Jewellery brands have a field day this Diwali

A change in policy last week has brought consumers back to retail showrooms, giving branded players a leg-up

The national-capital-based PC Jeweller is flaunting its gold and diamond collection on television screens quite aggressively this Diwali using actors Akshay Kumar and Twinkle Khanna as brand ambassadors. The move by the branded jewellery maker  to launch its first national advertising campaign though has come at an opportune time. 

Policy decisions taken last week by the government have ensured consumers are making their way back to retail showrooms, giving small and big branded players a leg-up. Most expect business to boom this festive, coming after a pall of gloom that lasted for nearly 18 months. 

To put things in perspective, the Ministry of Finance held that the Prevention of Money Laundering Act (PMLA) would no longer apply to jewellers, allowing cash transactions to be extended to Rs 2 lakh from Rs 50,000 earlier. This would, say experts, allow consumers to splurge more freely on jewellery, especially during Diwali, an occasion that contributes 25 per cent in annual sales to players.

Jewellery brands, both big and small, are predictably lapping up this relief, putting their best foot forward this festive season. Since the announcement, there has been a noticeable increase in advertising and sales promotions by most brands including  Gitanjali,  Tanishq  and  Tribhovandas Bhimji Zaveri (TBZ), with consumers opting for housemarks over hallmarked jewellery. 

The big shift

At the outset while opting for housemarks or the local mark of a jeweller is risky, players say demand is outstripping supply of hallmarked jewellery, prompting the shift. Hallmark, for the uninitiated, is the government-approved standard for gold jewellery, done to test purity by specialised centres. 

Hallmarking of only 14-carat, 18-carat and 22-carat gold ornaments is permitted in the country, leaving other areas open, explains Nitin Khandelwal, chairman, All India Gems and Jewellery Trade Federation. “Demand for  24-carat gold jewellery, for instance, is met through housemarks,” he says.

Jewellers have been lobbying hard with the government to permit hallmarking of all types of gold jewellery in view of customer needs, experts said. The proposal is  under consideration as proper standards are an ideal  practice since the government is seeking to improve transparency in the business.

From February 2016, the Indian government has undertaken a series of measures including slapping an excise duty of one per cent on jewellery and cutting the cash transaction limit by 60 per cent when buying ornaments. This kept  consumers away from the market.

The preference for housemarks therefore in the absence of hallmarked jewellery now, say experts, points to the pent-up demand for the precious metal that has been building up over the last 18 months. 

India remains among the world’s biggest consumers of gold, ranked second after China. While September imports of gold by India rose 31 per cent year-on-year to 48 tonnes, it could be higher still in October, experts said, crossing 70 tonnes. 

Apart from Dussehra, which is considered auspicious by Hindus to buy jewellery, Dhanteras, among the key days during Diwali, also sees heavy buying of ornaments. Brands are said to be stocking up for Dhanteras, which falls on Tuesday (October 17) in anticipation of record sales this year.

Trends this year, say experts, also point to the preference for affordable gold and diamond-studded jewellery as consumers across the board aspire to look good. This comes as brands make their presence felt across media from print to television, digital and outdoor.

“Diamond is considered an alternative to gold for investment. Affordable diamond-studded gold jewellery is high in demand this festive season,”says Mehul Choksi, managing director, Gitanjali Gems, producer and retailer of brands such as Nakshatra, Sangini and Asmi.

Jewellers such as TBZ and Om, on the other hand, are offering discounts on making charges of up to 100 per cent for diamond jewellery and up to 55 per cent for gold jewellery to lure consumers.

India’s largest branded jewellery maker Tanishq, meanwhile, sees consumers opting for bangles, necklace and earring sets this Diwali, prompting heavy discounts and offers in these product segments, experts said.

“Demand for gold jewellery has been steady so far this season, which is a good sign. While gold jewellery remains the favourite of customers, diamond jewellery is also seeing good traction. In my view, it is a healthy mix of demand for gold and diamond jewellery,” Sandeep Kulhalli, vice president (retail  & marketing), Tanishq, says.

Online jewellers too are leaving no stone unturned in their endeavour to make good the period, offering everything from innovative designs and unique craftsmanship to free-home deliveries on assured purchases. Players such as Bluestone and Caratlane, a subsidiary of Titan, are already seeing three times more traffic on their websites this festive season, sector experts said.

Apart from this, online players are also focusing hard on the gifting market this year, positioning themselves as ideal platforms for the same. The idea, they say, is to strike while the iron is hot and take advantage of the boom.