The challenges that Covid-19 threw up in the Middle East are now gradually ceasing. Indian exporters can now look at expanding market share in the Gulf Region by offering a combination of handmade and tech-aided lightweight diamond jewellery.
It has been a grim year-and-a-half in many ways. Jewellery retailers, gold and diamond manufacturers, mining companies together employ millions of people, so when the global gold and diamond trade was crippled at the onset of the pandemic and saw a sharp downturn last year, these industries began to feel the pain. Although the post crisis reality has been looming in 2021, things have started to look up in the wake of the vaccine roll-out, Holiday season and optimism hinged on the upcoming wedding seasons.
Last year has been very challenging for the jewellery trade; in particular for wholesalers, confirms Chandu Siroya, Vice-Chairman of the Dubai Gold and Jewellery Group (DGJG). The DGJG is a government licenced group with over 600 jeweller members from various sectors of the trade (bullion dealers, refiners, manufacturers, wholesalers and retailers of gold and diamond jewellery).
“Our group is to facilitate the jewellery industry in the United Arab Emirates (UAE) and work as a link to the government so as to benefit our trade.” The Managing Director of Siroya Jewellers added that the demand for the diamond jewellery has been growing more rapidly over the past few months, with the average spending hovering around USD $3,000 and above.
“Mixed lightweight jewellery is finding many takers this season. In the UAE region, the year-on-year comparison reflects a fall of over 60% over the first nine months of 2020. Business has picked up in the last quarter,” he adds.
The lockdowns and airport closures across the region hit the industry hard. Depleted purchasing power among consumers further impacted sales, while massive fixed costs and inventory cost led to severe losses – and several businesses shuttered their operations in a bid to save capital. “Consumer confidence was at its lowest, while the increasing gold price resulted in an 80-90% drop in jewellery sales worldwide till September 2020. Thereafter, the markets reopened and gold prices stabilised, resulting in an increase in the sale of jewellery.” Siroya believes a way to overcome the current wave of challenges is for exporters to craft lightweight jewellery and use modern technology to reduce cost. “A great combination of handcrafted jewellery aided by technology could result in an increased demand for Indian-made jewellery across the markets,” he observes.
Dubai-based Ashish Sakhardande has been working with luxury brands – Tiffany & Co., Graff Diamonds, Paspaley Pearls, Mikimoto, Carrera Y Carrera – for over two decades. Having launched and conceptualised the VOD Dubai International Jewellery Show, he is a keen observer of the jewellery industry in the UAE. “The market though slow has been very resilient. Although the spending on highly expensive pieces has dropped, we are seeing a steady purchase of gold and diamonds in Dubai,” he adds. The Dubai Shopping Festival helped stabilise jewellery retail with gold sales picking up gradually. “There is an upward trend that will gather steam over the coming months. Both December and January have been very productive, with almost half-a-million visitors flying into Dubai and consequentially translating into robust growth in retail,” adds Sakhardande.
The post pandemic sales in the Middle East region took off on a low note with Q1 and Q2 (financial year quarters) nearly being washed out in terms of both retail and wholesale sales, observes Ashish Garg, Head of Sales-KGK Diamonds and Jewellery DMCC, Dubai. “Q3 saw Dubai opening up; the retail sector seems to be consolidating with strong players garnering more market share, while the mid-segment is suffering due to low sales and high expenses,” he adds.
KGK has been in multiple segments for jewellery and diamond in the GCC region and has been able to garner market share despite shrinkage in the overall market size, says Garg. “Round and fancy cuts have been selling well in diamonds for both loose and certified. The only thing that has changed is the quality requirement; that has gone down.”
Another key retailer in the region, Liali Jewellery has 13 stores across UAE and neighbouring Oman along with a factory in Dubai. Anuraag Sinha, Managing Director, observes the demand for 22-karat gold jewellery has been consistently high. “However, youngsters and international tourists have an affinity for diamond jewellery. Modern and daily wearable diamond jewellery in 18-karat gold sells well.” Liali’s international line Tessitore, which uses the new-age Tubogas technology, is very popular among younger buyers, while their in-house brand Memories has a lovely collection, of which rings, bracelets and earrings have been selling well.
“Round brilliant-cut diamonds have always been the most sought-after cut. However, in the last couple of years, cushion and emerald cuts have been quite in demand. Due to the pandemic, people have adapted their lifestyles and their preference now has veered towards minimalist styles. Also, with gold prices shooting up, customers tend to spend conservatively,” says Sinha, adding that the sales posted during December and January were quite encouraging.
How can exporters move forward with optimism? “We work with select vendors who adhere to quality in a very consistent manner, while ensuring a timely delivery. If both these issues are taken care of, exporters from India and importers here will see not just the business flourish but their relationship too,” adds Sinha.
Nishith Shah, CEO of La Marquise Jewellery, a leading gold and diamond retailer in UAE and Dubai, feels consumers have taken a pragmatic approach during the pandemic and have dropped their jewellery budgets. They are investing in delicate and meaningful contemporary jewellery, he adds. “That doesn’t mean the high-end jewellery business has slowed; people are keen on buying substantial pieces as an investment.”
According to Shah, there has been a surging demand for round brilliant-cut diamonds followed by pear and emerald cuts. “Baguettes, too, have been in demand during the pandemic. We also noticed that the customer spending power decreased slightly; on average, jewellery priced between USD$ 1,500 and $2,000 had a higher turnover.”
Last year, the closure of jewellery shops, compounded by health and travel restrictions brought the gem and jewellery industry to a standstill. Disruption in the supply chain is likely to be the biggest roadblock, notes Shah. “Diamond pricing has also been increasing; however, this was expected to happen during the pandemic.” The Holiday season wrapped up on a positive note in the UAE. “The market has been revitalised; the government in Dubai has invested into the health and tourism sectors, ensuring a constant flow of tourists into the city. This has been very helpful for homegrown businesses,” he adds. Although it is an odd time, Shah’s honest assessment is that growth prospects can be bolstered by “forecasting effectively, re-assessing key selling periods and entering the market at the right time.” Seasonality, he affirms, plays a big role in the region.