The Bank Street of Karol Bagh, a key jewellery hub in the national capital, is a silent witness to the changing moods of the Indian gold customer. Six-seven years ago, on a typical weekend afternoon, a few women would drive their cars right up to the stores of established jewellers like Tanishq, PC Jewellers and Gitanjali Group, plunging the already clogged street into a traffic nightmare, while most others would flock to the neighbourhood ones located just yards away. The traffic chaos still continues, but the confluence of customers at branded stores now has a curious mix of the rich and the poor, the upper class and the middle class.
In the past few days, the change has been even more noticeable. Demonetisation has just accelerated an already gradual shift of customers from the unorganised to the organised sector. Fears of a hardening crackdown on informal sector transactions, especially in gold, and a government push for digital payments are making customers switch loyalty faster.
While the overall retail gems and jewellery sector is growing roughly 10% a year, the organised segment is expanding 30-40% in recent years, according to an internal study by PC Jewellers.
Demonetisation may see the organised sector jewellers growing at an even faster pace, at the cost of the unorganised ones.
Gold jewellery makes up for 80% of the R3,00,000-crore gems and jewellery market of the country. Currently, the organised segment accounts for 22% while the unorganised one, primarily comprising local and independent stores, makes up for 78% of the retail gems and jewellery market.
PC Jewellers managing director Balram Garg said demonetisation is a “very good decision”, especially for the organised sector. Gitanjali Gems chairman Mehul Choksi said the jewellery industry will “thrive” following demonetisation, as people will have a greater level trust in pure jewellery than currency notes.
All India Gems and Jewellery Trade Federation chairman Sreedhar G V said although unorganised sector jewellers could face some problems initially, demonetisation would help them get organised.
According to another study by AT Kearney, the share of the organised segment has grown substantially from just 10% in 2008-09, which means organised players have stepped up operations significantly, while the unorganised segment is struggling to record robust growth. In the organised segment, the share of regional jewellery chains was 7% and national chains 3% in 2008, it added.
As such, neighbourhood stores have been hit hard by growing preference, even among rural population, for pure metal and beautiful designs. Soaring income levels, rapid urbanisation, rising number of working women and bright economic prospects will continue to attract people to buy gold.