Diwali may not add lustre to jewellers' expectations

Gold and diamond jewellery retailers are cautiously optimistic about sales this Diwali, due to high volatility in the prices of precious metals and unexpected tightness in liquidity. Lack of seasonal discount offers may also keep retail consumers away this festive season — traditionally the most “auspicious” occasion to buy gold. Consequently, retailers are expecting gold sales to remain flat this year.

The Diwali season for jewellery retailers begins two months ahead of the actual date (October 26 this year), during which retail consumers accumulate funds to buy gold, either jewellery or investment products like coins and ETFs (exchange trade funds) or paper gold. During this period, generally, a third of the yellow metal’s annual consumption is sold to consumers. According to the World Gold Council, total gold demand in India was recorded at 963 tonnes last year.

“This year is different,” says Prithviraj Kothari, managing director of RiddiSiddhi Bullion, one of India’s largest online gold retailers. “People are facing with very high inflation along with the peak interest rate which have squeezed their savings creating thereby, liquidity tightness at the hands of individual consumers.”

Also, given that gold’s future movement was available with almost all consumers, people prefer to buy the metal on corrections rather than waiting for an auspicious occasion, he adds. “They (consumers), opt to exchange the metal on festival days and avoid fresh purchases. Therefore, overall gold sales may remain around 10 per cent lesser this Diwali than last season,” he quips.

In order to capture the exchange trend, Kolkata-based Shree Ganesh Jewellery House has introduced waiver of five to seven per cent usual cut as melting charges for old gold jewellery sales. This facility is not available for customer seeking cash for jewellery, says Umesh Parekh, its MD. Leading gold and jewellery retailers like RSBL, Tanishq, Rajesh Exports and Tribhovandas Bhimji Zaveri (TBZ) have not introduced any specific discount offers for this Diwali season unlike last year. However, a majority of them have extended their existing promotional offers until Diwali to lure customers.

Tanishq, for example, has extended 20 per cent discount on high-value diamond jewellery sales worth over Rs 200,000 that the company introduced during the monsoon season — until Diwali. “We do not have any specific offers especially meant for Diwali. But, we are continuing with existing offers until the current festive season,” says Sandeep Kulhali, Tanizhq’s vice-president (retail & marketing). He, however, hopes for marginally higher sales this Diwali season. TBZ, one of the leading jewellery retailers in Mumbai, is yet to introduce any discount offer on jewellery sales.

According to Rajesh Mehta, managing director of Bangaluru-based Rajesh Exports, the company sales gold at the lowest price the precious metal available in the world. “We are the only mines to market company in terms of gold,” he says. “Hence, we take only single digit transportation charge from customers availing thereby the yellow metal to consumers without any making charges. Since, further discount will result into a loss, there is no such offer from the company.”

The Reserve Bank of India has raised interest several times this calendar year to cool off inflation. But, rising fuel prices proved the central bank’s effort futile. A sharp increase in gold prices has also faded jewellers’ expectations. Gold price rose over 30 per cent this year to quote currently around Rs 27,000 per 10 grams.