The World Gold Council’s Q1 Report released in London on April 28 states that the gold demand in the jewellery sector fell by 7% year-on-year to 474t that was driven by a soft demand in India and China. In China mostly due to lock downs while in India, a fall in the number of weddings and lack of auspicious days in the first quarter had a direct impact on gold purchasing. This along with a global rise in gold prices prompted many Indian consumers to hold back on their jewellery shopping so as to dampen the demand for gold jewellery by 7% in the first four months of 2022

Gold is doing really well since the last six months in the market. Market size is actually growing. It was definitely more than the previous years. My growth percentage was 20% more than the previous years before the pandemic. We have seen a 100% growth. The average ticket has gone up. Over the last 10 years there has been a constant 10-12% growth year on year but last year it spiked to a 100% growth. That is because of multiple reasons. The overall market size has increased. The price of the basic raw material gold has increased (long term) which is why the overall revenue has definitely gone up.VIVEK VAVADIAOwner, KR Sons, Ahmedabad

Though there was a slowdown in the first four months of 2022, there were many new store launches reported across the nation. Retail chain stores, corporate jewellers and brands like AVR Swarnamahal, Senco Gold, Orra, De Beers, Malabar Gold and Diamonds, Kalyan Jewellers, Tanishq, and many other smaller stand-alone retailers across the nation have announced or started campaigns to launch multiple outlets spanning the nation. Though there was a slowdown reported by the WGC and jewellery sales fell by 7% across India, yet, there is evidence of jewellers on an expansion spree across the nation a raging fire. According to a recent research report published by the ICRA revenues of organised retailers are likely to grow at the pace of 14%, backed by their aggressive store expansion plans and a gradual shift from the unorganised segment towards the organised one. Infact another study of Retailers Association of India (RAI) confirmed that the industry had grown by 28% in March 2022 in comparison to March 2021, in a sharp turnaround in consumer sentiments on the back of a receding Covid-19 scare and enhanced in consumer mobility, alongside the opportunity to celebrate the upcoming wedding seasons with aplomb and fanfare. This is the highest pace of growth noted since the outbreak of the pandemic.

If more stores are coming, it is better for the jewellery industry. It is mainly the gold rates that have gone up. It’s healthy competition. The gold rates have not been very stable. Now everything is coming back to normal and consumers are waiting for gold prices to decrease to make a purchase. This is the reason for store launches across the nation. If there is a stable gold rate consumers would prefer to buy more gold. Gold being a safe investment it will not affect businesses. SIDDHANTH A.V.RDirector, AVR Swarnamahal Jewelry Pvt Ltd

The forecast is positive that India’s retail industry is on a robust path to recovery despite unprecedented challenges, and will grow at nearly 11% CAGR levels to reach approximately $2 trillion in the next decade. Since the Tier 1 segment is near saturation and leaning heavily towards online shopping, many smaller towns and cities hold the promise of high revenue growth potential. Tier II & III cities especially reported a retail boom where luxury goods like high-end auto and electronic outlets, real estate developments, investment banking options, high-end accessory stores, gems and jewellers boutiques, fashion labels and retail apparel brands, international food and beverage retail chains among other goods and services clinched spaces. This development evidently has its basis in the post- Covid success stories across the nation. The per capita income of the nation seems to have increased, the buying power of the citizens, real estate development, lifestyle changing scenarios including malls, business parks, hospitality services mark the onset of development and growth at unprecedented levels.

Crux of the Matter

An apparent contra indication of a slow down at 7% versus jewellery retail expansion at the same time, calls for an introspection of the jewellery retail scenario. Has the demand for jewellery risen that jewellers need to reach out to the growing demand of newer consumers? Has the market size of jewellery increased? Was the slowdown reported in the first quarter of 2022 due to these new store launches eating into the market pie of the consumer demand and reportedly a complete slowdown due to war and inflation just before Akshay Tritiya? Were the store launches initiated due to excess profits earned on post-Covid rebound jewellery purchases? How best can the nation’s overall economic development be reflected through retail expansion in the gems and jewellery sector especially Teir 2 and 3 cities? To get to the bottom of the expansion plans we approached retail chain stores and corporate jewellers like Tanishq, Kalyan, Malabar Gold and Diamonds, Senco and others to get perspectives, however due to vacation tours and family outings, few jewellers were available for comment. Among the top of the brass retail chains, we spoke to AVR Swarnamahal’s Owner, Siddhant to get a better perspective of the retail scene and the price scenario. Upon asking him, if too many store launches have diluted a rising demand, he said, “If more stores are coming, it is better for the jewellery industry. It is mainly the gold rates that have gone 

up. It’s healthy competition. The gold rates have not been very stable. Now everything is coming back to normal and consumers are waiting for gold prices to decrease to make a purchase. This is the reason for store launches across the nation. If there is a stable gold rate consumers would prefer to buy more gold. Gold being a safe investment it will not affect businesses. India has a very large population and people love wearing jewellery and each jeweller has his own identity, strength so I don’t think it will affect the industry. It will boost the gold jewellery business in the country.” Akhilesh Agarwal, owner of Shri Krishna Jewellers, Hyderabad which is a stand-alone store currently, denied the slowdown altogether. He said, “In the south we have not seen any such slowdown in the market, we have not seen any slowdown as such. There has been a good increase in sales and people are purchasing for the upcoming wedding season.”

Because of the presence of so many players who have invested huge amounts into business prospects, there is a shift in the purchase decisions of customers from the unorganized to the organised market. There is a definite trend in multiple other industries that whenever a shift like this happens the overall market size increases. “One has to stay dynamic and agile to protect one’s customers in order to expand; but overall I think jewellers with several chain stores are going to increase the overall market share. It’s good for the industry when we look at it on a large canvas.” AKHILESH AGARWAL Managing Director of Sri Krishna Jewellers, Hyderabad

Market Size of Jewellery

Has the market size changed after the pandemic? Has the consumer demand increased in the recent past? Vivek Vavadia owner of KR Sons, a retail-chain-jeweller from Ahmedabad, says, “The first two years after the lockdown have been the best period that I have seen in my life. A lot of clients were waiting to conduct wedding and suddenly everyone started buying in bulk. There were a lot of Covid-19 restrictions and people were not comfortable performing weddings of their daughters or sons on a small scale. So they waited until the lockdown was completely lifted and they went all out to make huge purchases. A lot of families especially in Gujarat felt that if wedding celebration costs are being curbed to a limited amount of guests and food then why not buy gold jewellery in bulk with a specific budget. Events were not happening so they invested in gold. People were buying 700-800 grams of gold from me instead of the usual 500 grams. There has been a marked increase of 20% in my business since the last one year.” Echoing Vavadia is Akhilesh Agarwal from Hyderabad who agrees that the market size of jewellery is growing because more number of people are buying jewellery now, post pandemic. “People who wanted to buy gold are now

investing in studded and precious jewellery, clients are upgrading themselves to diamond jewellery. Market size is increasing as the average income of the people has risen. I don’t think the pandemic has got anything to do with this. It is the income of the people that has gone up,” he reveals. Ahmedabadbased jeweller Vivek Vavadia, owner of KR Sons elaborates further, “There is a lot of competition in the market right now. A lot of stores have been launched in Ahmedabad as well. The demand for diamond jewellery is lesser than that of gold jewellery. Gold jewellery is very highly priced, only diamond jewellery prices have gone down due to the fluctuation in rates. Gold is doing really well since the last six months in the market. Market size is actually growing. It was definitely more than the previous years. My growth percentage was 20% more than the previous years before the pandemic.” Defining the demand further Agarwal said, “We have seen a 100% growth. The average ticket has gone up. Over the last 10 years there has been a constant 10-12% growth year on year but last year it spiked to a 100% growth. That is because of multiple reasons. The overall market size has increased. The price of the basic raw material gold has increased (long term) which is why the overall revenue has definitely gone up.

Jewellery Retail Expansion Spree

AVR Swarnamahal who has a legacy for the last 94 years in the jewellery industry claims a lot of trust in the minds and hearts of their clients since the last 94 years. Siddhanth Director at AVR Swarnamahal Jewelry Pvt Ltd informs, “Year on year we are increasing our sales because we are expanding. We have more store launches and going to regions where there are no stores. After the pandemic we have made great strides in expanding our business. We have recorded sales that has gone beyond our expectations. Currently we have 18 stores, growing and yet to launch 4-5 stores this year in Tamil Nadu, Karnataka and Pondicherry. Agarwal, who has a standalone store in Hyderabad is now considering expansion and says, “We are going for a multi-store expansion but, for now, our focus is only in South India which includes Andhra Pradesh, Telangana and Tamil Nadu. Once we are done in expanding in these three regions in the next three years then we could think about expanding pan India. For now we are thinking of opening 8 stores in these states in the next three years. Why expansion now we wonder, and he replies, “New launches are taking place for the sake of geo-specific penetration. Nowadays jewellers have their stores in every area where they live. Within every 5km radius there is a jewellery shop. Retailers are opening multiple stores so that customers have easy access to them as it is important to their business. How is it going to help them reach their sales target? New customer acquisition, localization of their stores so that they can acquire customers from local audiences. How is it going to affect us? It is going to affect us both positively and negatively and it all depends on how you take it. Negatively because the business may get a bit diluted for instance if a jeweller has a market share in a particular area and we have another jeweller open up a store of his own in that area then there would be dilution, very important for smaller businesses in that area to protect their clients with good customer service and even better customer experience. Lastly they have to focus on their pricing strategies which is the key to the success of their business. In order to compete with bigger players they have to keep their pricing quality, service as well as the experience top notch otherwise the bigger players will eat up the market share.”

Jewellery Towards Becoming An Organized Sector: Defining New Customers & Demand

Because of the presence of so many players who have invested huge amounts into business prospects, there is a shift in the purchase decisions of customers from the unorganized to the organised market. There is a definite trend in multiple other industries that whenever a shift like this happens the overall market size increases. “One has to stay dynamic and agile to protect one’s customers in order to expand; but overall I think jewellers with several chain stores are going to increase the overall market share. It’s good for the industry when we look at it on a large canvas,” quips Akhilesh Agarwal Agarwal from Shri Krishna Jewellers Hyderabad. He adds further stating that this kind of trend could dilute the market till a level where it could come down to the survival of the fittest. “Unless one is going to keep oneself updated with the designs and offer the right service to the customer along with a competitive pricing strategy…..but here again, one’s brand presence should be dynamic enough because the brand presence plays an important role. No matter how diluted the market is, clients visit stores only because of one’s brand presence. From them one could acquire new customers.” Today’s business world is a place where variety is the name of the game. AVR’s Siddhanth says, “We cater to everybody be it a farmer, a billionaire or even a small government employee. We have jewellery which caters to everyone. Our focus is on design, craftsmanship and we have our own design studio. We give exclusivity to the customer where the customer feels special.” Vivek Vavadia of KR Sons, Ahmedabad on the other hand feels that there are no new customer profiles. He says, “My client base is the same, but the purchasing power of the same existing clients has increased,” he informs. Siddhant of AVR Swarnamahal further elaborates that his customers are those women who prefer to wear light weight jewellery. “We are more into light weight jewellery which people can wear on a daily basis. We also have heavy jewellery but light weight jewellery customers are our main target. Our target is the client who purchases gold regularly as they are the ones who refer newer clients on a regular basis, through word of mouth or reference. Niche market customers are few but the regular market is huge. I prefer mass gathering of customers at my stores on a daily basis,” he states and adds, “Most of the brands may only cater to niche clientele but we are different as we cater to everybody. We don’t pick and choose our customers, anybody and everybody is welcome to our stores. We also have light weight anklets, silver jewellery and many more options for the typical client who visits stores for making small interesting purchases. We also have silver and gemstone furniture for those with a royal taste, ours is a one-stop destination for all our customer’s needs,” he concludes.

Noting the increased demand Agarwal says, “One of the reasons for increase in demand is because during the pandemic a lot of weddings were stopped. The ones that were happening were on a very small scale. The pandemic is now under control and the marriages are happening. All the accumulated weddings are happening now which is why there is a sudden influx in marriages and the customers have gone up.” Vivek Vavadia gives a valid reason for driving sale. He elaborates, “I have both gold and diamond stores. I can see a decline in the sales of diamond jewellery but a sharp increase in the purchase of gold jewellery. Nowadays people are more into buying gold. Since the past two years there has been a huge increase in the price of gold. It has really shot very high. People felt that rates will go higher so they went into a panic buying mode because of the rumors in the market that the prices will really skyrocket. People who have planned their marriages in 2023 have already stocked gold because of the fear in rise of prices. Rising rates are the main cause for such huge purchases of gold.”

Akshay Tritya & Design Trends

This year Akshay Tritiya was celebrated after two years. Siddhant of AVR Swarnamahal shared, “After two years Akshay Trithiya was celebrated in a big way so there was a lot of rush in our stores. It was a big boost to the entire jewellery industry. It is like a religious custom to purchase gold on that auspicious occasion. It’s a growing market and industry. There’s still a lot to do. De Beer’s Diamonds have launched themselves in India in a big way. We are the first corporates to have lab grown and mined diamonds at the same place. We are yet to see the full potential of both gold and diamonds." The rush was felt across the nation. Harshit Verma owner of 75-year-old legacy jewellery store, Punjab Jewellers from Dehradun informs that they saw more customers during Akshay Tritiya this year as compared to last year. “There was a very big difference in the walkins, let alone just-buy, there was more of the consumer walk-ins and ask for gold in any form, especially after the war and now during inflation which has caused major sparks in rates for gold. We noted people come ask for gold for investment purposes and this is a national phenomena.” Commenting in the design trends Vavadia from KR Sons Ahmedabad informs, “We are retailers and we are supposed to keep all types of jewellery and all the latest designs in the market. There is a very traditional type of jewellery design that comes under the heritage collection. People love heritage jewellery called polki jewellery. Polki jewellery is the latest trendsetter. After the pandemic there is a lot of demand for polki jewellery like necklaces, gemstone necklaces and bracelets.” Siddhant from AVR Swarnamahal says, “Trends are changing every month and every year it is different change in designs and trends. As preferences change we have to cater to each taste which is different and unique. 

People want sustainable jewellery. Expectations of people are very high in terms of styles and designs. A lot of people prefer daily wear jewellery, very minimalistic and light weight. Customers prefer light weight jewellery, only for weddings customers go for heavy bridal jewellery.” Talking about design trends in jewellery, Agarwal from Hyderabad says, “There is a category of design which is called Victorian. We have seen a very high demand in Victorian designs. This demand was there 7-8 years ago, it died down. In jewellery everything is a cycle. What goes round comes back and now these Victorian designs have returned in a big way. The kind of demand for it is very high and the volume in the Victorian design segment has really increased a lot. Victorian means that the designs have a certain oxidized finish or polished to make the gold look under toned and not bright yellow and even solitaires are now in great demand.

Events & Outlook

Presence of B2B events in the industry has upped trade. “There are a lot of B2B shows launched and there is no time for creativity, customers are looking for creativity through designs. That is why we are forced to have our own bespoke services, our own design studio because the industry is not focusing on design. Indian heritage has a lot of designs and slowly it is being lost. Being a very legacy conscious brand our customers have some expectations from us. We offer premium craftsmanship that our customers look forward to. Jewellers should focus more on designs, which India is famous for.” Vivek Vavadia says, “After the pandemic we started doing a lot of private exhibitions and also events that were happening. Initially we used to do 4-5 exhibitions in six months. Yes these exhibitions and events have definitely have given an exposure to my business and also boost sales.” Siddhanth form AVR Swarnamahal is optimistic about the future. “The jewellery industry in India is a growing market and there is scope for both a stand-alone retailer as well as a retail chain owner. Our population is the main reason that both the types of store owners will stick in the business and grow. As a retail chain owner I do not see any disadvantage as I have a loyal clientele that will keep coming back to me for more.” Vivek Vavadia from Ahmedabad’s KR Sons says, “When there is a growing demand there is obviously an advantage. In each and every corner of the Ahmedabad city a lot of stores are opening up. All my four stores are in different locations like Ahmedabad, Baroda, Mumbai and Mahua (Saurashtra), I see no disadvantages in the growing number of stores across the country. I only see prosperity of the gems and jewellery sector and that of the nation at large.” With inputs from Sunitta Raman.