The Hindu Business Line : Good as gold

The general recovery in Coimbatore's industrial and business environment has also enlivened the city's jewellery trade. Coimbatore has over the years developed its strength in ornament manufacturing, backed by jewellery designs emanating from the bordering Kerala state.

The gold trade witnessed upheavals in the aftermath of serial bomb blasts in 1998. However, the recovery in the retail trade has helped the city regain its hold over the wholesale jewellery business, as Coimbatore-based jewellers supply tomajor buying centres in the country.

The spiralling gold prices are forcing people to not only think twice before making a purchase but also doubly ensure the product is of good quality."If at all there is any emerging pattern in consumer preference in recent times, it is their willingness to spend on quality jewels," says Chandiran, managing director of KTM Jewellery Ltd, a sister concern of the well-known textile house Sri Chennai Silks.

"Till recently, people preferred to buy jewels based on the discounts offered by the retailers but that has given way to selection of quality retailers and hallmarked jewellery. Another significant change in consumer preference is towards branded jewels," says T.K. Mahadevan of Kalyan Jewellers.

But is the rising price of the yellow metal forcing people to delay purchases?

T. Shanta Kumar, managing director of Kirtilal Kalidas and Co feels that jewellery has an emotional connect with people and gold ornaments have also acquired fashion connotations. People have always considered gold investment worthwhile and a recent trend is consumers upgradingtheir jewellery.

The steep gold prices may put off those who buy gold as investment, but purchases for weddings and other social occasions continue without pause. Chandiran estimates there has been a 10-15 per cent drop in jewellery sales.

Although short-term gold investments have been affected, long-term investments have not lost their sheen, says Shanta Kumar, who feels that a market correction was likely if gold prices continued to rise.

The sale of gold coins have received a boost as people prefer to buy these to avoid making and wastage charges. "In the last three months we have sold more gold coins at our outlets," says Mahadevan.

The time is also favourable for selling old ornaments to book profits, while it favours shopkeepers who allow buyers to exchange old jewellery for new. But this segment, says Shanta Kumar, is not that significant as there is a lot of emotional value attached to retaining gold jewellery.

While traders are reluctant to spell out the size of the Coimbatore jewellery market, daily transaction in wholesale and retail is estimated at 250-300 kg.