The ongoing festive season, which comes after two years of COVID, has made gold, diamonds and platinum jewellers optimistic.
After witnessing a spike in July, jewellery brands are looking forward to bumper festive sales this year. Manufacturers are opening new stores and upping their marketing activities to reach out to more consumers.
“We are expecting the demand to go up this festive season as we are coming out of the shadows of COVID-19. We are putting up stores in eastern India (West Bengal, Orissa, Bihar and Assam), which would benefit from both Pujo and Diwali,” Kushal Singh, head of marketing of Melorra, told Business Insider India.
Melorra plans to launch 60 stores by the end of this fiscal and 350 by FY26.
As per the Retailers Association of India, jewellery sales this July were 36% higher than they were last July.
This is in spite of erratic movements in gold prices. In mid-July, 10 grams of gold had dropped to ₹51,860. While falling prices is generally good news for buyers, since it’s also treated as an investment, they could turn nervous if their prices are erratic. Also, they have been inching up since late July and it caught pace in August.
Singh however says that prices do influence purchases, but only temporarily. “Historically, gold imports to India have grown despite gold prices going up,” said Singh. He said that most of the demand will come from tier I and II cities during the festive season.
Kalyan Jewellers hopes a rerun of the last quarter’s performance and also expects it to be better going ahead. It reported a net profit of ₹108 crore in the April-June quarter and its consolidated revenues stood at ₹3,333 crore.
“July has been very good, the momentum is better than Q1. In the South, there's wedding and festive season, so we expect that Q2 should be good and we have high hopes because July has been behaving extremely well in India and the Middle East,” said Ramesh Kalyanaraman, executive director, Kalyan Jewellers.
In the last one year, most jewellery stocks provided positive returns to their investors.
After the pause
Kalyanraman said that consumers tend to take a pause during major macro-economic changes but that hasn’t affected brand’s long-term sales.
“It [fluctuation] does not impact our sales because the customer comes with a budget and they buy for the money they have. So, if the gold price is more the volume will be lesser, if the gold price is low, then the volume will be higher, because customers come with a budget and they adjust accordingly,” said Kalyanraman.
To deck up for the festive season, Kalyan Jewellers is now working on increasing its retail footprint in non-Southern India by another 8%, before Diwali this year.
Platinum industry expects a buoyant consumer sentiment
The platinum market too is gaining back its lustre after a lull. In Q4 FY22, it grew 30% year on year on the back of the wedding and festive season. It’s expected to return to pre-pandemic levels.
Platinum Guild International-India’s managing director Vaishali Banerjee told Business Insider India that it has been encouraging to see platinum jewellery moving in a positive direction.
“This year's H1 has seen tremendous recovery and phenomenal growth, with weddings and the festive season returning after two years. With the unlock phases post-Covid, platinum has been able to maintain a consistent and strong position in the Indian jewellery industry,” she said.
Banerjee’s outlook for the second half of 2022 is equally positive.
“We are hopeful that this growth trajectory will continue in H2. During the last quarter, the already buoyant consumer sentiment and positivity are expected to further increase due to the convergence between the festive and wedding seasons. This extremely important jewellery purchase period will be built through various consumer and trade marketing campaigns by PGI and its strategic partners," said Banerjee.
Ovals, emeralds, long radiants, long cushions
Despite a supply cut from Russia, diamond jewellery brands too expect good sales.
“The forthcoming season is always important for the diamond industry. It is the season to sparkle! Jewellers and retailers replenish their stocks during August and September to fulfill their orders for the festive and wedding season. To meet the demands of the retailers and jewellers there is enough inventory and supply of natural diamonds of all shapes and sizes,” said Rajesh Shah, partner, Venus Jewel.
Diamond manufacturing, said Shah, is demand-led, which means the production automatically changes as demand grows. This time, ovals, emeralds, long radiants, long cushions and diamonds are in demand.
For Caratlane, Dhanteras, Akshay Tritiya and Valentine’s day contribute over 45% to its revenue.
“We have done a lot of preparations to be ready in time for the season in terms of adding more designs, more inventory, marketing actions, all of those are also on track. We feel a lot of confidence and optimism about the season,” Avnish Anand, COO and co-founder of CaratLane told Business Insider India.