Ease of Doing Business for MSMEs: Gold prices had declined from Rs 52,000 per 10 gram in November last year to Rs 47,000 per 10 gram on November 1, 2021, while silver had declined from Rs 74,000 per kg in May this year to Rs 64,000 per kg.
Ease of Doing Business for MSMEs: Jewellery businesses are jubilant this festive season and particularly for Dhanteras or Dhantrayodashi that marks the first day of the five-day Diwali celebrations even as buying jewellery or utensils on Dhanteras is considered auspicious in Hinduism. While Covid dampened the festive spirits last year, micro and small retailers, wholesalers, and manufacturers this year are certain of overachieving the 2019 levels on the back of decline in gold prices from last year, economic recovery, and strong customer demand amid Covid relaxations and higher vaccination rate.
“In comparison to 2019, 10-15 per cent additional improvement is expected in sales volume this year for retailers. Out of five days of Diwali festivities, Dhanteras and Pavda (in Western India) are muhurta days when maximum sales happen. The two days are the bellwether of the season’s performance. Gold has been strong this year while diamond also is doing well even as during the pandemic, people expected diamond to slow down. Silver rates are also favourable now,” Mumbai-based Ashish Pethe, Partner, Waman Hari Pethe Jewellers and President at India’s apex body of the gems and jewellery industry — All India Gem & Jewellery Domestic Council told Financial Express Online.
Gold prices had declined from Rs 52,000 per 10 gram in November last year to Rs 47,000 per 10 gram on November 1, 2021, while silver had declined from Rs 74,000 per kg in May this year to Rs 64,000 per kg. Saiyam Mehra who runs Unique Chains in Mumbai manufacturing gold jewellery said while the sector has already achieved pre-Covid levels recovery, it is yet to make up for the sales lost during the pandemic.
“People had pre-booked jewellery for delivery on Dhanteras almost a month back. This year, sales will be higher than 2019 levels. Since gold prices are stable, more customers are coming in. We expect this stability to continue this festive season before the prices possibly go up. For retailers and manufacturers, it will take six months more to achieve the lacuna in sales for around 12 months during Covid. Retailers have procured goods 50-70 per cent more this season in comparison to 2019 levels from wholesalers and manufacturers,” Mehra told Financial Express Online.
Importantly, there has been a 47 per cent year-on-year growth in demand for gold in India during the July-September quarter to 139.1 tonnes following a strong recovery in economic activity and consumer demand, as per a report by the World Gold Council, PTI reported. During the same period last year, the overall demand was 94.6 tonnes while its value increased by 37 per cent to Rs 59,330 crore from Rs 43,160 during the said period. The value of total jewellery demand was up 48 per cent to Rs 41,030 crore for the September quarter this year from Rs 27,750 crore a year ago.
“Gold prices this festive season are up nearly 30 per cent from the 2019 season but around 8 per cent down from last year. Hence, while the purchase volume might decline but purchasing power will remain the same among customers. The rush is heavy in retail markets since Navratri,” Prithviraj Kothari, National President, India Bullion and Jewellers Association told Financial Express Online.
Kothari said that since the price is hovering around a certain amount for quite some time, customers are able to plan their purchases better instead of waiting for prices to get stable. Silver has also been good as the price is in the comfortable zone. There is no lack of demand this year for jewellery, he added.
The surge in demand has also been triggered by the upcoming wedding season that makes up for 60-65 per cent share in the retail market for gold. The pent-up demand for gold in the market and the comfortable price levels have encouraged customers to purchase for weddings as well including those that were postponed from last year due to Covid, according to Pethe. India’s wedding season is usually from October till January and around mid-April till May.
“We are witnessing that people are buying heavy jewelleries, bridal collections for their wedding that were kept on hold or postponed because of Covid restrictions at different stages. With the pandemic slowing down and thanks to the nationwide vaccination drive, people are slowly and gradually coming back to normal life. The Indian economy is bouncing back strongly. These are good indicators for this festive season and the wedding season ahead. Therefore, I think euphoria marketing will be a trigger for Dhanteras sales this year that are expected to get back to pre-Covid levels, with an increase of 15-20 per cent from last year,” Suvankar Sen, CEO, Senco Gold and Diamonds told Financial Express Online.
Senco also expected around 5 per cent of its total sales to come from its online business on Dhanteras. While the pandemic had enhanced customers’ interest to purchase jewellery online, the market has largely been driven by the touch-and-feel factor. The share of online revenues remained at less than 5 per cent in the retail jewellery market, according to a report by rating agency ICRA last year. BlueStone, CaratLane, and Melorra are some of the other players in the online jewellery market in India.
“Online sales in the last few years have seen multi-fold growth as more people have got comfortable with the online channel. However, its share is still in lower single digit while it might grow to 8-10 per cent in perhaps two-three years ahead,” said Pethe.