The uncertain economic scenario and regulatory hurdles related to gold imports are forcing retailers to tweak their strategies. Gold retailers such as PC Jewellers, Tanishq, Kalyan, among others, are shifting focus to diamond-studded wedding jewellery to drive volumes as well as margins as demand for gold jewellery has fallen.

A report by research and broking firm Edelweiss says that margins in wedding jewellery (comprising diamonds, platinum and semi-precious stones) are as high as 35 per cent compared to pure gold jewellery, where the gross margin is a mere 9-10 per cent. It adds that wedding jewellery drives volumes even in smaller towns as demand for diamonds is increasing.

New Delhi-based PC Jewellers wants to increase its share in the studded category to reduce the impact of gold price fluctuation and thereby improve margins. The company anticipates that sales will jump more than 25 per cent in fiscal 2014.

Sandeep Kulhalli, Vice-President, Marketing and Retail, Tanishq, said that consumers are holding back their gold jewellery purchases as they anticipate more fluctuations.

This has persuaded the company to focus more on studded wedding jewellery for better sales.

“This year the season has been good so far. We are also happy that the auspicious days for weddings are staggered throughout 2014. We expect a 10 per cent growth, but this is less than the 20-30 per cent growth that we witnessed last fiscal,” he added.

According to a senior official at Kerala-based Malabar Golds and Diamonds, the wedding category contributes over 40 per cent of the overall sales for retailers.

Also, this is growing as the young generation prefers diamonds and stylish platinum to the yellow metal. Even the southern market, the largest consumer of pure gold, is now slowly shifting to diamonds on back of aggressive campaigns.

However, Rajiv Popley, Director, Popley and Sons, said that the wedding category has always been a focus with his company. “The category not only caters to the bride and groom but to the entire family as it extends to return gifts in terms of gold and silver coins. People prefer this over gifting box of chocolates and sweets,” he added.

The Edelweiss report said that the gold jewellery demand declined in second quarter of financial year 2014 as gold prices increased quarter on quarter.

The demand was advanced to first quarter of fiscal 2014, which saw a sharp decline in gold prices. Also, gold coin sales have fallen drastically due to regulatory issues.

>priyanka.pani@thehindu.co.in

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