Wealthy Russians scramble to buy luxury watches and jewellery amid crisis
Russia’s wealthy are turning to luxury jewellery and watches in a bid to preserve the value of their savings.
Bulgari’s, Swatch Group, Richemont, Rolex, Hermes, LVMH and Kering continue to trade amid conflict between Russia and the Ukraine.
With sanctions on Russia sending the rouble plunging and keeping stock markets shuttered, the country’s wealthy are turning to luxury retail items such as jewellery and watches in a bid to preserve the value of their savings
Sales in Bulgari’s Russian stores have risen in the last few days, the Italian retailers chief executive officer said, after the international response to its invasion of Ukraine severely restricted the movement of cash.
“In the short term it has probably boosted the business,” Jean-Christophe Babin said in an interview with Bloomberg, describing Bulgari’s jewellery as a “safe investment.”
“How long it will last it is difficult to say, because indeed with the SWIFT measures, fully implemented, it might make it difficult if not impossible to export to Russia,” he said, referring to restrictions on Russian access to the SWIFT financial-messaging system.
Much like gold, which can serve as a store of value and a hedge against inflation, luxury watches and jewellery can hold or even increase in price amid economic turmoil caused by war and conflict.
Bulgari, owned by LVMH, is not alone. Richemont’s Cartier is still selling jewellery and watches, Swatch Group’s Omega timepieces are still available, as are Rolexes. All are continuing to make sales and trying to strike an apolitical stance.
Popular watches can change hands on the secondary market for three or four times their retail price. Yet the impact of the invasion on the value of luxury items is creating a potential public relations issue.
Sales in Russia and to Russians abroad account for less than 2% of overall revenue at LVMH and Swatch Group and less than 3% at Richemont, a “relatively immaterial” level, according to a report this week by Edouard Aubin and fellow analysts at Morgan Stanley.
That’s due, in part, to Russian income and wealth disparities, with a small number of billionaire oligarchs living way beyond the means of ordinary people. The average monthly wage in Moscow is about 113 000 roubles (£772 at pre-invasion exchange rates), and much lower in rural regions.
Bulgari, established in 1884 by Sotirio Bulgari and bought in 2011 by LVMH, is likely to raise prices in Russia at some point, according to the CEO.
“If the rouble loses half of its value, our costs remain euro costs, we cannot lose money on what we sell, so will have to adapt the prices,” he said.
Whatever sales bump they experience, luxury watch and jewellery-makers may soon have difficulty restocking stores. Moscow closed its airspace to European Union countries, and the continent’s biggest logistics firms have halted shipments to Russia.
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