Zaveri Bazaar is not glittering. Its dilapidated buildings and narrow, congested lanes look forlorn, bereft of bustle. Very rarely do you see large families — stoic men leading groups of happy women — flocking jewellery shops to buy gold for an impending wedding.
This year has been particularly bad for many jewellers in the area. Arguably the most valuable gold hub in India, home to over 5,000 jewellery shops, the 150-year-old Zaveri Bazaar has seen a mammoth fall in sales this marriage season, say oldtimers and traditional jewellers. It’s not alone; it’s a national trend.
Others traditional jewellery hubs — Thrissur and Kozhikode markets in Kerala, Bow Bazar and Bagree Market in Kolkata, Johari Bazaar in Jaipur and Sadar Bazaar and Hauz Khas in Delhi — are all marking decline in sales over the past few years. This is despite India continuing to import record bullion.
“Close to 35,000 marriages took place across 5-6 muhurats in November and December. Despite so many marriages, we did not see a significant spike in gold demand,” rues Kumar Jain, vice-president, Mumbai Jewellers Association. This wedding season has close to 85 muhurats or auspicious marriage hours, jewellers clarify.
Between September and June, jewellers in leading micro-markets hold 70-90 tonnes of gold stock. This year, these traditional jewellers have trimmed holdings considerably, in the backdrop of slackening demand for “new gold” (industry parlance for fresh cash purchases and not exchange of old gold). Zaveri Bazaar does about `170 crore worth of daily sales currently, as against Rs 225-250 crore worth of wedding season sales in previous years.
Jain, whose family owns Umedmal Tilokchand Zaveri, one of the oldest shops in the bazaar, feels their patrons are “scared” to purchase new gold using banked funds, lest they come under the prying eyes of income tax officials.
“People are not buying fresh jewellery anymore. They’re only exchanging old gold or selling gold coins (investment gold) to acquire new jewellery,” he adds.
A few also blame higher prices for sluggish demand. Gold prices were trending at `29,500-levels (per 10 gm) in Mumbai market last week.
On the other hand, gold import data paints a shiny picture. As per global consulting firm Metals Focus, India imported 846 tonnes of gold in 11 months of 2017 — 39% more than all of 2016. During January-September, Indians consumed 350 tonnes for jewellery and 105 tonnes for investment needs.
“There is a shift in demand from unorganised to organised jewellers. This is visible in the strong results posted over the years by listed players,” says Chirag Sheth, a research consultant at Metals Focus. “Gold shopping is no longer just buying a product. It is all about the experience that goes with it.
Jewellers who can provide good quality products, along with a great buying experience would outperform peers.” Anecdotal evidence suggests that organised jewellery retail — with assurances of quality and convenience — is indeed eating into the business of traditional one-shop family jewellers. Till about a few years ago, more than 70% of jewellery sales in India were through unorganised regional players — many housed in traditional markets such as Zaveri Bazaar.