTEC JUNWEX Media-Holding has decided to extend the product range of its main trade show JUNWEX Moscow (September) by including suppliers of fashion watches. The need for such project has been felt for quite a time and the regional market players try to solve the problem locally in their own way. For example, in 2010 the first watch exhibition “Kostroma” was held on the initiative of the Amethyst Trading Group and attracted much attention from customers. This event included a fair of Swiss watches, presentations of different watch brands and displays of new collections. This year the Amethyst Jewellery Centre has again invited amateurs of watches and connoisseurs of the watch art. The presented brands in different price segments include Swiss, Japanese, German, South Korean, American, Italian and Russian brands.

“Such regional events are very interesting for the Club”, says S.K. Vedovsky, President of the Russian Jewellery Trade Club. “They facilitate tracking the industry’s activity and trends in sales development. According to RusJewellerExpert Consulting Agency with which we closely cooperate, twenty-four percent of domestic jewellery shops plan to expand the product range by including watches and transferring their business to the jewellery and watch format”.

Название раздела 31

32 Events JUNWEX magazine

New Russian Style: History and Present Time T

he New Russian Style exhibition opened in May 2002. It was held in the best exhibition hall at the time that both met the world standards of technical and communication support and ideally matched the luxury level: the Atrium of Gostiny Dvor. This prestigious exhibition venue for elite business and social events was rightfully positioned as a place of implementation of the most ambitious ideas of the owners of well-known foreign and Russian brands and sophisticated demands of VIP-clients. The primary purpose of the New Russian Style exhibition was presentation of the leading world companies jewellery and integration of Russian brands into the international market of premium-class goods. The philosophy of the project was based on the people’s eternal wish to have something rare, unique, exclusive, highlighting the owner’s individuality and status.

Why did the New Russian Style become an exhibition of a principally new format for Russia? — it is the first time such a large-scale event reflecting the integration strategy of development of our country and its jewellery industry was held; — it is the first time trade visitors had the possibility of renewing and replenishing the assortment of jewellery stores in the run-up to the summer season and retailers were able to learn about the products of the leading foreign and Russian brands;

Events 33

Due to the changes that were taking place in the country the domestic market had a deficit of gifts intended for the newly formed class of well-to-do people in Russia who could demonstrate their wealth. Luxury goods, however, demand a higher consumption level. The participants regarded the New Russian Style as a highly effective marketing tool of goods and services promotion targeted at a particular buyer audience. Therefore, to create an appropriate atmosphere attracting the metropolitan beau monde, middle-class elite, wide public and mass media the exhibition organizers

started cooperating with one of the most popular radio stations at the time – Russian Radio – and the leading company in the sphere of showbusiness – Artes Culture Fund, an organiser of the Fashion Week in Moscow. The Fashion Week is a large-scale presentation of collections from fashion designers of the leading fashion houses of Europe and Russia held within the framework of the New Russian Style exhibition. It gained all possible support of Moscow government and became a major event in the business and social life of the capital city. It is no coincidence that the exhibition was visited by a good many celebrities:

— it was the first practical implementation of the mechanism of interaction between Russian governmental and business entities and foreign colleagues to solve problems of transportation, insurance, customs clearance in the course of temporary import and export of items of precious metals and stones; — it is the first time a Russian exhibition organization tried to reverse the public opinion about the impossibility of mutually beneficial partnership of Russian and foreign companies and to put civilized business cooperation into practice.

34 Events JUNWEX magazine

In the first three years the exhibition was already attended by 256 foreign companies from 17 countries. More than 30% of foreign exhibitors found distributors in Russia concluding agreements for exclusive presentation of their collections.

A. Pugacheva, K. Orbakaite, B. Moiseev, L. Leshchenko, N. Baskov, K. Novikova, I. Liepa, V. Vinokur, I. Krutoy, Zhasmin, K. Sobchak, etc. The Union of fashion clothes designers and artists-jewellers contributed to the search for new solutions in the field of design and creation of original collections. The prerequisite for this alliance of business ideas of the fashion industry and jewellery art was the substantially identical client base of fashion houses and producers of watches, jewellery and expensive accessories. The Fashion Week in Moscow that was held simultaneously with the New Russian Style exhibition enabled the Russian jewellery industry to become familiar with the world achievements in the design sphere and to increase the country’s competitiveness on the international market.

The New Russian Style – 2003 elicited a generous response in the business press. For example, The Vechernyaya Moskva wrote: “This exhibition may be justly called the main Russian show of jewellery brands. The four days of the exhibition turned into a real holiday for professionals.”

Events 35

Greeting the guests and participants of the New Russian Style exhibition – 2004 Caroline Thompson, Director of the Reed Jewellery Group, noted: “Both companies are aware of their unique potential that they will be able to realise in organisation of a joint exhibition project.’’

The next significant step in development of the exhibition was cooperation with the Reed Exhibitions (Great Britain), the leading operator of specialised exhibitions in various key sectors of industry on all continents. Jewellery industry is one of the main spheres of the company’s activities. Closely interacting with representatives of the international jewellery community the Reed Jewellery Group, a division of the Reed Exhibitions, turned its attention to the growing interest in Russia on the global market. The partnership of two leaders, the RESTEC Exhibition Company and the Reed Exhibitions, turned the New Russian Style exhibition into a top level event, some “window to Europe” for the domestic jewellery business. The cooperation with such a reputable exhibition operator became a serious professional school for RESTEC JUNWEX Media-Holding. Western standards of exhibition organisation came to Russia. It took the creators of the Jewellery Russian Program a lot of work, patience and money. But the result was worth all the efforts made: today the New Russian Style is one of the most effective marketing tools for jewellery business development.

36 Events JUNWEX magazine

Mathematics 539

Number of exhibitors

517

Exhibitors 292

283

152

205

167

303

329

227

24 300 21 011

Exhibition space (sq. m)

Exhibition space 9351 7144

1958 2425 2002 2003

7152

9390

8062

3000 2004 2005 2006

2007

2008

2009

2010

2011

Events 37

of the “New...” 26 942 Visitors

16 829

Visitors

25 784

16 634 14 524

10 680

12 346

11 347 9216

8829

Trade visitors

7173

6152

5987 5137

2002 2003

6780

5896 5753

5492 4807

2004 2005 2006

2007

2008

2009

2010

2011

Trade visitors

8781

38 Russian Jewellery Trade Club JUNWEX magazine

Jewellery Sales:

Monitoring by Regions

RusJewellerExpert conducts a roundtable meeting by correspondence devoted to the results of jewellery business in the first half of 2011

V. M. Ivanov, Nika Ltd., St. Petersburg:

ur company is a jewellery wholesaler and works with partners not only in the Central Federal District, but also in the Volga and Ural regions. Our observations coincide with the general mood on the jewellery market: undoubtedly last year was not as good as the pre-crisis period. The consumer demand dropped by 25% versus the successful years. Many sales companies were also affected by instability of the prices for precious metals in the November-December period. In whole, the year of 2010 was unsuccessful for us. And the prospects do not look good either, I don’t think them optimistic. The money returns from the regions with difficulties. The problem of non-payments is still a crucial one: sometimes payments have to be urged. And I can understand retailers: sales have really dropped. For example, one of our partner networks in the best years sold from ten to fifteen percent of our products, and now only seven-eight percent. Although they always get approval from us for their mark-up and comply with the contract terms. In whole, in jewellery shops of Samara, Orenburg, Saratov and other large cities in the Volga area the retail mark-up is not more than sixty percent. The market forces price adjustments.

G. M. Khasanshina, Private Entrepreneur G. M. Khasanshina, Perm

e have four outlets in shopping centres. The comparison of the results from the last year and this year shows that two outlets have gained profit and the other two have had losses. The reason for the more successful operation of the former is that in 2010 we invested in cooperation with recruitment agencies: replaced fifty percent of the staff and provided professional training. As a result, we gained thanks to very efficient work of new staff, logical delegation of functions and split of responsibilities. This was also helped by activities of the shopping centres which decided to raise their level by advertising, successfully combining outlets, updating the interiors and shop equipment. I know well that nowadays customers will not come to a jewellery shop for no special reason: we should put efforts into attracting them, find creative solutions. In whole our team we have reconsidered work principles: we think how to improve service, how to attract new clients and what to offer to repeat customers. I would like to note as an important positive factor the visit with the Russian Jewellery Trade Club to a trade fair in Istanbul as a result of which I have had interesting ideas on how to optimize my business. This visit made me feel more confident and united with the industry’s community: all of us face approximately the same problems and many find creative solutions to such issues. Nowadays the consumer demand has stabilized. However, clients of our outlets now prefer gilded silver articles to gold products. It isn’t clear what will happen in the future. Our city is an industrial one; if manufacturing enterprises develop, our situation will be good too, however, provided that we will do our best to achieve this.

Russian Jewellery Trade Club 39

D. A. Kuznetsov, “Karat Platina” Kostroma Jewellery Factory Ltd., Kostroma

A. B. Kalinovskaya, Private Entrepreneur A. N. Ivanov, PetropavlovskKamchatsky

espite the attractiveness of the jewellery market, the industry considerably lags behind in development compared to other industries such as food industry and construction sector. Only recently jewellery companies have started to pay attention to the marketing policy; previously the determining principles were only the price and quality. While abroad the business is precisely segmented, in Russia, where branding is not developed, the main market factor is still the price. In our work we are guided by the experience of Western colleagues and this has facilitated our growth from a small workshop into a large jewellery factory. The company’s products are distributed in over seventy regions. Each region receives exactly the assortment which is in demand there. Certainly it is convenient for retailers as they purchase from us what will sell well. For example, in Moscow and other large cities products of “lemon” and white gold are popular. In southern regions, according to our observations, they like jewellery of “lemon” gold with large stones.

he market situation in the Far East region is different from other federal districts. The crisis itself was not felt in Petropavlovsk-Kamchatsky, only last November sales started to decrease. Consumers have become more demanding in general and especially after some television programs: some people come to a shop with a hand magnifier to look carefully at a product. Fortunately, these are not many. If we talk about the demand itself, in our region consumers prefer large and showy jewellery that attract attention of other people. These are articles that can be called works of art. The demand for diamond products has increased. Silver products are purchased with attention to showy and catchy design. I think that if in the near future the prices for precious metals stop growing, and consequently the end product prices too, the demand will remain unchanged or will even grow thanks to additional marketing efforts of manufacturers and sales companies. But if these prices surge, we will have an unfavourable situation, as there is a high level of industry competition on the market of Petropavlovsk-Kamchatsky, and it will be even more difficult to retain customers.

RUSSIAN JEWELLERY TRADE Club RUSSIAN JEWELLERY TRADE Club

is the biggest business association at the Russian jewellery market uniting more than 6500 wholesalers and retailers from 806 cities of Russian Federation.

Business activity Buy at the stores of RUSSIAN JEWELLERY TRADE Club — Integrated corporative action for strengthening Club members’ competitive ability. Business Contacts Exchange — Establishment of business links between manufacturers and trade companies to arrange active supplies to the jewellery stores of Russian Jewellery Trade Club. Regional project — Russian Jewellery Trade Club supports regional shows within the framework of Jewellery Russia Exhibitions in Ekaterinburg, Kazan, Kalinigrad, Kostroma, Makhachkala, Perm, Samara, Yaroslavl. The main purpose is to represent the interests of the Club members in regions by developing and maintaining customers loyalty.

Cooperation with RUSSIAN JEWELLERY TRADE Club Buyer’s Programme — delegations of trade visitors; Direct-marketing — a program specifically designed to build the booth traffic; Match-making service — Business Contacts Exchange — assistance in scheduling the business meetings. Tel./fax: (812) 235 83 83 E-mail: club@rjexpert.ru | www.junwex.com

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Fashion Seasons

Fashion Seasons Catalogue offers For consumers: • Opportunity to learn more about the latest jewellery trends, exclusive and main trends products

For manufacturers: • Effective innovations in exclusive jewellery sales • Brand promotion For retailers and wholesalers: • Opportunity to create an order system for exclusive jewellery without additional investments • Sales increase and customer demand aligned by seasons

Circulation - 100 000 copies. Distribution: Free distribution among the members and partners of the Russian Jewellery Trade Club (more than 6 500 wholesalers and retailers).

For designers, art-critics and other interested Persons: • Opportunity to see all the winners of the jewellery contests of the JEWELLERY RUSSIA Exhibition Programme of 2009–2011 years

International Department Tel.: +7 812 303-98-60 Fax: +7 812 320-80-99 E-mail: jewellery@junwex.com