MUMBAI: The world’s worst coronavirus outbreak is changing the way Indians buy gold, hastening a shift to modern, retail stores.
While buyers have been slowly shifting away from the thousands of family-run jewellry shops that control the bulk of the world’s second-biggest gold market, the pandemic has sped up the process, according to Ramesh Kalyanaraman, executive director at Kalyan Jewellers India Ltd.
“We have seen in the last quarter that the shift has become very, very steep, ” he said in an interview.
“We saw a lot of first-time customers coming into the stores, about 50% more than a year before. In this Covid scenario, people don’t want to go to crowded streets and small shops and instead they prefer standalone stores like Kalyan.”
India has been reeling under a deadly second wave that has overwhelmed its medical infrastructure and lifted its official Covid death toll to more than 318,000 – a figure that experts say is likely a significant undercount. That has led to some states restricting economic activity and mobility, unlike last year when Prime Minister Narendra Modi announced a nationwide lockdown, bringing the country to a standstill.
Demand for gold slumped to a more than two-decade low last year although it bounced back in the first three months of 2021 on softening gold prices and a sharp pick-up in economic activity. The change in buying behaviour and resilient wedding-related purchases boosted Kalyan’s profits by 54% in the January-March quarter.
The company, which counts Warburg Pincus LLC and the Singapore government as investors, raised US$158mil (RM653mil) in an initial public offer in March, one of the biggest share sales among Indian jewellers.
“The shift to national and regional brands is clearly on the rise as consumers get more comfortable and feel secure in terms of quality, which is still a problem with the unorganised sector, ” said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services.
Concerns by consumers are also prompting smaller jewellers to accept new government rules on quality standards to try to retain their customer base, he said. — Bloomberg