Suvankar Sen, MD, Senco Gold and Diamonds Pvt ltd said to WGC that, with a company history of more than five decades, Senco Gold and Diamonds has witnessed considerable change in the Indian jewellery market. These developments have occurred both at the retail and trade level.
The chief catalyst was the liberalisation of the economy in 1991, which kick-started India’s economic growth. The resultant gains in consumer incomes, which have continued over the last three decades, have given rise to a large middle and upper middle class in India. Consumers are now more informed than ever, contributing to some notable shifts across the retail jewellery market.
To begin with, economic liberalisation paved the way for abolishing the Gold Control Act, which allowed the metal to be freely imported. This helped the retail trade to flourish as it became much easier to source gold. In addition, with incomes rising, tastes and preferences for jewellery have also changed.
For instance, with better exposure to Indian and global trends, due to rising travel and internet penetration, jewellery tastes are no longer local and traditional. A consumer in the South of India is no longer opposed to Jaipur jewellery or studded diamond jewellery.
Similarly, temple jewellery, which is widely popular and traditionally bought only in the South, now has acceptance even in the North. Modern takes on traditional jewellery are also increasingly popular, and young consumers are no longer fixated on buying only traditional pieces. The concerted shift from local to regional and national buying patterns has largely benefited chain stores, whose market share has grown sharply in recent years.
Separately, consumer behaviour has also been affected by the trend in rupee gold prices, which have touched record levels. Consumers normally have a fixed budget when they visit stores and so the amount of gold they can buy will vary with changing gold prices.
As a result, over the last five to six years retailers and manufacturers have increasingly focused on lightweight products to satisfy a range of budgets. This is important, even for traditionally heavy bridal pieces and temple jewellery. As a result, I believe, over the years there has been at least a 10% drop in average product weights.
Aside from moving to lighter pieces, the daily wear segment has seen some key developments. Most important, I believe, has been a trend embracing modern designs to fit Western attire, which has seen increased demand for lower caratages, notably 18-carat and 14-carat. Given that more than 65% of the Indian population is below 35, their choice of jewellery differs greatly from earlier generations as younger consumers tend to prefer Western clothing.
Another significant development over the last decade has been the penetration of mobile phones and low-cost internet. About a decade ago very few jewellery retailers focused on online sales, but today every large and mid-sized retailer has an online platform.
Even for us, online jewellery sales now account for between 5-10% of our overall sales, which have been growing since the pandemic. Lastly, rising internet access and the advent of social media have allowed retailers to interact directly with their consumers in new ways to create brand awareness and drive sales.
From a regulatory perspective, successive governments have taken steps that have impacted the trade and consumer behaviour. These include a sharp increase in import duty, restrictions on cash transactions, compulsory declaration of PAN Card on high-value transactions, demonetisation, the introduction of the Goods and Service Tax (GST) and compulsory hallmarking.
While the increase in import duty did initially help the unorganised trade, demonetisation and GST have supported the growth of organised operations. Numerous research agencies attest that chain stores are gaining market share in India. This trend has also been due to changing consumer behaviour and growing awareness about quality and price transparency. The clampdown on cash usage has also seen more consumers adopt digital payment modes, which is a positive sign.
Overall, I believe the Indian market will continue to evolve as the younger generation drives trends and as organised retailers gain market share. Retailers are trying to tap into the sizeable young population by offering products that suit their tastes and budget. It has made us adjust not just our product offerings, but also how we do business and interact with consumers.
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