JUST BROWSING: With sales down, jewelers are putting lower quality imported trinkets under glass.
KLAIPEDA - Lithuania is hardly a precious metals exporter, but nonetheless, the export value of what is exported has risen from 11.9 million litas ( 3.4 million euros) in 2009 to 23 million litas in 2011. Meanwhile, gold and jewelry imports, with the 2008 crisis still gnawing at consumer wallets, has skyrocketed by nearly twice in a year - from 19.1 million litas in 2009 to 32.3 million litas in 2010. This before dropping to 26.9 million litas in 2011.
“The increase in export is related to the severity of the crisis, as many cash-strapped people pulled out their precious necklaces, bracelets and gold watches from drawers and brought them to local pawnshops to cash them out and get through the hard times,” Vytautas Versickas, owner of Santimas, a jewelry making shop in Siauliai and former chairman of the Lithuanian Jeweler Association, explained to The Baltic Times.
When the time to buy back the pawned items arrives, most don’t have enough cash, and the jewelry pieces stay with the pawnshop. With gold and other precious metal demand and prices rising in the West, they hurry to sell it there.
“Since being a part of the Soviet Union, Lithuanians’ jewelry is regarded highly, so pawnshops have no problems trading it abroad,” Motiejunas says.
He says that most Lithuanian jewelers bring silver from Poland, obtain gold from Russia and buy Swarovski crystal from Austria. Minted jewelry items in Lithuanian goldsmith and jeweler shops end up mostly in British, Slovakian and Romanian stores. “I was hoping that jewelers would be able to sail through the crisis relevantly unscathed. However, it has caught up. If not for our extra activities - jewelry repairs, engraving services and jewelry making tool sales - we would hardly be in the market,” Versickas says.
To stay afloat, the craftsman takes on a limited production of custom-made jewelry. “If I made serial jewelry items, I’d have been finished off by the competition a long time ago,” he admits.
In just over a year, Santimas’ turnover has tumbled 40 percent, Versickas acknowledges.
The entrepreneur employs nearly ten people, but the deterioration of the business makes him think of labor force cuts. “As long as gold and silver prices go up on international markets, as well as heating and gas costs, I see no glimmer of hope,” he says.
Quick profit oriented
With consumers getting rid of jewelry and being unable to buy high quality pieces, all kinds of items, from as far as Turkey, Thailand and China, are filling the void.
“Cheap and often shady Eastern production has made inroads into Lithuania for a single reason: there is demand for it. Certainly, not all Eastern bangles, quality-wise, are bad. Even some famous jewelry companies are moving their production from Europe to Asia, where labor costs are cheaper,” Eimantas Mitkus, director of the Lithuanian Assay Office, says.
The worst thing in the precious metals market is, he says, market players’ desire to rake in large earnings in the quickest possible time. “In other words, all want to buy the stuff as cheaply as possible and sell as expensively as possible. We are monitoring the market closely,” he says.
According to the statistics, there were 852 legal persons involved in the business of precious metals and gems in Lithuania in 2008, and the number has kept climbing: to 984 in 2009, 1,131 in 2010 and over 1,250 in 2011.
According to Mitkus, most of the new enterprises are importing jewelry from Asian countries.
Asian bangles lure money-strapped women
“I don’t sell anything Asian, as it would seriously harm my image. No serious jewelry store sells Asian production. However, if you were to look around, you’d find many shady jewelry stores with a shady assortment,” Giedrius Kleismantas, owner of a jewelry store in Siauliai, said to the daily Respublika.
According to him, not all Eastern bangles, rings, necklaces and bracelets are of poor quality.
“You can’t judge the book by its cover. However, speaking on the whole, I am of a very lowly opinion of that kind of production. For example, some rings, brought to Lithuania from Honk Kong, Thailand and Indonesia, weigh less than one gram. What is that? Such a ring will crumple and lose its color in a matter of weeks,” the jeweler says.
He says he often becomes a witness to the frustration and rage of newlyweds who, scrimping on their wedding rings, buy a pair of Asian rings and turn up in his store, after a month or so, for advice on how to fix the mangled shape and color.
“People naively expect to buy a good quality wedding ring for 150 litas. Meanwhile, good quality golden rings cost much more than that,” the jeweler says.
He expects this trend to continue, however. “As long as people’s purchasing power is low, they will be looking for cheap Asian jewelry,” he says.
Lithuanians want to feel
“After spending quite a lot of years in the jewelry business and being unable to set a stronger foot in it, three years ago I came up with an idea of opening up an online jewelry store. Especially when there was no other similar kind of store,” Marius Skirpstas, owner of an Internet store, says.
The start-up proved to be a difficult task, he remembers. “Well, the store is still there, but it doesn’t go the way I’d like it. I guess online jewelry stores are not for Lithuanians, who tend to be extremely mistrustful about the novelty. Most buyers want to touch the jewelry I’ve put online. It is very different from the West, where online jewelry stores thrive,” Skirpstas said to The Baltic Times.
He notes that even pigu.lt, the most popular online trade site in Lithuania, had to take its entire jewelry selection off the Web for the same reason: Lithuanians want to touch and feel the merchansdise.
“The factor of distance plays a significant role: with distances being so small in Lithuania, even Internet addicts would rather go to the nearest jewelry store than order rings, with a few clicks, online. I didn’t take this into consideration before launching the business,” Skirpstas says.
However, he’s not giving up just yet. “Turnover has been creeping up. It reached a solid five-digit number last year, which allowed me more or less to make ends meet,” the online entrepreneur admits.
Among the most sought-after articles, wedding rings sit on top of on-line sales. Silver pieces in the range of 100 litas go strongly in second. “As I’ve set very small markups for all the items, I don’t profit at all from sales of the cheap silver stuff. Only sales of wedding rings pay off,” Skirpstas acknowledged.
He says that ex-pats are the most frequent visitors of his e-store. “The longer they live abroad, the braver they become and the more they discover on-line advantages,” the e-store owner says.
He says that 90 percent of emigres order Russian red gold through his Web site. “As a rule, the number one item for them is red gold rings. Turkish and all Asian rings, as well as all those kinds of jewelry, is not hot with the Lithuanians,” he notes.
Market swindled customers
A nearly year-long boom in gold prices has not left untouched the Lithuanian jewelry market. Reacting to the prices, Lithuanian jewelers have reacted by increasing their own prices. “However, Lithuanians, unlike Westerners, instead of investing in the precious metal, have turned away from gold and started checking out stores offering cheap gold jewelry. Simply speaking, good quality gold is just too expensive for most Lithuanians,” Donatas Kupciunas, a jeweler in Vilnius, says.
Throughout the gold fever, he says most local jewelers juggled with discounts instead of slashing high price markups. “With the gold prices going up, local jewelers would decrease discounts. The bottom line in discounts was this: those whopping discounts, up to 75 percent in some stores, were a gimmick, something that very large price mark-ups would allow them to do,” Kupciunas said to The Baltic Times.
“Many potential buyers, seeing the tricks with the huge discounts, have gotten very wary about Lithuanian jewelry stores. And the jewelers, who hadn’t increased markups as others did, and who are willing to play a fair game, had to resort to new means to adapt to the new conditions in the market. And, sure, the cheap Asian stuff poses a huge challenge,” the jeweler stressed.
A postal rival for pawnshops
Traditional pawnshops have an unusual rival in the gold rush – the company Auksovokas offers buying gold and gold jewelry via local post offices. If the seller wishes to sell gold from his or her home instead of going to the nearest post office, he or she can do it by handing the Auksovokas-stamped package, with the jewelry in it, to the postman while she delivers the mail.
“Selling gold and silver pieces using non-traditional ways, like employing the postal service, is an increasingly popular service abroad. Heeding the increased sales of gold articles, we’ve launched these kinds of services in Lithuanian as well. Basically, a person willing to sell gold items can do so without leaving his home. The service has already proved to be very popular in Lithuania as well,” Donatas Butkus, director of Auksovokas.lt, says.
With the economy struggling, salaries frozen, heating and gas prices at record highs, it is likely most Lithuanians will keep passing by jewelry stores. And those women who may want to show off their new Asian bangles may be cursing the world a few months later, seeing them crumble away and discolor.