Gold jewellery demand grows; sales back to pre-COVID level at Kalyan Jewellers, others

The demand for gold jewellery has picked up in the country, to the surprise of even the industry. Even as the COVID-19-linked turmoil is going on, gold jewellerry sales have reached back to nearly the same level as last year. “Sales have picked up after the lockdown and almost all our showrooms in the country are currently doing business  to the tune of 80-85 per cent of what it was in the same period of last year. This is despite showrooms in the COVID-19 worst-hit cities like Mumbai, Delhi and Chennai and in other hot-spots are not operational on all days,” Ramesh Kalyanaraman, executive director of Kalyan Jewellers told Business Today.

The All India Gem & Jewellery Domestic Council (GJC) chairman Anantha Padmanaban had earlier estimated the domestic jewellers to lose Rs 45,000 crore of business during the 45 days of the national lockdown. Adding woes to the sector, the lockdown was during  Akshaya Thritiya, when jewellers sell maximum in a year and at peak of the summer wedding season. Normally, the three lakh retailers in the country sell about 80-100 tonnes of jewellery a month. Sources said though business is limping back to normalcy for cash-rich organised jewellers, small scale unorganised jewellers are still in doldrums due to lack of cash to resurrect their business after the lockdown.

Elaborating reasons for the surprise improved sales, Kalyanaraman said the industry was expecting people to postpone fat weddings and defer jewellery purchases due to the COVID-19 situation. That did not happen and many families are going ahead with weddings as scheduled. Now most weddings are a strict family affair, abiding by the rule that maximum 50 people can participate in such occasions. Actually many parents are routing the savings earmarked for fat feasts, costly marriage halls, travelling, accommodation and decoration into additional purchase of jewellery as a gift for the couples. To attract more customers, Kalyan is currently running a successful campaign ‘MuhuratAtHome’, highlighting wedding as an old culture of intimate, simple and memorable family function.

Kalyanaraman says a new set of young and old customers has also emerged during the COVID-19 times. In states like Tamilnadu, people have the habit of buying and keeping jewellery when a girl child is born, but that was not the case in most other states. In states like Kerala, big jewellery purchases with latest fashion happen only a week or month prior to weddings. Now people are coming to showrooms to buy jewellery for future use and also as a safe bet of investment during the chaotic uncertain times. Many youngsters, who usually earned and spent their salaries on vacations, food and fun in the past, are happy to buy latest gold jewellery and diamonds – also as a means of saving for future. Another trend is customers pre-booking jewellery at today’s price, anticipating the prices could shoot up further during the August to October festive season.

Kalyanaraman said it took about average two-three weeks for all the showrooms to bring customers back in full swing. Raw material is not an issue as organised chains like Kalyan get about 40 per cent of its required raw material from recycled gold (people selling old jewellery to buy new). Most of the current sales are from inventory during the pre-lockdown period. Kalyan was planning to open five new showrooms in Chennai, Madurai, Hyderabad, Kerala and Maharashtra during the quarter, but have deferred it due to the lockdown. Despite the full loss of business in April and May and an ongoing slowdown in Middle East business (which is only 20 per cent of overall business), Kalyan Jewellers is likely to post nearly same revenues in 2020-21 as in 2018-19, said Kalyanaraman.

Courtesy: Business today