Gold demand falls 70% as US-Iran war enters fifth week
What's the story
The ongoing conflict in West Asia is taking a toll on Indian gold and jewelry retailers, with sales in key Gulf markets plummeting by as much as 70% in March compared to last year. Industry executives have confirmed the sharp decline. Major chains like Malabar Gold & Diamonds, Kalyan Jewellers, Joyalukkas and Titan Company's Tanishq are all feeling the pinch of this downturn.
Market impact
Indian retailers pause Gulf expansion
Despite most stores remaining open in markets like the UAE, retailers are witnessing a drop in footfall and cautious spending. The region is a $2 billion jewelry market, with Indian players accounting for half of total sales. However, expansion plans have been put on hold indefinitely due to prolonged uncertainty stemming from the conflict.
Corporate response
Titan Company reports mixed March sales
In an email to The Economic Times, Titan Company acknowledged the adverse impact on consumer sentiment and sales during March. However, it added that Eid sales in less affected markets such as Saudi Arabia and UAE were reasonably strong. "While retail expansion plans are currently impacted, our transformation journey continues without any let-up," the company said.
Market commentary
Joy Alukkas says sales volumes hit
Joy Alukkas, chairman of the Joy Alukkas Group with 50 stores across UAE, Oman, Qatar, Bahrain, Kuwait and Saudi Arabia, said that the situation was worst in the first week after war broke out. "Now, while stores are open, volume offtake has been hit. People are buying more gold coins and bars rather than jewelry due to a drop in gold prices," he added.
Buying behavior
Ashish Garg: Asian expats holding back
Ashish Garg, board director at Dubai Gold & Jewelry Group, said that tourists, Asian expatriates and Arab expatriates are the main buyers of gold and diamond jewelry. However, due to the current geopolitical situation, tourists aren't coming in as much. "Asian expatriates are the major buyers for Indian retail chains, but they are holding back purchases," Garg added.
Market exploration
Indian jewelers eye US, Far East
In light of the current situation, Indian jewelry chains are looking at the US and Far East as potential alternative markets for routing their GCC operations. This is an attempt to offset some of the lost business due to the ongoing conflict. An executive at one of India's largest jewelry retail chains said that expansion in Gulf region is on hold indefinitely due to lack of clarity on when things will improve.