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Igor Kevchenkov - “The things that will survive us”

19 april 2021

Igor Kevchenkov, Director General of ‘Russkaya Yuvelirnaya Kompaniya (Russian Jewellery Company) No. 1’, one of the seasoned professionals in the jewellery industry due to many years of experience, answered the questions about the state of the Russian jewellery industry in an interview to Rough&Polished.

Russkaya Yuvelirnaya Kompaniya No. 1 that comprises the Moscow Jewellery Factory of the same name and the retail chains in Novosibirsk and Moscow manufactures exclusive jewellery pieces and sells them on the Russian market. It specializes in the production of high-standard gold jewellery studded with diamonds and precious stones.

Quite recently, you took part in the St. Petersburg Junwex. How does the lockdown affect the number of participants in the jewellery exhibitions and the customer traffic?

The lockdown has a strong impact. Practically from March last year until the end of 2020, no exhibitions were held in our country. The first exhibition - Junwex - was held in St. Petersburg, and not many firms participated in it - at best, half of the number of the companies that took part in the previous exhibitions. And the biggest problem was that the buyers did not come to the exhibition. During the pandemic, shops were closed, people did not make purchases; in principle, the stores had the goods for sale, and there were no usual New Year holiday sales surges, either. Therefore, those who sell did not need to come and buy goods. As for the exhibitors, they paid for their participation in the exhibition back in May 2020, so they came. Actually, there was no September exhibition, it was postponed. But I looked at what was happening at the exhibition. The entire market has slowed down for almost a year. In this regard, the consumers did not need to come to buy goods, and the sellers had no opportunity to bring and display their goods. Many jewellers have already switched to the silver jewellery. So, jewellery pieces are mostly made to order - customers can see the samples and order them. The manufacturers no longer have inventories as before - a customer can place an order and receive a jewellery piece in two months. All this slows down the market: the situation is not that a manufacturer makes jewellery pieces, offers them and encourages wholesalers or retailers to purchase the goods and offer them to end customers - the opposite situation occurs: a manufacturer waits for a retailer to come to him and order the jewellery pieces he needs. And retailers are very selective about this and order only those goods that will definitely be sold. A few more words about purchasing - earlier, manufacturers offered many jewellery items to retailers on consignment, now the quantity has greatly decreased because the manufacturers cannot make many goods, distribute them and wait for money to come.

How did you manage to survive?

In principle, you can see those who managed to stay afloat today, because about 30% of the manufacturers had to shut down. And those who survived are producing less now. Either very large firms with large loans will survive as they have no options, so they run ahead and have to produce and promote their goods, or the smallest firms that are self-sufficient and can do without loans and have no debts. Right now, there are practically no middle-scale manufacturers left and, unfortunately, this results in the poorer jewellery art culture in the Russian market. There were many companies on the market that made interesting jewellery pieces. Their number is much less now.

Taking into account that buyers have become more selective in the choice of jewellery, does it mean that this should improve the quality of jewellery?

There exist differing approaches. There are goods that cost about five thousand roubles and customers quickly buy a gift that they can afford, and the quality does not really matter in this case. As for high-end jewellery pieces, the approach is different and the customers are more meticulous about the jewellery. Low quality jewellery items and flaws are not acceptable. Therefore, some of the goods that remained from ‘the previous life’, from the previous purchases of the stocks by the firms, are simply sent back to the factory for recycling.

A question about diamond jewellery: what is the future for this market segment?

The Russian jewellery manufacturing sector and cutting&polishing industry have greatly decreased, there are almost no private enterprises left. That is, it is almost impossible to buy polished diamonds in the market. The pandemic hit every jewellery hub - in Belgium, Israel, Hong Kong, Bangkok, and in India first of all. And, accordingly, the purchase of small sized diamonds from those centres also decreased significantly. In fact, everything has slowed down for a year, and if we consider this period of time - from a diamond miner to a polished diamond manufacturer - it is also not the best and shortest one. This means that less diamonds are used in the jewellery fabrication, the manufacturers look for something to replace them, a lot of synthetic diamonds are used now, the so-called lab grown ones. Moissanites have entered the market and they also replace the diamonds. Moreover, online trading has become very active. In the Internet, they write without a twinge of conscience that they offer beautiful diamonds, and it is added within parentheses that these are moissanites. The unaware people just buy the goods that are cheaper. So, this situation is very difficult.

Although, in fact, there is one positive moment for jewellers - the people do not travel much now, they almost do not go abroad and cannot buy foreign brands, as they did before when they flew to Italy just to buy the things they wanted on Via Montenapoleone or on Place Vendôme in Paris! Any brand was available - Tiffany, Bvlgary, Cartier. Now, due to the pandemic, people are not travelling, however, purely human needs still exist because of the weddings, anniversaries, some special events, and just gifts. Where can people satisfy their needs? At our Russian stores only. Therefore, some things that were in lower demand found their buyers.

What is your opinion about synthetic diamonds, do you consider the opportunity to switch to lab grown stones?

Well, these are very different markets. There is cubic zirconia and there are diamonds. When the cubic zirconia appeared, there was a widespread opinion that these stones would kill the diamonds! But they didn’t kill diamonds. There is a time and place for everything. When a woman goes out in an evening dress or goes to the Bolshoi Theater, to an expensive box, I don’t think she wears lab grown diamond jewellery pieces. I would like to make a small remark: a one carat moissanite costs $100, a one carat lab diamond costs $1,500-2,000, and a one carat average quality natural diamond costs $5-7 thousand. And if a natural diamond can be sold in any case, what will happen to the lab grown stones when 5-10 thousand presses are built to manufacture them? The lab grown diamond production is developing now in Russia and the presses for growing synthetic diamonds are under installation in Troitsk, Novosibirsk and near St. Petersburg, as well as in a new cluster near Pskov. Some lab grown diamonds will be used for the jewellery manufacture, but they will be mostly intended for industrial use to produce substrates, powders required for technical needs. And as for $100, $2,000 and $7,000, a person would not be greatly upset if a $100 jewellery piece is lost. But a stone for $2,000 is not cheap. If the stones were worth $500, there could be tough competition, however, these stones cannot yet find a place in the market due to the pricing policy.

Does your company still specialize in the high-end jewellery studded with diamonds and unique large stones?

We remain a jewellery house and try to use only natural diamonds (we stick to our motto - ‘natural and unique’), this is our principle. An average customer has gone, and we are not moving into a low-end niche. It is expensive to manufacture in Moscow, so our product is ‘average plus’; we work with our clients, create loyal terms reasonable for them, find the options to match the price and quality and, probably, we are surviving now thanks to these efforts. Of course, there are no more customers now, but we are not changing our point of view, our position, and we keep to it. Because, having once given up your positions, you will never return to them.

What are your plans for the future, what tasks do you set?

The main task is just to stay afloat. Today, those survive who do not have any loans. Those who have their business built in their own premises. In your own store you can continue your trade and use the store as a delivery point for Internet purchases, of course, you should observe the rules, provide sanitizers and meet the hygienic requirements of the sanitary and epidemiological authorities.

I would not like to tell you about our plans: as they say, if you want to make the God laugh, tell him about your plans. Time will show who will stay in the market. When you see how many firms have ‘left the race’ (and those were very good firms ) you understand that they have made the wrong steps and wrong moves somewhere. We are learning while going our own way.

The jewellery industry has gone through many crises, but is this crisis different and special?

It cannot even be called a crisis - in this case, the business has been just ‘switched off’ for a long time. A crisis is when your money either lost their value by half or was taken away from you by some kind of fraud. And in this case, there is no opportunity to manufacture, sell or buy - the firms are simply ‘excluded’ from the social environment, they are isolated, as if a cap is put on them. But now the ‘cap’ was taken off, and those who are strong enough to keep on ‘running’, they will keep on ‘running’, and the rest will ‘fall out of the race’.

The beautiful things you create - we see them at the exhibitions and on social media - are discordant with these sad comments. What gives you strength to keep on your work, stick to your principles, and to create really unique jewellery pieces?

First, people want to be special and unique. Any person who has one hundred roubles, or one hundred thousand roubles, or one hundred million roubles wants to be one-of-a-kind. He or she buys a jewellery piece that reflects his or her aspirations and status. Therefore, it is necessary to find an opportunity to understand this person, creatively rework his or her message and use it in our work.

What attracts you most about jewellery?

I just like jewellery - I do my business with pleasure, it’s my life. I like to develop something interesting, to promote something new - create beauty.

Let’s think that when we leave this world, the things will be left after us that will survive us.

Galina Semyonova for Rough&Polished