Jewellery firms cut making charges, offer lighter pieces to boost sales
Titan is enhancing its gold buyback programme, while Kalyan Jewellers is also stocking stores in smaller cities with affordable 18-carat pieces.
New Delhi: Jewellery makers are luring consumers back to stores with lower making charges and lighter pieces this festive season as gold prices continue to zoom ahead of peak festivities.
Gold prices hit an all-time high on Thursday amid geopolitical tensions in the Middle East and uncertainty around the US elections. 24-carat gold touched a high of ₹78,293.0 for 10 grams in the national capital on Friday. The yellow metal scaled a new peak to trade at ₹78,348 per 10 gm as of 6:45 p.m. on Monday, according to MCX data.
Also read | Why gold sales will be missing the glitter this Diwali
India, the world's second-largest gold consumer, often sees a surge in demand during festive seasons and weddings that typically fall in the second half of the fiscal year. However, rising gold prices threaten to dampen purchases this year.
“Whatever our indication shows, (the consumer) sentiment is high. There may be a little bit of dampener due to gold prices," Ajoy Chawla, CEO of Titan’s jewellery division said in an interview with Mint.
- Gold prices have reached all-time highs, impacting consumer demand.
- Despite rising prices, there is still strong demand for gold during festive seasons.
- Jewellery makers are implementing strategies to attract consumers, including lower making charges and lighter pieces.
- Consumer sentiment remains high, but rising gold prices may dampen purchases.
- Retailers are expanding their offerings of 18-carat jewellery to meet demand for affordable options.
In the September quarter, Titan's jewellery division that comprises brands such as Tanishq and Mia reported a 25% jump in domestic demand compared to the previous year. Titan is among the largest organized jewellers in the country.
Duty cut aids demand
Consumer demand significantly picked up momentum after the reduction in customs duty on gold imports from 15% to 6%, leading to a strong double-digit uptick in gold (plain) for the quarter, the company said in its quarter update on 04 October.
However, high gold prices remain a concern, he said. “I can't deny that there is some concern, because many people are interested, and they are just waiting to see if any correction happens," he said.
In response the jeweller that operates over 475 stores has dialed up its gold buyback scheme, increased the number of lightweight ornaments in its collection and lowered its making charges.
Also read | Will India go for gold this festive, wedding season?
“In our system today, about 50% of our stock keeping units or SKUs are lightweights optimized for gold. We have introduced 500 new designs in light weight just for the festive season in Tanishq; and in Mia, of course, virtually everything is lightweight," Chawla said. "Given the volatility in gold prices we have introduced the best rate offer—you can pick it up now, pay a small advance, and buy it closer to Diwali, and you can pick it at whichever rate is lower…We are also dialing up our gold exchange programme."
Meanwhile, Kerala-based Kalyan Jewellers reported a 39% year-over-year revenue growth in its second quarter. Strong in-store sales across all markets and a reduction in gold import duties drove this growth. While the Shraadh period and volatile gold prices had some impact, increased footfall from July to August largely offset these factors.
However, the retailer is closely monitoring the recent surge in gold prices.
Ramesh Kalyanaraman, executive director, Kalyan Jewellers, is optimistic about third-quarter demand. Price fluctuations often lead to temporary pauses in consumer buying but the company has strong festive season plans, including campaigns, pre-bookings, and budget-friendly jewellery designs, he said.
Fitting consumer's budget
Given the volatility in gold prices the retailer is ensuring it makes pieces that fit the consumer's budget. "If shoppers walk in with say a budget of Rs2 lakh or Rs5 lakh, they may not get the same grammage as they got last year given a jump in gold prices. So we keep that in mind and design pieces that fit their price range."
The retailer has expanded its 18-carat jewellery offerings to meet growing demand for affordable options in smaller cities. "Up until two years ago such pieces were only available in large metros, now we see demand for such pieces in tier 2 and tier 3 cities too," he said. This lifts the constraints around buying gold despite escalating prices.
Also read | Silver hits ₹1 lakh mark amid surge in demand, gold reaches all-time high
The move comes as competition in organized jewellery is growing. In July, Aditya Birla Group announced its entry into the branded jewellery business, marking the presence of yet another large conglomerate in India’s Rs6-7 trillion jewellery market.
“Every organized player is expanding at a certain aggressive rate because of the formalization," Titan's Chawla said. “More organized players will expand, and competitive intensity on gold rate and on making charges will remain."
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