Fall in gold prices leads to recovery for jewellery sales post demonetisation

Digital transactions have lead the way as jewellery sales have picked up in the past 2 weeks

Jewellery sales in India are gradually picking up momentum with consumers visiting retail stores to take advantage of the fall in gold prices.

Consequently, there has been a sharp increase in consumer footfall over the past two weeks as buyers are getting habituated with cashless transactions. Since cash transactions contributed nearly half of the jewellery sector's turnover, the complete shift to cashless transactions is expected to take at least a year with buyers in remote areas requiring a bank account, debit cards and proper training to initiate cashless transactions.

Consumers in urban areas, however, have started using cards and online fund transfers for jewellery purchases.

 

"Buyers have started gradually coming in. Sales have begun gradually picking up. But it will take sometime for restoring jewellery sales to the pre-demonetisation level. Online transaction is a smooth experience which requires no human intervention for counting, accepting, depositing in the bank etc. Online transactions are completed in a few seconds without any error or omission. The moment we get the message of fund transfer, we deliver the jewellery," said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar.

In short, jewellery sales have recovered half of their losses since demonetisation in the past two weeks.

"Cash transaction has disappeared. But, consumers used to card transactions are coming back to jewellery stores. We are witnessing a turnaround in consumers turnouts since December," said Ashok Minawala, director, All India Gems and Jewellery Trade Federation.

Gold prices have declined by 11 per cent since November 8, the day demonetisation of Rs 500 and Rs 1,000 notes was announced, to trade currently at Rs 27,900 per 10 gm.