Will the sky-high gold price impact sales this Akshaya Tritiya?

There is no consensus among retailers regarding the impact the high gold prices will have on the buying pattern of customers this Akshaya Tritiya. While some feel that the unprecedented jump will dampen spirits, others are of the opinion that it will be business as usual, finds out Suneeta Kaul

Post By : IJ News Service On 19 April 2023 12:05 PM

Akshaya Tritiya, one of the biggest festivals for the jewellery industry in India, is considered to be an auspicious day for buying gold, investing in property and starting new ventures. Historically, jewellery sales mark a significant jump on the occasion through the length and breadth of the country. This year, the sharp jump in the price of gold will be an important determinant of total sales.

We are expecting a very good Akshaya Tritaya this year,” says Pankaj Seth, Durga Das Seth Jewellers, Amritsar, adding, “My clear reason is this: Ugate sooraj ko sab salaam karte hai (Everybody bows to the rising sun). The price of gold is rising, and gold is such a commodity that when its price goes up, its perceived value also goes up, and so, demand actually rises. We are positive that sales will be very good, but yes, the ticket size will be mostly small. Many people go for advance booking on Akshaya Tritaya; they make a token payment, and then pay the full amount later. The ticket size will be bigger in the case of those who do heavy advance booking.”

Retailers point out that since it is considered auspicious to buy gold on Akshaya Tritaya, people will buy it, no matter what. Explains AVR Siddhanth, AVR Swarna Mahal, Salem, “We are taking the rising price of gold as a positive factor. Gold being a very safe investment, the demand will rise. And it being Akshaya Tritaya, when people make it a point to buy gold, we are expecting record-breaking sales.

“The situation was the same in 2019 -- prices were rising around Akshaya Tritiya then too, but still, good sales were recorded. So, I have no hesitation in saying that compared to the previous years, we are expecting a really good Akshaya Tritiya this time around, especially in view of our IMC campaign, which started 20 days before Akshaya Tritiya.”

The increasing uncertainty in the global economic situation has added to the value of gold as a safe-haven commodity, and this too is expected to spur sales on Akshaya Tritaya. Says Dr Saurabh Gadgil, PNG Jewellers, Pune, “Akshaya Tritiya is the single biggest and most auspicious day of shopping in India. This year it falls on a Saturday, and customers will get an added advantage of it being on a weekend. We are bullish about the festival this year. Gold prices are expected to stabilize and stay within the Rs 60k mark, which will definitely help boost sales. As uncertainty deepens globally, there is increasing confidence in gold as a safe-haven commodity, and hence the greater demand. Over the next one year, gold prices are expected to continue to rise, so investing in gold on Akshaya Tritiya will help us surpass numbers of the previous year.

“We expect customers to buy bullion as well as jewellery, not only for investment, but also for occasion wear. Akshaya Tritiya is celebrated widely in Maharashtra. We predict a huge spike in millennials’ and GenZ’s shopping on Akshaya Tritiya, as more and more first-time buyers have entered the market. This year, we expect a 10% hike in business in quantity terms vis-à-vis last year, while in value terms, we expect a 35%-40% rise.”

Over the next one year, gold prices are expected to continue to rise, so investing in gold on Akshaya Tritiya will help us surpass numbers of the previous year.

“We expect customers to buy bullion as well as jewellery, not only for investment, but also for occasion wear. Akshaya Tritiya is celebrated widely in Maharashtra. We predict a huge spike in millennials’ and GenZ’s shopping on Akshaya Tritiya, as more and more first-time buyers have entered the market. This year, we expect a 10% hike in business in quantity terms vis-à-vis last year, while in value terms, we expect a 35%-40% rise.”

Ticket size to settle around Rs 50,000

There seems to be some kind of a consensus about the ticket size of jewellery this Akshaya Tritaya. Says Dr Pratap Madhukar Kamath, Abaran Timeless, Bengaluru, “Since gold prices are high, we expect an average price point of Rs 40,000-Rs 50,000. But we are sure of robust sales. Akshaya Tritiya looks very positive this time around as well. The price of gold price is not a deterrent. I’m sure sales will be very good on the auspicious day. Light-weight gold jewellery will be popular this season.”

Seconding that, Siddhant also believes that people will mostly go for light-weight jewellery in the below-Rs 50,000 category. But Anand Prakash, Abhushan Jewellers, Agra, is of the opinion that the average ticket size is going to be around Rs 1 lakh.

“Akshaya Tritiya falls within the season of high demand. I am expecting robust sales, and a jump of 25% over the previous year. With gold prices rising, and customers expecting a further jump, people will come out and buy in big numbers. Bookings are already good,” Prakash points out, adding, “As gold prices are at an all-time high, the grams per transaction have gone down by 20%, but I feel the sentiment is still positive. Footfalls, which had seen a drastic drop in March, are now picking up smartly. I am expecting much higher sales of wearables and light contemporary designs, as jewellery which consumers can carry and wear multiple times is very much in demand.”

High gold price to have an impact on sales

The fact remains, however, that pre-Akshaya Tritiya sales have been fairly low. While that might be the historical pattern, as jewellery, particularly gold jewellery, is a cyclical product, the high prices are bound to impact the quantum of sales.

According to Shreyance Oswal, Rikhab Das Uday Chand Jewellers, Lucknow, “Expectations around Akshaya Tritiya are always good, as it’s an auspicious day to buy gold. We should always be positive. Having said that, the gold prices are definitely skyrocketing, with no sign of coming back to the mark to which our brains had adjusted.

“It takes time for the buyers to adjust to the sudden change. The prices might dampen the sentiments of buyers, but since it is an auspicious day, those who want to buy will buy, but will keep their budget in mind. Customers nowadays want to buy one-of-a kind jewellery. I am expecting the average ticket size to be anywhere between Rs 1 lakh and Rs 3 lakh.”

A section of retailers feels that with all that is happening around gold – the sky-high prices, issues pertaining to HUID, the high import duty, which the government has, so far, refused to look into -- it might be the right time to focus on diamond jewellery on Akshaya Tritiya.

The overall sentiment is a bit dull this time around,” says Shreyansh Kapoor, Kashi Jewellers, Kanpur. “Holi fell very early in March this year, and after that, there have not been any near-term auspicious dates for weddings. Gold prices have seen a huge jump. When people buy for an occasion, they have a budget in mind. The high price of gold will obviously upset that budget. Gold is a very traditional market, and is seen as an investment commodity. But the younger generation thinks differently. Youngsters believe in living life in the present.

“Since the price of gold has risen so rapidly, it will impact their purchases. It is a 10% hike since Diwali! That’s a lot. People can’t cope with such a drastic jump. Moreover, there is no telling which way prices are headed. Customers are shaken, and their budget has gone awry. It’s different for upper-end customers, they don’t care about the price rise and will buy what they want to. But the majority of gold-buyers are definitely apprehensive. The post-pandemic buying surge is over, and people have settled into their regular buying pattern. In fact, this is a good time to shift to diamond and polki jewellery,” Kapoor adds.

However, people find it difficult to move away from traditional purchase patterns. So, even if gold prices go up further, retailers declare that gold is what will sell. “Buying gold on Akshaya Tritiya is considered auspicious. Customers will buy gold, no matter what. It might be a good decision to buy diamond jewellery instead this year, and if people do opt for it, it will be a new trend around the festival,” says Satinder Jain, Jain Jewellers, Bathinda. “But I doubt that will happen. Not that customers do not want to buy diamond jewellery, but they are so emotionally attached to buying gold on Akshaya Tritiya, they will just ignore everything and go for gold. I am expecting them to buy jewellery in the range of Rs 50,000,” he notes.

In the end, what emerges is that while the high price of gold will be a deterrent, the impact will be more on the amount of gold people buy. But come what may, gold will sell on the auspicious day, as it does, year after year.

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