UAE- The brand factor in gold jewellery

(MENAFN- Khaleej Times)Walk into any of the many branded clothes shops in malls - think H&M Forever 21 Mango Zara all of them - and you see besides clothes a cosmetic jewellery section usually next to the cashier. It's basic marketing psychology: place knick knacks close to where you pay the bill. Leaves the door open for last minute purchases the "add this also" syndrome. (Like chocolate bars placed next to the exit of supermarkets). And so it is that over the years the female of the species empowered with cash and credit cards collects a lot of junk.

The point though is not the junk. It's the design of the junk. Cosmetic jewellery now aims for delicacy and is keen on filigree which is what reportedly the global trends are of the real thing too the actual 18 and 22 karat gold - big large delicate designer. Styles have changed.

Classic yellow

At the Mercato Mall outlet of Liali Oofrish Contractor Marketing Manager while pointing out the Italian designs talks about people's changing preferences. "Two-toned designs" she says "are more popular than rose gold". In the display cabinet she says of a delicate looking set "The trend is towards big and light."

Yellow gold she says is a classic investment and the first preference of people who move to Dubai. For the first five years she says they buy gold to invest.

After 5+ years when they've been earning for a while in dirhams they look towards owning white metal.

And after 7-10 years the purse strings are further loosened money is spent on style.

Customers' profile

Tawhid Abdullah Chairman Dubai Gold and Jewellery Group (also one of the founders of Damas now MD and CEO of Damas Real Estate) says: "By far the largest consumers of jewellery in the UAE markets are Asians. Indian sub-continent tourists prefer higher karat jewellery". He says that there has been a dramatic increase in demand for branded jewellery.

Abdullah says: "Dubai with its jewellery import from over 30 countries has consumers from all over the world. But Asians Middle Eastern and North African consumers constitute the largest chunk of consumers for the UAE markets followed by the Far East and European customers. By far the largest consumers of jewellery in the UAE markets are Asians."

The design angle crops up again and again. Abdullah says: "Consumers are becoming increasingly aware of the exclusivity of designs. Recent years have seen a dramatic increase in demand for branded jewellery. Jewellery lovers insist on exclusivity in design like never before".

The karat

Most often says Contractor Indians buy 22k gold. Often the men pick up pieces to send home and they buy in installments the easy payment scheme. Africans are also big on gold. Arab expats here from around the Middle East buy 18k. Local Arabs she says go for 18k and 21k and they buy sets of 3-4 pieces even as gifts for friends and sisters. Europeans expats most often buy 18k hoop earrings and bangles. The preferences seem clear.

Karim Merchant Group CEO and MD at Pure Gold Jewellers says: "When it comes to 22karat gold jewellery gold chain and bangles remain the favourite." According to Abdullah: "Jewellery preferences have a lot to do with a consumer's country of origin. For example tourists from European nations prefer light gold/diamond jewellery (in 18karat or below) - light weight chains with pendants bracelets rings and so on."

But exact revenue sources are difficult to pin down he says. "Depends on jewellery stores.

Each brand is known for a particular category of jewellery. Some consumers prefer their family jeweller for all kinds of jewellery including wedding sets. Therefore it is difficult to estimate the sales volume on each of these categories of jewellery overall".

Buying for an occasion

"Buying for occasions" Merchant believes "remains the top revenue spinner. Approximately 25 per cent of gold sales revenue comes during Diwali Onam and Akshay Tritiya followed by the wedding season".

As far as jewellery sales go occasions like Valentine's Day have also now caught up along with the old faithful wedding anniversaries.

"We experience more demand for lower gold weight jewellery" says Merchant.

"It also gives customers a chance to buy different types of designs without breaking the bank. In terms of production we produce more gold jewellery using laser cut technology which gives us more freedom to work with designs it also makes customisation and repair much easier.

Fixed making charges?

The story is no different at Malabar Gold. Bangles are the highest sellers "the most popular" says Abdul Salam KP Group Executive Director Malabar Group of Companies. At his Creek Road office in Deira Salam says that he can see in his 25 years here that "everything has changed" except perhaps the attitude of buyers who still haggle over 'making charges'. So much so that Malabar Gold is planning on having a fixed baseline of making charges starting this year.

"Gold is still an investment yes definitely. But there is an increased emphasis on the ornamental aspect." Malabar Gold caters almost exclusively to Indians - 60 per cent of their customers are Indian. The rest are mostly other south Asian nationalities Pakistan and Bangladesh. While "gold buying is a celebration in India" where Salam says "30-35gm purchases are often the norm the average purchase is 18-19 gram in the UAE. Interestingly he says "The percentage of women buyers in the UAE - selectors as well as decision makers in gold shopping - has increased three fold in three decades that I have seen."

He says also that "people's aspirations have gone up. Customers are better travelled. They have more exposure. They want designs and brands."

Contractor raised an interesting point about the competition for gold - in terms of electronics luxury shopping and vacations abroad.

Given the lifestyle of an average Dubai resident let's say with a reasonable level of affluence there is more money being spent now on travel gadgets designer bags and eating out.

This makes a difference on how much a family or an individual would budget for gold. "Yes gold is still seen as the easiest cashable option - as against say real estate. But as an investment? Given the gold prices it's not a guaranteed fixed deposit."

But in the words of Tawhid Abdullah "We have had our ups and downs like any other industry. Few years back like many countries in the world Dubai was also affected by the economic meltdown. Even in those difficult times Dubai's Jewellery industry remained and lived up to everyone's expectations Jewellery in Dubai is known for its purity variety and competitive pricing compared to various other markets. And we are moving towards establishing Dubai as the 'Jewellery Destination of the World'."

Nivriti Butalia