(MENAFN- Khaleej Times) Affordable yellow metal prices and better designs bode well for heavyweight buyers retailers.
Dubai — Affordable gold prices will continue to attract heavyweight jewellery buyers and top retailers expect a double-digit growth in sales this year.
In addition to prices design is the key element in decision-making for jewellery buyers in the UAE and they like trendy and chic designs.
Consumers in the UAE tend to buy heavyweight jewellery but they also occasionally buy lightweight jewellery if they purchase it for a special occasion back home.
Top jewellery retailers in the UAE said gold prices remained stable during the first four months of the year and they hoped prices would stay stable throughout the year. The home-going season will further boost sales in coming months they added.
Nowadays gold prices in the UAE are almost at the same level of January 2015 after witnessing a peak level in February. Prices in the international market remained below 1200 an ounce by the end of April.
The gold price is almost 10 per cent lower compared to the same period last year at the moment. In the UAE the latest price of 24-carat gold is Dh142.5 per gramme. The latest price in New York is $1178.28 an ounce and the London price is $1172.8 an ounce.
“The first four months of the year 2014 we saw a growth of approximately 15-20 per cent and we have seen the same trends in the year 2015. If the gold prices continue to be stable we expect a good 2015” Joyalukkas chairman and managing director Joy Alukkas told Khaleej Times.
“We expect jewellery consumption to continue to grow at a modest pace while retail investment in bars and coins is unlikely to return to the peaks we saw in the recent years” Alukkas explained.
Consumers in the UAE tend to buy more of ethno-contemporary trendy and chic designs the chairman said adding that they also occasionally buy very ethnic jewellery if they purchase it for a special occasion back home. Currently bangles are popular followed by rings and bracelets he added.
“When it comes to purchase of jewellery in the UAE it’s mostly a planned buy and seldom an impulse purchase. The shoppers first look for good design at the brands/retailers and the final decision is made based on the price” he said.
Malabar Gold & Diamonds managing director for international operations Shamlal Ahamed also expects stable gold prices and a double-digit growth in sales this year.
“The gold price has been fluctuating in the recent past and it is comparatively less than the previous year. We have witnessed an increase of over 23 per cent [this year] as compared to 2014. We expect the sales pattern to continue for now and increase to over 35 per cent in the last quarter [of 2015]” Ahamed told this scribe.
“The home-going season is also approaching and if we go by past years we will see a surge in the demand for jewellery in the coming months leading into the holy month of Ramadan” he said.
Talking about buyers’ interest in different carat of jewellery he said: “The demand for 22-carat gold jewellery is substantially higher than 18-carat gold jewellery from a volume point of view. The investment aspect is very high for 22-carat jewellery and therefore majority of customers prefer the 22-carat jewellery. However we are seeing a substantial increase in demand for diamond jewellery which used 18-carat gold as the base metal.”
Mentioning the importance of design he said: “Whether it is in India or Dubai design has a substantial role in the purchase decision. Therefore being a jewellery retailer we give high importance to the design and variety of the products that are available across all our outlets.”
Kalyan Jewellers which forayed into the UAE market in December 2013 said sales in the first three months increased by 40 per cent compared to 2014 helped by three new showrooms this year.
“We have seen robust increase in sales in all our categories including chains bangles and rings” Kalyan Jewellers executive director for marketing Ramesh Kalyanaraman said. “We expect the buying momentum to continue due to the overall positive consumer sentiment.” He mentioned that typically tbe South Asian community prefers yellow gold and Europeans white gold. Indian tourists usually ask for chains and bangles in 22 carats and European tourists prefer trinkets in 18 carats.
A majority of Indians buy heavyweight jewellery for use in the UAE as they are unable to carry high-value jewellery when they go back home because of high customs duty. So the new customs duty introduced in 2013 impacted gold jewellery sales in the UAE according to industry specialists.
Even those visiting their husbands in the UAE don’t bring their jewellery which they bought in India as customs officials don’t ask any questions to exiting passengers but there are strict rules for gold when it comes to people entering India.
Indian passengers who have stayed abroad for more than a year are allowed to bring duty-free gold in the form of jewellery in their bonafide baggage up to an aggregate value of Rs50000 (Dh2900) in the case of a male passenger or Rs100000 (Dh5813) in the case of a female passenger. A resident who stays abroad for six months can bring gold up to one kilogramme after paying customs duty of 10.3 per cent. Any quantity exceeding one kilogramme attracts duty of 36.05 per cent. The availability of gold at a cheaper rate in outside countries makes it profitable for the buyer even after paying hefty duties at airport.
Gold jewellery items are among the top revenue earners for the customs department in India according to local media reports.
Akshaya Tritiya sales
There was a substantial boost in sales this Akshaya Tritiya compared to the previous year however it did not meet high expectations of jewellery retailers despite low prices.
“Akshaya Tritiya is special for customers. We saw sales was not very high on the expected days. But we were able to garner a strong footfall when compared to last year during the offer period” Alukkas said.
Malabar Gold & Diamonds also said sales were better than last year during Akshaya Tritiya but failed to meet expectations despite stable prices and special promotions.
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