Russians are buying less jewelry due to rising prices

Jewelery chains, faced with a serious drop in the number of buyers a year ago after the outbreak of hostilities in Ukraine, are still unable to restore the traffic of their stores. In April-May of this year, it turned out to be 6% less even compared to the disastrous spring of 2022. Market participants attribute this to the increase in prices for jewelry, despite the reduction in spending by Russians, and the growth of online trading, which, however, still occupies 19% of total jewelry sales.

According to the results of April-May 2023, the number of buyers in jewelry stores in Moscow turned out to be 6% less year-on-year, calculated for Kommersant in Focus Technologies. This suggests that the segment is still unable to recover from a serious drop in customer traffic last spring. According to Focus Technologies, in April-May 2022, buyer activity fell by 29% year-on-year. One of the reasons for this is the beginning of hostilities in Ukraine. Then the Russians preferred to buy equipment and clothes, not jewelry, analysts say.

In 585*Zolotoy stores in Moscow in 2023, traffic decreased by about 2%, in 2022 the drop was about 5%, says Andrey Shlyaev, Director of Marketing and Retail Sales of the chain. Sokolov does not observe a decrease in demand and traffic. The network only notes that in the first quarter of 2023, the holding’s revenue increased by 37%, to 10 billion rubles.

Mikhail Burmistrov, General Director of Infoline-Analytics, believes that consumer savings and low attendance rates of shopping centers also continue to influence offline retail. To support the fading demand, retailers are trying to launch a variety of shopping incentive programs. So, for example, “585 * Zolotoy”, according to Mr. Shlyaev, introduced an interest-free installment plan.

The CEO of the Association of Jewelers Vadim Serov believes that the outflow of customers from offline retail stores may be partly due to the transition to online. According to him, online jewelry sales in January-April 2023 grew by 31% year-on-year, to RUB 14.5 billion. The jewelry market is under pressure from the development of online sales, confirms Mr. Burmistrov.

However, jewelry retail remains a niche where classic retail is still of great importance, and buyers prefer to make the purchase in the store after trying it on live and talking with consultants, Andrey Shlyaev says. According to the Association of Internet Trade Companies, by the end of 2022, online sales amounted to no more than 19% of the total jewelry market in monetary terms. In general, according to Vadim Serov, the restoration of attendance at physical jewelry stores no longer plays a key role in sales volumes, and a well-built omnichannel can stimulate customer activity.

Another reason for the decrease in the number of buyers in jewelry stores may be the increase in prices. According to Focus Technologies, in April-May of this year, the average check grew by 9% yoy. At Sokolov, the average check for jewelry for the five months of 2023 increased by 17%, to 6.7 thousand rubles, says Alina Kolpakova, head of the chain’s analytical center. At “585*Golden” – by 15%. Mrs. Kolpakova explains the rise in prices by the rise in the cost of raw materials and metal.

Mikhail Burmistrov notes that against the backdrop of increasing inflationary pressure and the weakening of the ruble, we can expect further growth in prices and, accordingly, the average bill. According to the results of the current year, this figure may increase by 10-12% with a decrease in the physical number of purchases within 5-7%, the expert adds. According to him, Russians continue to consider the purchase of jewelry as a tool to save money from inflation.

According to the Association of Jewelers, the volume of the jewelry market in 2023 will grow by 3-7%. Infoline also talks about the recovery of the market, growth by the end of the year will be 3-5%, up to 317-325 billion rubles.

Alina Savitskaya