KOLKATA/NEW DELHI: Indian gold and jewellery retailers are taking a sharp hit from the escalating West Asia conflict, with sales in key Gulf markets falling by as much as 70% in March compared with a year earlier, according to industry executives.
Chains such as Malabar Gold & Diamonds, Kalyan Jewellers, Joyalukkas and Titan Company‘s Tanishq, which together command a significant presence in the region, are witnessing weak footfall and cautious spending, even as most stores remain open in markets such as the UAE.
In a region estimated to be a $2 billion jewellery market, Indian players account for about half of total sales. While festive demand around Eid provided some support in relatively less affected pockets such as Saudi Arabia, companies say expansion plans in the Gulf have been put on hold indefinitely amid prolonged uncertainty.
In an email response to ET, Titan Company said that while many Damas and Tanishq UAE stores are open on most days, consumer sentiment and sales were adversely impacted during March, although Eid sales in less affected markets such as Saudi Arabia and the UAE were reasonably strong. “While retail expansion plans are currently impacted, our transformation journey continues without any let-up,” it said.
Tanishq has 13 stores in the GCC region and Mia has one store. Titan acquired a 67% stake in Middle East jewellery company Damas last year, which operates 123 stores across the GCC.
Joy Alukkas, chairman of the Joy Alukkas Group, which has 50 stores across the UAE, Oman, Qatar, Bahrain, Kuwait and Saudi Arabia, said, “The first week after the war broke out, the situation was at its worst. Now, while stores are open, volume offtake has been hit. People are buying more gold coins and bars rather than jewellery due to a drop in gold prices.”
emailed Kalyan Jewellers and Malabar Gold & Diamonds, both of which have a significant presence in the GCC, to assess the impact of the US-Iran conflict on their operations in Gulf countries, but neither company responded.
Ashish Garg, board director at the Dubai Gold & Jewellery Group, said tourists, Asian expatriates and Arab expatriates are the primary buyers of gold and diamond jewellery. “Tourists are not coming because of the current geopolitical situation. Asian expatriates are the major buyers for Indian retail chains, but they are holding back purchases. Mostly, bullion buying is happening among them. Indian retail jewellers do not cater as much to Arab expatriates, as they prefer different design aesthetics,” he said.
Indian jewellery chains are exploring the US and the Far East as alternative markets to route jewellery from their GCC operations, in an attempt to offset some of the lost business.
“Expansion in the Gulf region – our most crucial global market – is on hold indefinitely, as there is no clarity on when the situation will improve. Even if conditions begin to normalise in India, buying sentiment in West Asia remains depressed,” said an executive at one of India’s largest jewellery retail chains.
According to analysts, gold and jewellery remain the largest Indian consumer sector by value sales dependent on West Asia, contributing an average of 20-25% annually. While packaged consumer goods makers such as Reliance Consumer Products, Marico, Dabur and Godrej Consumer Products also have significant businesses in the region, their combined contribution by value is smaller.
