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The continuous rise in gold prices has resulted in a situation wherein people buy gold more in coins or biscuits rather than as jewellery. Jewellery sales have remained flat in the last two months. But, sales of 24-carat gold coins and biscuits have increased substantially during the period, “which obviously means that the consistent rise in gold prices has actually encouraged even the lower middle-class consumers to see gold as a good investment option”, says Mr Sandeep Kulhalli, Vice-President (Retail), Tanishq.
According to various retailers, there has been a significant fall in sales of gold jewellery in recent times. “Consumers await price correction; and we expect the trend to continue through this year,” says a ‘consultant' for a leading retailer in Chennai. However, need-based and seasonal buying still continues, they say.
“Our daily sales might have declined a bit in terms of weight, as consumers prefer light weight jewellery. But, this has been more than compensated by gold coin and biscuit sales,” said Mr G.R. Anantha Padmanabhan, Director, GRT Jewellers, a jewellery retail outlet in Tamil Nadu. The company is currently celebrating ‘Tallest Bangle Mela' – where the consumer who stacks up the most number of bangles will get a 6-gram gold bangle free – to promote sales. “The idea is only to encourage our customers to invest in gold – be it in the form of jewellery or coins,” he says.
Mr N. Anantha Padmanabhan, Chairman, Gold Club of Chennai and Managing Director of NAC Jewellery, says there has at least been a 35 per cent fall in gold jewellery offtake. “Majority of them buy bullions these days.”
According to him, this trend has resulted in poor margins for retailers. “Retailers operate on thin margins in the 24-carat gold segment,” he says.
Mr Kulhalli of Tanishq said that in fact, there has been a “two-digit growth” in jewellery sales in the first six months of 2011 compared with the same period a year ago. “Buying more coins and biscuits has been a trend only in the last two months.”
However, most retailers hope that the coming months will see a surge in demand for jewellery, irrespective of the price trend, as we step into the festival and marriage season.
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