Chain stores comprise 35% of India’s retail gold jewellery market: report

As per the report, demand for better designs and consumer experience, a growing awareness about hallmarking, better pricing structures and competitive return policies, have accelerated the shift towards chain stores.

Chain stores, with national operations, focus on daily wear and fast-moving jewellery items–such as chains and rings– and these items account for 50-60% of their business.

The report estimates that over the next five years, such stores will continue to expand, and their market share will surpass 40%. The top five retailers alone are likely to open 800-1,000 stores during this period.

Somasundaram PR, regional chief executive officer, India, World Gold Council, said, “Small players need to become more transparent and adapt technology faster if they have to gain similar access to credit and protect market share. On the other hand, manufacturing sector is only at the beginning of its much- needed transformational journey. Jewellery parks, some of which have already been established, will help address concerns about ethical standards and working conditions. The same can help eliminate barriers impeding the growth of manufacturing industry, further supporting demand positively. Bottom line is – the sector has grown but the wave of change facing the industry due to tech adoption and broader tax compliance in the economy can be a boon for those who are willing to transform and a significant risk for others whose business models continue to rest on legacy practices.”

While stand-alone retailers initially struggled to compete with chain stores, the adoption of better practices has allowed them to co-exist in the highly competitive landscape.

As of 2021, their market share within the retail jewellery industry was at 37%. Typically, stand-alone and medium-sized retailers tend to focus on three elements: bridal jewellery, customisation, and developing personal relationships with their customers.

Millennials drive online sales

The Indian online jewellery market has also seen rapid growth over the last few years, driven by demand from millennials, growing internet penetration and a hike in smartphone sales. Most sales are driven by consumers aged between 18 and 45. Interestingly, while online jewellery purchases have risen, the average ticket size has remained between 5 and 10 gram. Online buyers tend to purchase lightweight daily wear/fashion jewellery in 18-carat gold. Looking ahead, the report projects that the market share of online jewellery in the next five years could increase to 7-10%.

Manufacturing market structure

Despite being one of the world’s largest fabricators of gold jewellery, India’s manufacturing industry is still highly fragmented and unorganised. The report said that only 15-20% of manufacturing units operate as organised and large-scale facilities which was less than 10% about five years ago. The report attributed this growth to three distinct factors: the expansion of organised retailing; a growth in exports; and a clampdown by authorities.

The manufacturing industry is still dominated by small jewellery workshops and artisans. While there is no official estimate on the number of manufacturers in India, and many operate independently as freelancers, industry estimates suggest there are 20,000-30,000 manufacturing units across the country.