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About 60 per cent of gold jewellery purchase paid in cash: WGC report

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About 60 per cent of gold jewellery purchase paid in cash: CAIT

The festival season is back, and on Thursday alone, India saw the sale of gold jewellery worth over Rs 3,000 crore, according to the Confederation of All India Traders and All India Jewellers and Goldsmith Federation. Amid this, we looked at what the data says about trends in gold purchases in the country.

Even though the scale and value of UPI transactions are skyrocketing in the country, a new report by the World Gold Council notes that “cash remains the preferred means of making a purchase, accounting for some 50-60 per cent in metros and large cities and 70-80 per cent across the rest of India, in terms of value.” It, however, doesn’t fail to acknowledge an increase in digital transactions. The report was out on September 28, 2022.

“There is still a lot of cash generated in the economy. But a day has to come when most of the transactions for gold purchases have to be cashless. Only then the economy will be healthy,” says N Anantha Padmanabhan, Managing Director of NAC Jewellers and former Chairman of the All India Gems and Jewellery Council. The report also notes that more cash transactions are being made via an official bill.

Commenting on this, Ramesh Kayanaraman, Executive Director, Kalyan Jewellers, said, “Jewellery purchases are mostly high value transactions, and in many cases, a customer’s credit card limit does not allow them to make those big purchases. Adding to this, about 35 per cent customers in the business prefer to exchange their old gold for new jewellery.” He added that cash transactions are possible only when the purchase value is below Rs 1.99 lakhs and that transactions above this limit require the customer’s PAN card copy.

Rise in retail chains

The WGC report also says that the share of regional and national gold chains is increasing in the country. Between 2015 and 2021, the proportion of the share of these stores in the country rose from 30 per cent to 35 per cent.

“ Demand for better designs and consumer experience, a growing awareness about hallmarking, better pricing structures and competitive return policies, as well as the introduction of GST and demonetisation, have all accelerated the shift towards chain stores,” it says.

At the same time, in these seven years, the share of stand-alone stores has come down in the country from 50 per cent to 37 per cent. “Many jewellers have changed categories over the past five years as their businesses have expanded and they have gained market share,” says the report, adding, “Many standalone retailers with prominent brand names have expanded their stores or opened new ones in their region and are now classified as medium-sized retailers.”

Padmanabhan agrees on this. While he says that this assures that consumers receive good quality gold, he adds that small retailers with very little stock are losing their business. “Eventually, their business will be taken over by corporates,” he says, adding, “It’s high time they come together and specialise in particular ornaments.”

Currently, the top gold chains in the country are Tanishq with 384 stores, Malabar Gold and Diamonds with 150 stores, and Senco Gold and Diamonds with 126 stores.

The report also says that the proportion of handmade jewellery is coming down in the country. It has come down from 65 per cent in 2011 to 55 per cent in 2021. “The positive thing here is that we are able to make jewellery the way we want, fast. But the sad part is that there is no skill development happening among goldsmiths. The next generation of jewellers and goldsmiths should be encouraged and pushed towards this, and the government has to look into this,” says Padmanabhan.

Courtesy: The Hindu Business Line

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