Jewellery business expected to decline after Chinese New Year

  • Business
  • Saturday, 10 Jan 2009

JEWELLERY shops are expecting sales to worsen in the first half this year, especially after the Chinese New Year, due to low consumer spending power and high gold prices.

Weng Kwong Jewellers SS2 branch manager Jenny Loh says she expects sales to decline 30% to 40% after the Chinese New Year.

She says sales in November dropped 15% to 20%, especially in products such as earrings, rings and pendants.

To revive sales, Weng Kwong has offered up to 80% discount for selected items from Dec 6 to Jan 6 and has reported good response for the one-month promotion. Loh says it will now slash it orders.

“We have also observed a shift from yellow to white gold. Although white gold has no trade-in value, the younger generation prefers it,” she says.

Loh says buyers shy away from yellow gold purchases as it is 20% more expensive and too striking to wear.

“Buyers can’t wear them day in day out, especially when the economy is bad. It is not practical,” she says. Currently, yellow gold makes up 30% of its sales.

Meanwhile, Amoris Sdn Bhd, which specialises in rings and wedding bands, also experienced sales drop of 10% to 20% in September and October but this has picked up in November due to the wedding season.

Unlike other gold and jewellery shops, Amoris rings are imported from Germany and has a fixed price, says a company official.

She says its Purity White collection, which is priced lower than the Unity collection, is becoming popular now as customers cut their budget to below RM6,000 for a pair of rings.

To counter the decline in sales, Amoris has teamed up with bridal houses to give out cash vouchers.

Bestino Golden House Sdn Bhd business development manager Cindy Chong says the gold jewellery business has not been very good since last year as gold price has shot up.

“It has worsened with the current economy. We expect sales to drop by 30% to 40% after the Chinese New Year,” she says.

Asked if gold is a good investment, Chong says investors may opt for it as an alternative to equities due to market volatility.

“Not everyone can afford to buy gold for investment and people prefer to secure cash now,” she says. Yellow gold makes up 60% of the company’s sales.

A customer, Datin Saraswathy Sivaraman, in her 30s, says: “I have to cut down on jewellery spending because, at times like these, it is better to save money.”

She says she does not set aside any budget for jewellery purchases and will buy as and when she feels like doing so.

In contrast, Poh Kong Holdings Bhd executive director Ermin Siow says retail sales has yet to be affected by the current economic crisis.

“Our sales for the first quarter ended Oct 31 showed a record, the highest achieved for any quarter since our listing in 2004. Sales in the last three months to December also did not show any decline,” he says.

Siow says yellow gold is still the preferred choice among Malay and Indian consumers in Malaysia.

“Of course, due to the higher unit price for gold, chunky and heavier designs do not sell as well as before. Now, most of the new designs will be of lighter weights.

“We hope to maintain our revenue for the current financial year (ending July 31). If our new outlets show encouraging sales, we may even outperform the last financial year,” he says.

Siow says the group is confident of achieving its target because it is eyeing the mass market, from low-income to high-end consumers.

“We foresee this economic crisis will affect the high-end customers more. As plain gold jewellery makes up about 75% of our sales, we are quite sure we can maintain our business,” says Siow. For latest Bursa Malaysia indices, charts and other information click here

For latest Bursa Malaysia indices, charts and other information click here

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Next In Business News

Bank Islam continues enhanced targeted repayment aid
UK probe of Gupta’s GFG a big test for beleaguered SFO
ESG provokes laughter and nightmares
Soros bought up stocks linked to Bill Hwang’s Archegos implosion
KLCI futures to trade higher next week
CPO futures to move higher next week
Biden rescinds Trump-era health insurance requirement for new immigrants
Venezuelan court seizes newspaper office in defamation case
FTC officials say 7-Eleven purchase of Speedway chain likely illegal despite closing
GLOBAL-LNG-Asian spot prices hit $10 on global supply disruptions

Stories You'll Enjoy