At KS Durlabhji, a high-end jewellery store in Jaipur’s upmarket C-Scheme, business is steadily picking up after the second wave of Covid-19 knocked precious jewellery out of the consideration set — partially because of tightened finances and the drastic reduction in the size of weddings.But Ruchi Durlabhji, partner at the iconic Jaipur store, says that sentiment is improving. Some of her clients have, in the last week alone, picked up a Ganesha gold pendant, diamond wedding bands, an emerald and diamond wedding ring, and polki rings. Durlabhji, who says business is still inching towards its 2019 level, is confident of a bounce-back soon.In the last quarter of 2020-21, India’s gold consumption was up 37% to 140 tonnes over the same period in 2020, just before the first lockdown. But for many sellers what was to follow was another death knell. The second wave dried up business, and even as it waned, higher gold prices put a damper on any possible recovery.In June this year, gold prices hovered around the Rs 49,000 mark for 10 grams of 24 carat gold and dropped only slightly in July to around Rs 47,850. There has been about an 18% increase in price since January and February 2020, for instance, before the pandemic hit, when gold was pegged at about Rs 39,200 and Rs 41,750 respectively. To account for these fluctuations, website Candere by Kalyan Jewellers has pushed a new installment scheme, ‘Double Gold Rate Protection, where it protects customers from any surges in price once they sign up for the scheme.However, jewellers are much more hopeful now. “We have done wedding rings and jewellery, anniversary and birthday gifts, gifts for newborns etc. People have started investing in jewellery, diamonds and gemstones again,” says Durlabhji. The January-March period also coincided with the wedding season in India, but a surge in Covid-19 cases due to new variants significantly impacted key markets across the world, including India, according to the World Gold Council. 84504611Currently, gold jewellery demand entirely depends on whether a third wave will happen or not. World Gold Council India MD S om a su nd a r a m PR says, “We know by now that Covid isn’t going away. But by September, there will be a strong spike in demand even when prices remain volatile.” That’s when the next wedding season will begin. “Buyers who will be sitting on the fence will convert,” he says. For many organised players, the story has been no different.For the quarter ended June 30, Titan said in a report that its jewellery division of Tanishq and Zoya grew by 107% (excluding bullion sales), compared with last year but this was primarily because of almost zero sales in April last year. May was a washout in 2020 as well as 2021 — revenue contributions for April, May and June in 2021 were about 50%, 10% and 40% respectively. Titan spokespersons were unavailable for comment for this story.“I would term this as neutral business, which is just about 10-15% up from what we usually do in this period. A lot of people are fearful of spending and the luxury side of the business has taken a major beating. People usually invest in jewellery when they have extra money. But by August this year, post Raksha Bandhan, business should bounce back. We are expecting a lot of weddings to happen by November-December and people will plan ahead for these functions,” say PP Jewellers founder Pawan Gupta. Rupesh Jain, founder of Candere, agrees: “From midsummer to early monsoon, there’s generally a slump in the jewellery business but we expect demand to come back to its usual peak with the onset of the festive season in August.”Many observers say investment in gold has taken a big hit overall. Akhilesh Agarwal, CEO of Sri Krishna Jewellers in Hyderabad, says typically people buy gold jewellery either for occasions or as an investment. People are no longer investing as much on birthdays and anniversaries and are instead trying to conserve money, he adds.This business was otherwise a 12-months-a-year one but has been reduced to only about two wedding seasons. When he compares business to the previous year, it stands at only about 50-60%. A Diwali bounceback is what most jewellery companies like his are banking on.That and international clients. He says the reliance on the NRI buyers, mostly from the US, has gone up tremendously this year. They now contribute 80-90% to their business — up from 10% earlier — and are willing to make high-ticket purchases online.Somasundaram of the World Gold Council is positive that the demand for gold coins will remain strong no matter what happens to jewellery, since they offer better value for the price. “Coins will experience a good demand, just like gold bonds have been successful for those who want to avoid the risk of keeping physical gold with them,” he adds. But he feels that since the Indian gold coin was launched in 2015, no branded gold coins have hit the market, making it an “under-explored” area.Gold, while it may have hit a rough patch, he adds, is not going away anytime soon. High-income customers have built up savings during the pandemic, as their avenues for conspicuous consumption reduced. And with the stock market at record highs, Somasundaram says, “People will turn to gold as an investment. Those on the fence will be more positive in investing in gold because of hallmarking and that could be a slow but steady driver of demand.”
from Economic Times https://ift.tt/3xMCdID
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