Perhaps you've heard, but things ain't going so great for Russia at the moment. The ruble is faceplanting, which means the cost of basic goods are skyrocketing. And, too, the cost of not-so-basic goods like high-end jewelry, which Russians are racing to purchase before prices jump yet again.
Russian business news site RBC reported that there was a run on silver bracelets and wedding rings (link in Russian) at the Tiffany store on Red Square in late November, with shoppers eager to buy jewelry before the company changed prices to reflect the volatile exchange rate—which is just what happened at Cartier in Moscow on Tuesday (Dec. 16).
Bloomberg News says they've been snapping up Porsches and Lexuses, as well. And we're not talking oligarchs rushing to finish their Christmas shopping, either. Generally the idea of an "investment piece" is bollocks, but when the value of your currency is plummeting that tennis bracelet suddenly becomes a more stable asset. A Russian Mercedes-Benz's spokesperson told Bloomberg: "In times of crisis, people view cars as an investment.... The rule of thumb that a car loses 20 percent of its value once it leaves the showroom isn't valid anymore."
Which is a very, very bad sign if you're actually in the business of selling luxury goods to Russians, whether in Russia or somewhere like Milan:
As trips to Milan and Paris grow steadily more expensive in ruble terms, and imported luxury-goods prices back in Russia are revised higher to reflect the weaker currency, the recent surge in shopping will probably soon fizzle out. A slump in Russian spending won't be enough to sink the big luxury fashion houses, but it will certainly be an unwelcome bruise on the back of a decline in Asian spending. Bain & Co. predicts that Russian luxury market could dive by 18% this year.
Bloomberg News reports, too, that Russians are disappearing from London's absurdly overheated real estate market as well. "The number of Russians registered through Christie's International Real Estate to buy homes in the city dropped by 70 percent in a year.... That has led to a plunge in offers for properties priced at less than 10 million pounds ($16 million) as it becomes more difficult for all but the wealthiest to take money out of their home country."
When things go south for all but the really really really really really really megarich, you know a country's in deep shit.
Image via AP.