“Shoppers opting for lighter, more affordable pieces amid rising gold prices” | commodities

The gold tax cut, which lowered rates by about 9%, caused a temporary increase in demand. This unusually significant fall in gold prices led to a noticeable increase in purchases of gold jewelry for several months. However, this effect was short-lived as international gold prices changed. While the initial surge in demand benefited luxury jewelry brands by boosting sales, prices have now returned to previous levels.

Is there any change in customer behavior, especially during the holidays?

Despite rising gold prices, the enduring appeal of gold during holiday and wedding seasons remains strong. However, instead of investing in traditional heavy gold pieces, many customers are opting for lighter and more affordable options such as 14k or 18k gold jewelry. Silver jewelry is also growing in interest as a more budget-friendly alternative. Buyers are still buying gold because they anticipate that prices may continue to rise, so they prefer to secure gold now rather than wait for a potential drop.

Have Gold ETFs and Sovereign Bonds Affected Jewelry Sales?

The impact of gold ETFs and sovereign bonds on physical gold sales was relatively smaller. Physical gold continues to hold strong cultural significance, particularly for jewelry buyers. About 20% of jewelry store sales come from bullion purchases, most of which are eventually turned into jewelry. Only 1-2% of the total turnover is gold focused exclusively on investment, which remains in its raw form. Therefore, while ETFs and sovereign bonds have made gold more accessible to a wider range of investors, they have not significantly disrupted the demand for physical gold in the jewelery sector.

How much is Artificial Intelligence integrated into the jewelry business?

The jewelry business is yet to fully utilize artificial intelligence (AI), especially in retail. However, Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems play critical roles. These systems help manage inventory, track sales trends, and understand customer preferences. We have internal systems that capture buyer behavior and trends, but the business does not yet have large-scale AI integration. ERP systems are evolving with built-in business intelligence tools that help analyze sales data without the need for external AI or machine learning solutions. AI may have potential applications in manufacturing, but for now, the focus is more on traditional retail systems.

Do cultural and religious factors influence the demand for gold?

Cultural and religious beliefs significantly influence the demand for gold during festive periods. In the Hindu calendar, certain auspicious days, including Gudi Padwa and Akshaya Tritiya, hold special significance, prompting purchases of gold during these periods.

First publication: 09 October 2024 | 4:31 p.m IST