Jewelry sales in India beat expectations during the Diwali season amid a release of pent-up demand and strong consumer confidence about future gold prices.

Revenues were on a par with last year, or better, as Indians returned to shopping following lockdowns, industry executives told Rapaport News this week. Lower spending on travel and weddings freed up cash for jewelry purchases, while retailers sharpened their ability to capitalize on e-commerce demand.

“The mood is good — customers haven’t spent money on anything else,” said Colin Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC). “They have money to spend, and they’re buying jewelry.”

Sales value for the season was flat year on year as higher gold prices compensated for a drop in sales volume of around 15% to 20%, Shah estimated. Online revenues grew to around 10% of the total, from 5% in previous years, he added.

The festive period encompassed the gift-shopping season running up to Diwali, which this year occurred on November 14. It included Dhanteras on November 13, considered an auspicious time for buying gold. Diwali also kicks off the important wedding season, which continues until March, with optimism relatively high for that too.

Sales of the yellow metal were mixed on Dhanteras, with large, national jewelry chains performing better than regional and independent ones, Shah explained. Business related to Diwali itself was strong across the board, he said.

“People are bored and went out and shopped,” he observed. “Everyone is just tired of sitting at home.”

 Titan Company, India’s largest jewelry retailer, enjoyed year-on-year sales growth of around   15% during the 30-day season ending with Diwali, it reported last week. Sales of studded jewelry   recovered, while watches and wearables also performed well, the company said.

 Unfounded fears 

 This contrasted with the springtime Akshaya Tritiya holiday, another gold-buying occasion, which this year provided Titan with negligible in-store sales as the Covid-19 pandemic forced its   retail network to close. 

“Though we missed Akshaya Tritiya due to [a] lockdown across the nation, Dussehra [a gold-buying day that fell on October 15] and Dhanteras turned out to be excellent occasion[s] to   recover the gaps,” commented Anantha Padmanaban, chairman of the All India Gem and   Jewellery  Domestic Council. Most retailers saw better festive sales this year than last, he added.

 Expectations were lower after the coronavirus ravaged India’s economy. In addition, retailers   feared that past customers would return to stores merely to resell their gold at the new higher   price, forcing the original sellers to buy it back at a loss. These worries were mostly unfounded, Padmanaban noted.

 “Gold prices shot [up] phenomenally during the lockdown,” he said. “We expected a huge   old-gold return post-lockdown, and that was a worry for us. But that did not happen much,   because India’s love for gold jewelry is eternal.” Gold is considered “stridhan” — a term in Hindu law for a woman’s property over which she maintains complete control, he added. 

“[In the past,] the consumer waited for gold prices to come down to buy,” recalled GJEPC   chairman Shah. “But this time, that’s not been the case, because they all believe that it’s only   going to go up.”