Jewellers introduce innovative offers for bullion to revive demand

Bullion watch Jewel TrendzSoaring prices of gold and below normal monsoon is likely to affect the demand for gold and silver in India. In addition to this, lack of festivals and weddings are also posing a threat to dampen the jewellery sales. To deal with this situation Indian jewellers offer BMWs, discounts to lure gold buyers.

The current gold prices and monsoons have surely have dampen the jewellery sales in India. Though there was slight jump in sales figure after the yellow metal dropped below `27,000 per 10 gm, consumers have taken a back seat once again due to slow price surge. To generate the rush, to help beat the cloudy, glum skies lots of jewellers are introducing lucrative offers to maintain sales figure.Joyalukkas India Pvt. Ltd, renowned gold and diamond retailer in India, is offering 12 free BMW cars and two kilograms of bullion in a lucky draw to fight with the current slowdown in the gems and jewellery market. This is first time Joyalukkas has come up with single promotion for entire India and Gulf countries to boost demand during the rainy season. “There are holidays in the Gulf countries during these months and non-resident Indian come back to their hometowns in South India. We are hoping to tap the market,” Joy Alukkas, Managing Director of Joyalukkas told ET.

The Joyalukkas offer is valid until August 2, 2014 and is likely to boost the sales by 10 per cent to 15 per cent. The group has 47 stores in India, 32 in Middle East and one each in UK, Singapore and Malaysia. Joyalukkas are not only one, who introduced offer. Others like Gitanjali Gems Ltd, Rajesh Exports Ltd, Kalyan Jewellers Ltd, etc are also giving away discounts and opportunity to dine with Bollywood celebrities. The monsoon season is considered a lean period for gold demand due to lack of festivals and weddings in this season. The import curbs imposed last year was another reason for sales slowdown. Last year, Government raised duties on inbound shipments of the yellow metal three times in 2013 to contain a record current-account deficit that pushed rupee to an all-time low.

The demand sales of Gitanjali Gems dropped 24 per cent to `1,24,400 crores in the financial year ended March 31, the first annual decline in revenue since listing on the stock exchanges in 2006, according to data compiled by Bloomberg. Similarly, sales at Rajesh Exports’ also slid 24 per cent to `2,35,400 crores, the first annual slump since 2003, while Titan Co. Ltd’d jewellery division grew 6.5 per cent to `8,63,200 crores. According to analysts, freebies may stem the decline in sales but it is also Prime Minister Narendra Modi’s effort to revive economic growth may have a greater impact on gold and silver demand in India. Modi, who won the election after promising to revive the economic growth, was the biggest poll victory for any single party in three decades.

Hence, this victory drove the benchmark S&P BSE Sensex to an all-time high in June, as foreign investors bought close to $10 billion of shares in 2014 and domestic mutual funds attracted the most inflows in five years in May. The gems and jewellery sector expects a revival in gold jewellery demand. According to a Mumbai-based jeweller, “By December if the consumer sentiment improves further, then you could see better volume growth.” Gitanjali Gems, India’s biggest gold and diamond jeweller by revenue will be announcing a rain and shine plan, that would offer heavy discounts on ornaments and jewellery making charges.

“Sales are flattish at the moment because stocks are less and people are waiting for new policies to be unveiled by the new government. We expect demand to pick up because of this attractive offers,” said Mehul Choksi to a newspaper. The 80:20 policy introduced by the Government last year further resulted in a drop in demand for the yellow metal, helping China overtake India as the world’s number one gold consumer. The curb on gold has already helped narrow the current account deficit to $32.4 billion in FY14 from a record of $87.8 billion last year. A shrinking deficit aided the rupee in its recovery. It had rebounded about 13 per cent since touching an all-time low of 68.845 against the Dollar in August.

Rajesh Exports Chairman Rajesh Mehta told to a newspaper that a pick-up in demand will result in a growth of as much as 25 per cent in net income this financial year. He believes that 2014 is going to be a good year and with a waive off introduced in ornament making charges will definitely increase the sales of the company. PC Jewellers is also adopting the strategy giving lucrative discounts to consumers. They have been giving flat 10 per cent off on diamond jewellery and 15 per cent off on the making charges of gold jewellery. Kalyan Jewellers, one of the biggest Indian retail chains is offering their customers a chance to dine with their celebrity brand ambassador Aishwarya Rai Bachchan on the sets of a film. Ramesh Kalyanaraman, Executive Director of the Thrissur-Kerala based jeweller said that Kalyan has been rewarding loyal customers with such offers depending on the number of times they visited the store in a year. He said to a newspaper, “This time we expect demand to be better as the mood is positive because of the change in Government.

“Last year there was frenzy among people to buy gold and sell it off as prices started climbing up. They wanted to make quick gains from gold as equity market was not giving good returns. Now there is a bull run in the equity market, which is why we do not see people buying gold heavily,” Chairman of All Indian Gem and Jewellery Trade Federation (GJF), Haresh Soni said in an interview. Gold has touched `27,500 per 10 gm in the spot market. Internationally, gold and silver prices have started shooting up due to concern that a civil war looms in Iraq and escalating tension between Ukraine and Russia. In the global markets, gold futures clocked a second straight weekly gain as escalating violence in Iraq boosted demand for the precious metal as a haven.

Soni feels that gold will not cross `30,000 per 10 gm this time. “Unless there is some major global tension, prices will not cross `30,000, unlike last year when gold prices crossed `33,000 as rupee depreciated against dollar to touch 69 level,” he said. But the fear of below normal monsoon is a matter of concern. Prthviraj Kothari, Vice President of Indian Bullion and Jewellers’ Association, said, “Less rainfall will have a negative sentiment on rural gold purchase.” Soni added that there will be selling pressure in the market as farmers will try to offload their household gold to meet their livelihood.

Gitanjali’s shares have gained 28 per cent this year in Mumbai, compared with the 18 per cent rally in the benchmark S&P BSE Sensex index has more than doubled to `188.55, while Titan has advanced 42 per cent to `326.05. A weak monsoon poses a risk as almost 65 per cent of Indian purchases are from the rural areas, according to UBS AG. The monsoons are expected to be 7 per cent below normal as per MET department. Earlier Citigroup Analysts Rohini Malkhani and Anurag Jha had predicted the Indian gold imports to climb by 25 per cent to 800 tons in the year that began April 1 as the Reserve Bank of India was expected to relax some restrictions. The lucrative offers and expectation of a change in import tax, jewellers expect to see some normalcy in demand.

The first set of the Joyalukkas offer or ‘Golden Carnival’ promotion winners have already been announced. Mr Alukkas said during the event, “It’s a pleasure to see such an overwhelming response for Joyalukkas Golden Carnival.” The participants in addition to getting the big win opportunity also have the option to avail an attractive exchange offer wherein customers will be offered zero deduction in weight and rate of old jewellery on purchase of new jewellery at the store. There are many more jewellers that intend to introduce discounts, offers and freebies to lure more and more customers during monsoons.

For example, PN Gadgil Jewellers has launched Mangalsutra Mahotsav from 27th July – 24th August, whereby the renowned retailers are offering 75 per cent off on diamond mangalsutra pendant making charges to lure in the customers. Monsoons are always considered a lull period for jewellery business, hence to attract the customers many retail chains and jewellers introduce attractive schemes, discounts, offers during this time.

Khimji Jewellers of Bhubhaneshwar has also introduced the end of season sale for the customers. The renowned retail chain in South India is offering 60 per cent off on making charges of gold jewellery, zero making charges on diamond jewellery and many more such offers at the stores. Besides this offers, jewellers also introduce affordable collections for the people. Since, there are no festivals or wedding in monsoon, people are reluctant to invest money in jewellery. However, this is the time when people prefer to buy jewellery as luxury rather than investment. Hence, monsoons are perfect time to introduce feasible collections for the consumers.