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Gem & Jewellery: Return of the Sparkle
The gem and jewellery industry is confident that 2021 will be different, and believes it could be a transition year, helping the industry stabilise across both domestic and export markets
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India's gem and jewellery industry would like to put 2020 behind it as soon as possible. After being badly hit in the first half, the sector that reports a turnover of about $80 billion, nearly half of which comes from exports, and employs over 5 million, saw some of the sparkle returning over the past few months. On the cusp of a new year, it exudes a definite positivity.
Colin Shah, Chairman, Gem & Jewellery Export Promotion Council (GJEPC), the apex body of the export sector says, "Considering the encouraging market demand and the current rate of growth, the sector is expected to record exports at pre-Covid levels over the coming year."
In a similar vein, N. Ananthapadmanabhan, Chairman, All India Gem & Jewellery Council (GJC), representing manufacturers and retailers servicing the Indian market, notes that sales in the domestic arena picked up from October, with Dusshera and Diwali giving an initial push and the wedding season adding to the impetus. "Many retailers are at 60-70 per cent of last year's levels and we are confident that by the end of 2021, overall sales will probably be 10 per cent above the 2019-20 levels."
Global Demand to Boost Exports
GJEPC's Shah says that studded precious metal jewellery exports will be an important growth area in 2021, and silver jewellery exports will also continue to rise. Increasing demand for synthetic lab grown diamonds from Western consumers will also contribute to growth.
According to a statement from GJEPC, "Global markets like the US, Europe, China and other Asian countries are witnessing increasing demand for gems and jewellery. Thanksgiving Day spending in the US rose by nearly 22 per cent year-over-year to $5.1 billion, hitting a new record, with a 37 per cent jump in online sales."
Dinesh Lakhani, Director, Kiran Gems, the world's leading manufacturer of small diamonds, foresees "enhanced demand in these sizes" from jewellery and watch manufacturers globally. "Swift changing global scenarios are a part of the new normal, and more and more jewellery manufacturers are choosing to partner directly with suppliers who can offer a consistent assortment," Lakhani adds.
Domestic Sales Will Revive
The domestic sector too exudes confidence as it bids farewell to 2020. GJC's Ananthapadmanabhan believes that with the development of a vaccine, shopping patterns should return to normal by mid-2021. "Demand for jewellery will bounce back once that happens."
Sachin Jain, Managing Director, De Beers India too believes that in an overall sense, the market will be healthier and more robust in 2021. More realistic pricing of real estate will see many expansion plans that were put on hold in 2020 being revived in the months ahead. Rather than a return to the old, however, there will be a new normal. "Consumers are internalising many of the lessons from the Covid experience," he avers. Based on studies commissioned by De Beers, Jain says the new shopping mantra will focus on "fewer, but better" things. Simpler designs will be in with smaller but better grade diamonds, he explains, adding that the global giant's Forevermark brand witnessed a significant rise in demand for single solitaires over the past few months.
Connecting to consumers will entail "story-telling"- about the products and the people behind them, and utilising the multitude of new social media channels to do so. Jain believes that "a lot depends on the strategies and capabilities of different players - while most will see returns to perhaps 75 per cent of 2019 levels, those that have adapted better will even reach 120 per cent."
The Rise of digital Modes
Some things from the pandemic-induced lockdown period are here to stay: the enhanced use of digital tech being the most significant.
A recent Crisil study indicated that the proportion of gems and jewellery manufacturers - largely non-precious, stone-studded jewellery, imitation jewellery, and luxury fashion jewellery - embracing online selling platforms has more than quadrupled to 55 per cent in November from 13 per cent before the pandemic, with micro enterprises showing the biggest jump (41 per cent, up from 13 per cent).
"After this experience, even when travel restrictions are lifted, there will be greater use of digital interface in B2B exports. While e-commerce is here to stay, even contact with clients, buyerseller meets and trade shows will see increased use of digital modes," says Shah.
Indian jewellers report that though still small in volume and value, e-commerce has taken major strides forward in this period, and the use of websites and social media for research and shortlisting has spiked, with only the final purchase being carried out in a physical store.
Over the next 12 months the foundations of the industry will be restored, providing a base for future expansion and growth.