Joy Alukkas, Chairman and Managing Director, Joyalukkas
The retail jewellery segment in India is expected to witness double-digit growth on the back of favourable demographics and improved consumer sentiments. The quarter ending December typically accounts for about a third of annual gold sales in India, given that it coincides with the start of the wedding season and with festivals such as Dhanteras and Diwali, during which period the purchase of gold is considered auspicious. To leverage the growing demand, the jewellery sector is making significant investments in the retail arena. Jewellery major Joyalukkas, one of the fastest-growing retail jewellery chains with a 130-showroom network spread across 11 countries, is looking to expand its retail footprint even further by opening stores in metros and other major cities. The company has invested close to ₹600 crore towards this to meet the emerging opportunities, says Joy Alukkas, chairman and managing director, Joyalukkas. In an interview with BusinessLine, he shared the company’s expansion strategies to remain competitive in the market. Excerpts:
How were sales during Dhanteras this year?
Our sales were much better than expected. Overall, there was a 40 per cent growth in sales during Dhanteras, including around 30 per cent rise in diamond jewellery sales. We consider this growth momentum a very strong and positive signal, and the sentiment is likely to continue.
For generations, customers have been considering gold and jewellery as safe havens.
Did demonetisation impact gold demand in any way?
In the initial days following the note ban, the demand sharply increased, which in turn caused an uptick in gold prices. But it was temporary. After that boom, we witnessed a slight drop in sales. However, gold sales stabilised and returned to normal in December 2016, a month after demonetisation. Since then, our sales have continued along expected lines.
What are the likely triggers for demand growth?
In India, the market for jewellery is unique, and traditions always trigger demand.
For instance, weddings and festival seasons are the prime drivers of demand. Since weddings happen throughout the year, and festivals are celebrated annually, gold jewellery will always be sought-after.
It may be appropriate to say that demand has increased slightly this year and has also started changing. Consumer preferences are getting more sophisticated and retailers should be on top in realising global trends.
As demand from online sales is on the rise, we are strengthening our position by partnering with online retailers and customising our website to handle e-commerce.
It is a buyer’s market now, but the challenge is to approach buyers with the right product as well as to meet their ever-changing requirements.
How much has the Goods and Services Tax (GST) impacted consumer prices, and is it impacting demand?
The GST on jewellery is now 3 per cent, whereas customers earlier paid a 1 per cent VAT. However, in the long term, we expect that GST will benefit consumers, with improved quality controls and a more transparent pricing policy across the industry.
Of late, consumers’ gold purchase habits have changed. Now, customers buy less gold at a time, but buy more often throughout the year, whereas earlier they opted for bulk purchase during promotional periods.
There are also quite a few impulse buyers who are looking for quality and purity over quantity. At Joyalukkas, we welcome this trend, as it gives us an opportunity to offer better value selections.
How will hallmarking of gold jewellery, which is to become mandatory, influence market dynamics?
Hallmarking ensures quality of gold and jewellery. We already have a 100 per cent hallmarking policy on all gold and diamonds sold across all our outlets. Whether it becomes mandatory or not, we would like to strictly adhere to this policy. Quality and trust are the key requirements to build long-term relationships with customers, and we will ensure this.
What about the provision mandating PAN details for jewellery purchase?
To prevent money laundering and tax evasion, the use of PAN card is mandatory for transactions over ₹2 lakh. We adhere strictly to this rule. So far, this has not caused any inconvenience to customers.
Where do you see gold prices in the next year?
Gold prices are driven by several factors; the most important of them is the demand from various industries. In 2016, the jewellery industry alone accounted for 47 per cent of demand, according to a World Gold Council report. However, recent months have seen an increase in demand from the investment sector. Retail performance seems to be slowing down, but gold prices could still go up on account of consumer demand. We expect this trend will continue through 2018 and beyond.