INTERVIEW: Sokolov to focus on China, no plans to expand elsewhere

MOSCOW, Dec 19 (PRIME) -- Russian jewelry holding company Sokolov plans to focus on development of its business in China in its international affairs and has no plans to expand to any other new country, co-owner and Managing Partner Artyom Sokolov told PRIME in an interview published on Tuesday.

“As for the other countries, we are actively developing a franchise and a wholesale division in the CIS and EAEU countries. We have no plans to go anywhere with our retail business, we are not stretching ourselves thin, we are focusing on China,” he said, adding that the Chinese people were very loyal toward Russian brands and producers.

In China, the company focuses on jewelry made from 75% and 58.5% pure gold, or 750 and 585 gold, which the Chinese call “Russian gold” and which is usually bought by the Chinese tourists in Russia.

“Our global goal in China is to become a leading foreign mass market brand of jewelry goods in a span of 5 years. In order to achieve that, we will have to open about 400 stores in different cities and reach a turnover of half a billion of U.S. dollars. This is the plan. It is too early to talk about possible results right now, we are testing the waters and polishing the pilot stores, we planned to spend a year or a year and a half on that,” Sokolov said.

He said that the Russian jewelry market could grow by 6–7% on the year to 380 billion rubles in 2024 after reaching 356 billion rubles in 2023.

“Our forecasts show that the market could grow by 6–7% to 380 billion rubles next year if no shocking events happen, and the online sales would accounts for a quarter of the total sales,” Sokolov said.

The Sokolov company’s growth outstrips the market, and its budget and plans include launches of 300 stores and 100 franchisees next year, a 30% growth in revenue to 65 billion rubles, and an increase of earnings before interest, taxes, depreciation, and amortization to 13 billion rubles.

In 2023, the jewelry market drivers include higher average retail prices caused by ruble volatility, the gold price growth, the impact of delayed demand from 2022, and recovery of consumer activity, he said.

“And, finally, it comes from the growth of jewelry production in the country both in the gold and silver segments. The share of silver jewelry in our sales continues to rise. Silver jewelry goods account for more than 75% of the jewelry goods that we sell. Silver is cheaper, but the quantity and the margin of sales in this segment is much higher than in the gold segment,” he said.

He said that Russia’s average retail prices for jewelry grew by 19% over the past year, with the average purchase gaining 15% to 7,500 rubles. Sales through the online marketplaces also grew noticeably, which shows that Russians want to save money, but nevertheless began spending more in 2023, Sokolov said.

Even though the prices for jewelry in Russia depend on the ruble rate and prices for precious metals, there are no prerequisites for the prices to jump, he said.

(90.4162 rubles – U.S. $1)

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