Growth in gold jewellery demand likely to remain steady

Written by RajeshRavi | Updated: Jan 26 2013, 07:42am hrs
India is the worlds largest consumer of gold jewellery. The Indian gold and jewellery market was valued at approximately R1,22,000 crore ($27.5 bn) in FY2011 and is expected to grow at 15% CAGR till FY2016, according to CARE Research. By FY 2016, the annual value of Indias domestic gems and jewellery industry is expected to double to $55.3 billion. Rajesh Ravi talks to TS Kalyanaraman, chairman and managing director, Kalyan Jewellers, Indias largest jewellery chain. Kalyan Jewellers posted revenues of R9,500 crore ($1.8 billion) and a net profit of R295 crore in FY 2011-12.

How will the higher import duty on gold affect the consumption and trade of gold jewellery

For the common man, it means paying more for gold. But it is not a new phenomenon. Usually, gold prices fluctuate due to other reasons, but this time it will be because of the duty increase. Historically, demand for gold jewellery has never decreased because of a price hike. In fact, buying gold jewellery remains a safe investment and people enjoy wearing it.

How did the retail jewellery sector fare in 2012

I am in a better position to speak on the performance of Kalyan jewellers in 2012 than on the jewellery sector in general. For Kalyan jewellers, sales grew by 30% and continue to grow each month.

This may be due to two reasons. First, people have started buying ornaments from trusted jewelers in the organised sector. Second, they are investing in gold as a commodity.

What is your outlook on sales of gold jewellery in the near and long term

We expect growth to remain steady over last year. We see people making a conscious switch from the unorganised to the organised jewellery sector. We feel that people continue to view investing in gold as a safe and sound option.

Is there a trend among the new generation to move away from gold to diamond and platinum jewellery and accessories

Diamonds and platinum are different products and, according to me, only a small percentage of people are choosing them over gold. But the demand for diamonds has increased by 40% and that for platinum by 10%. Customers view both diamond and platinum as distinct products and they are never seen buying diamond as a substitute for gold. In fact, they are seen buying both.

Have you found regional variations in terms of consumption of gold jewellery in India

Yes, each market is different. Even within a state, peoples choices vary from town to town, even if they are located close to each other.

Do you see a move towards branding by shops in the jewellery sector Do you also see more companies coming in Is consolidation on the cards in the industry with smaller shops finding it difficult to survive

As far as the common man is concerned, he or she should get what they want for budget and the branded retailer should have a good track record.

Yes, it is true that some people are moving from the unorganised sector to the organised sector and going in for trusted brands.

But I would say that small regional retailers could survive if they earn the trust of the customer. If they are honest, sell at competitive prices and provide good variety, they can manage their market share. They can even compete with big brands. In fact, some single-shop players are doing very well.