Sravanthi Challapalli

Chennai, May 19

With the rather relentless rise in gold prices, a fixed price for gold jewellery must come as a pleasant shock to all customers hoping against hope to somehow indulge in a little excess. The jewellery brand Orra says it's been quoting a fixed price for all its diamond-studded jewellery since its launch and that this policy is an advantage at a time when consumers are holding on to their purses, waiting for a correction.

Speaking to

Business Line

, Mr Vijay Jain, CEO, Orra, said the company could afford to do this as it was a completely integrated company. Orra, part of the Antwerp-based Rosy Blue group, says being present at every stage of the value chain helps it to absorb the vagaries of the trade.

"Despite the rise in gold prices, Orra has seen the best ever sales in April, beating its own internal target by 40 per cent," says Mr Jain. He also doesn't see prices being revised for the next 6-12 months as "we are well hedged in terms of diamonds and golds."

But could that be because Orra is more expensive than other jewellers, to begin with? Mr Jain says the pricing is comparable on "stated quality" - if the customer is told she is getting a certain purity of diamond, say VVS (very, very small inclusions), that is what she gets, and not VS (very small), he claims.

A city jeweller, though, is sceptical. Prices of branded jewellery, in general, are more expensive than comparable products at traditional outlets, he says. They don't go by the traditional valuation of gold, stones, making charges and wastage. Also, these details are made available to the customer in a traditional outlet unlike in a branded outlet where it's not so transparent, he added. At a mark-up of 25-30 per cent in comparison to competition, Orra can well afford to sell its jewellery at a fixed price and still make a profit, he says.

However, Mr Jain says that Orra, being a very small part of a much larger business, does not have to worry about unsold inventory, profits and viability and that its aim is to pass on its benefits to the Indian customer, who believes in value for money. As for the charge that there is little transparency in pricing, he says the weight of gold and diamonds is provided and the customer can calculate backwards to estimate wastage and making charges.

What if the fixed price policy hurts the brand image? "We are established now and the customer is aware of our quality," he says confidently. Pure gold jewellery, however, is sold on the daily rate, but forms less than 2 per cent of Orra's product range. That's because customers should not feel they are paying more on a day the gold price falls, explains Mr Jain.

Mr Naresh H. Mehta, Trustee of the Chennai-based Mehta Jewellery, says the rising prices of gold have made a big dent in purchase. There is no fall in value terms but volumes have fallen by about 25-30 per cent as consumers are buying in smaller amounts. "There will be resistance from customers who are hoping for a correction but prices are definitely going to go up," he says.

(This article was published in the Business Line print edition dated May 20, 2006)
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