Jewellery firms cut making charges, offer lighter pieces to boost sales

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.

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.

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.

“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.

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.”