India’s leading jewellers, including Tanishq, Kalyan and Malabar Gold, expect their sales to sparkle this Dhanteras – considered auspicious for gold purchases – on Tuesday, but the unorganised, neighbourhood stores face bleak prospects during the festive season. Some of the established jewellers FE spoke to predicted sales to pick up in the range of 15-30%, thanks to the growing trust in purity and designs of their products, competitive prices and aggressive marketing. However, small jewellers – mostly concentrated in rural areas and make up for roughly 70% of the country’s sales – predict flat growth or even a moderate drop in footfall in their stores.
Rural disposable incomes haven’t quite picked up, thanks to subdued prices of many farm items. On top of that, compliance requirements after the GST launch are weighing on small jewellers – most of them had been operating in an opaque environment for ages. The situation also suggests a shift in consumer choice – from the unorganised shops to the organised brands. Malabar Gold expects 15-20% rise in sales, while Anmol Jewellers sees sales grow by 20-25%. WHP Jewellers expects it to jump around 30%. Ahammed MP, chairman of Malabar Gold & Diamonds, said the government’s recent decision to exempt the gems and jewellery sector from the reporting purview of the PMLA Act, no know-your-client (KYC) requirements for purchases up to Rs 2 lakh, and the abolition of the need to report sales over Rs 50,000 in cash will boost consumer sentiments. “The government has initiated a pro-market reform, which will boost sales volumes and steer the sector on a higher growth trajectory,” he said.
Sandeep Kulhalli, senior vice-president (marketing and retail) at the jewellery division of Titan Company that sells under the Tanishq brand, expected “much better sales” this Dhanteras than a year earlier and said consumers’ shift toward the organised sector has been accelerating. In fact, according to the industry estimates, the market share of the organised jewellery players (national and regional chains) tripled to 30% between 2008 and 2016. However, some of the smaller neighbourhood jewellers in Delhi and Mumbai are expecting a maximum of 5-10% rise in their sales. The sale of coins, which made a comeback last year after luckwarm responses to the previous two years, is expected to remain subdued again this Dhanteras, while jewellery purchases by consumers could get a boost.
Ishu Datwani, founder of Maharashtra-based Anmol Jewellers, said: “We are expecting an increase in demand for both gold and diamond jewellery. It will also be the onset of the wedding season; so there will be a good demand for small and big-ticket items.” Vaibhav Saraf, director at Uttar Pradesh-based Aisshpra Gems & Jewels, said: “People are becoming more and more aware of the benefits of hallmarked jewellery in tier-II and tier-III cities; thus organised players like us are preferred over unorganized players.” “Overall, positive factors like lower gold prices and current walk-ins are indicators of a good festive season,” Saraf said.
Aditya Pethe, director at WHP Jewellers, said: “The market sentiment has improved since Akshay Tritiya and the government’s decision of putting gems and jewellery industry in the low (3%) slab has reinstated consumer’s faith in the industry.” Tanya Rastogi, director at Lala Jugal Kishore Jewellers, said since the remonetisation exercise has been completed, the demand for gold will remain robust. She said people are unwilling to sit on currency these days for fear of any unpredictable government policies. This augurs well for gold, she added.