Commodity Online
After a drastic decline in Gold demand over the past few months, Indian jewellers are now providing a mouth watering 20% discount on gold jewellery to lure back consumers.
Brands like Gitanjali Gems and Tanishq are being reported to be offering about 20% discount on their products. And the discount is not on the making charges but on the jewellery itself! Tanishq's online sales portal is currently offering discounts from 2.5%-20% where one can chose items by magnitude of the discount.
A Gitanjali sales promotion campaign offers a flat 20% off Diamond Jewellery and Rs 101/gm off in making charges on Gold Jewellery. “We pass on to consumers the raw material price benefit that we get through efficient hedging strategies”, Business Standard quotes Gitanjali Gems Chairman Mehul Choksi.
A part of the reasoning of these companies for providing such high discounts is the fact that they have a huge inventory and remelting and converting these into new jewellery would cost more than the 20% discount being offered to customers. So better to offer discounts since this will also help boost the image of their brands.
Gold prices had risen by more than 30% in 2011 and this had resulted in weak buying from the price-sensitive Indian consumer. This was evident in the drastic fall in gold imports when it fell by more than 40% in the quarter ending Dec 2011. Jewellery demand had fallen to 567.4 tonnes in 2011 from 657.4 tonnes in 2010, a decline of about 14%
And despite the wedding season in India, jewellery demand has remained lacklustre, remaining below historical levels. Many are opting to buy only necessary volumes unlike the previous lavish expenditure on gold jewellery. Volumes have been trimmed. Given that the number of days in 2012 considered auspicious for marriage are the fewest since 2004, the coming months does not look good for the Indian jewellery market unless prices fall.
