Gold brand power: Inside the changing face of India's gold market
Our Indian correspondent takes a closer look at where Indians are buying their jewellery in small towns and the increasing power of brands.
Posted: Tuesday , 10 Jun 2014
Mumbai (Mineweb) -
Promita Chakraborty often bought small quantities of gold each month, though she no longer frequents her neighbourhood bullion retailer. Her loyalty now lies with the organised retail jewellery chains that have invaded her district, bringing with them a brand name and a brave new approach to gold, as an object of desire.
All of 39-years-old, Promita swears by Malabar Gold and Diamonds and Tribhovandas Bhimji Zaveri (TBZ), two of the scores of branded jewellery chains that have set up shop near her home in Kolkatta, in Eastern India.
"There are many advantages to buying jewellery from these brands. For one, their designs are quite different from the rest. And the customer is always assured of the right carat at the time of purchase, and will not get cheated,'' she said.
Kerala based Joyalukkas has also opened a 5,000 square feet store on Camac Street, Kolkatta, the same location where TBZ and Malabar already have big showrooms.
What exactly has been happening in this small town? Three big brand retailers all jostling for space on the main street? With buyers increasingly becoming more brand conscious, consumers are thronging branded jewellery stores, who together reportedly sell 250 kilograms daily on an average in just this one town in Kolkatta.
"Customers in smaller towns have a fetish for all kinds of gold jewellery and they now want jewelleries that have a contemporary appeal,'' said Nilesh Parekh of Shree Ganesh Jewellery House, which retails gold jewellery under the brand name Gaja.
He added that there is a definite market for branded jewellery, especially if something is aimed at the younger generation, which wants to buy fashionable real, authenticate gold jewellery in smaller towns.
The demand for gold jewellery is also buoyed by increasing affluence and preference for branded jewellery. Jewellery retailer Tanishq also plans to open 20 new stores across the country next year.
"We plan to set up 20 more retail stores within the next year,'' said CEO C K Venkataraman. Relaunching a Tanishq showroom in Ahmedabad, Gujarat in Western India recently, he said Gujarati women's jewellery buying preferences were changing drastically, which has made the retailer focus more on diamond jewellery pieces at its stores, rather than just gold ornaments.
"In Gujarat, women now prefer to buy diamond jewellery rather than gold jewellery. However, in Southern states like Tamil Nadu, gold jewellery is still in fashion. Another major demand is for everyday jewellery which can be worn to the work place by women,'' the CEO added.
Here too, the official added, the preference was for branded jewellery pieces, rather than rely on the traditional jeweller.
The relaunched Tanishq showroom has now been converted into a large format store with multiple floors.
The official maintained that the company's latest business initiative is to open such large format stores across the country, to cater to a large number of growing clientile. He added that organised retailing is growing at 12% to 15% in India.
"Gold prices are hovering at four month lows and the rupee has regained its strength. Even non resident Indians are showing more interest in buying the precious metal at our stores in the UAE,'' said an official at gold retailer, Joy Alukkas.
The brand has inaugurated a 60-day Golden Carnival scheme across the Gulf region, wherein shoppers would get a chance to win 12 BMW cars and 2 kilograms of gold on every purchase of a certain denomination.
Jewellers like Tanishq and Joy Alukkas have also reported higher grammage sales in the past few weeks with the price sliding southward. "There has been an increase in terms of kilo gold sales over the past few days,'' said an official at Tanishq.
Joy Alukkas' official said the store had recorded a rise in volumes at the 46 stores across the country.
"Major jewellery brands from across the country are keen to spread to smaller towns. Buyers are becoming increasingly brand conscious, particularly when it comes to gifting gold jewellery pieces,'' said bullion retailer Sukumar Dasgupta, who added that gold would never go out of fashion.
While Kerala based Malabar Gold has a lone showroom on Camac Street, Kolkatta, Mumbai based TBZ opened two stores in 2012.
"The gold jewellery market in Eastern India alone is estimated to be worth around $11 billion (Rs 700 billion). There is no concrete data, because a large part of the market is still unorganised, but the estimated yearly growth rate of the jewellery business ranges between 5% and 10% per annum,'' said Bachhraj Bamalwa of the All India Gems and Jewellery Trade Federation.
The entry of big brands has created a win-win situation not just for buyers, but also for skilled artisans.
"Gold is a staple in this country. Everyone buys gold for weddings, ocassions and prayer ceremonies, even the younger generation. That has not changed over all these years,'' added Subir Kumar Sen of BC Sen & Company, a bullion retailer.