One of the biggest sellers of jewelry, Moscow Jewelry Plant (MJP), is planning to open stores named after its shareholder, the Israeli businessman of Soviet origin and co-owner of AFI Development Lev Leviev: LEVLEVIEV DIAMONDS. In parallel, the company is preparing the launch of the wholesale brand for the development of regional chains. The new project will be launched against the backdrop of the crisis, from which the jewelry market, except for the luxury segment, is still struggling to get out.
MJP has filed an application for registration of new trademarks LEVLEVIEV DIAMONDS and LUKAS, as follows from the materials of Rospatent. The company explained that it was preparing two projects: the first is the shops under the brand of LEVLEVIEV DIAMONDS, the second is the wholesale business under the brand of LUKAS, which will be sold primarily to regional players. Its launch is scheduled for September this year. The company did not disclose the terms of implementation of the new chain and the details of the projects.
Today MJP is the second only to "Adamas" player in the jewelry market, as follows from the calculations of Infoline. According to analysts, in 2016 its net revenue remained at the level of 2015 and amounted to about 8 billion rubles. At the end of 2016 the retailer ran 309 stores with a total area of 10.8 thousand sq. m. Its beneficiary is Lev Leviev, who also owns AFI Development. According to Forbes, AFI's flagship facility, AFI Mall trading center in the "Moscow City", earned $48.2 million in revenue for the first nine months of 2016, while the entire development company increased its net loss by more than 2.5 times to $55.7 million.
Experts interviewed by Kommersant agree that under his own name Lev Leviev will make the product of the high price segment. "If the jewels are high-cost exclusive, the audience of the new brand will, most likely, be the people who have not changed their habitual consumption pattern even in a crisis. It is what happened with Richemont Group networks and Mercury," says the Director of market research at CBRE Olesya Dziuba. CEO of Infoline-Analysts Mikhail Burmistrov agrees that with the persistence of the negative dynamics of household incomes, the growth potential can be seen only in the high price segment, oriented to foreign tourists or the Russians with high income. According to Mrs. Dziuba, the shopping area could reach 250-300 sq. m, and the expeses per one shop (in the case of the street retai objects) is €1,75-3 million at the rate of €7-10 thousand per 1 sq. m. But one of the main risks for the new network is the perception of the brand, which is unknown to the buyer.
However, the development of the wholesale trends also raises questions from analysts. "Wholesale companies have also noticed the decline. From this year, they began to work with a number of salons in installments with interest and offer staggered debt repayment schedules," says the Head of Marketing at Fashion Consulting Group (FCG) Maya Kaznacheeva. Mikhail Burmistrov confirmed that now the retail chains in regions are experiencing great difficulties. In general, the jewelry market has not yet recovered from the crisis. According to FCG data, in 2015 the demand for products made of gold fell (41.1 tons, which is 39% less than in 2014) to 14-year low, and in the past year it decreased by further 20%. In monetary terms, the market fell by more than 12% in 2016, to 180 billion rubles, as calculated by Infoline. In an optimistic scenario, this year the market may stabilize, in the pessimistic it will fall by 10%, FCG experts predict.