With Akshaya Tritiya being celebrated tomorrow (26 April), jewellers are trying to lure customers through various innovative offers to keep the business tide through difficult times amid the coronavirus lockdown.
There is a sentimental value in booking precious metal on this auspicious day.
“Usually ahead of Akshaya Tritiya, jewellers make purchases, but this year no one’s buying,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the Kolkata to Reuters.
Akshay Tritiya is one of the biggest gold buying days due to the auspiciousness attached to it, and amid lockdown, the industry has missed out on Gudi Padwa and wedding sales, Waman Hari Pethe Jewellers Director Aditya Pethe said.
“However, as the auspicious day approaches, we were surprised by the number of enquiries we received for pre-bookings. We have started taking Akshaya Tritiya bookings online from 21 April on our e-commerce platforms. The same will be delivered to the customers post-lockdown. We can't do sales speculation due to the exceptional circumstances, but we look forward to an online Akshaya Tritiya this year,” he said to PTI.
Many jewellers have announced plans to sell gold online on the festival and deliver it after the lockdown is lifted, “but retail buyers are not interested in online purchases due to the higher price and uncertainty about delivery”, said a Mumbai-based dealer with a private bullion importing bank.
Ahammed MP, Chairman, Malabar Group, said Malabar Gold & Diamonds is offering discounts on online gold purchases which is being promoted via SMS, WhatsApp, emailer, Facebook, Instagram, Google search and Google network. "We are offering 30 percent discount on making charges of gold jewellery, up to 20 percent discount on diamond value and 5 percent cashback on transactions above Rs 15,000 on SBI credit cards. The offer will be valid till 26 April. The online gold purchase facility comes with the rate protection advantage, i.e. customers can avail the jewellery at the booked rate or prevailing rate whichever is lower," Ahammed said.
Gold futures at record high
Indian gold futures held near a record high of Rs 47,327 ($620.5).
In April, the loss in revenue will be 15 percent of the total annual turnover due to Akshaya Tritiya falling in the month when the country is under lockdown to prevent the spread of COVID-19,” All India Gems and Jewellery Domestic Council Chairman Anantha Padmanaban told PTI.
The first six months of this calendar year has witnessed a very weak consumer sentiment due to high gold price and the COVID-19 pandemic; however, the demand is expected to begin taking off from July onwards and peak during Diwali, he added.
"Due to the COVID-19 pandemic, stores across the country are closed; however, on individual level, jewellers are reaching out to their customers through innovative online offers, including booking now and payment and delivery later among others. How far the consumers are going to react to these innovative marketing by the jewellers is yet to be seen,” he opined.
Some like Titan are offering options like its 18K gold watch offering. Kalpana Rangamani, CMO-Watches and Wearables, Titan Company said, the company is offering online Muhurat Booking so that customers who are unable to visit stores have a seamless digital seamless digital experience to our customers on this auspicious day. "With Muhurat booking, consumers can now book their gold watches on titan.co.in at an auspicious time of their choosing. To address the delay in delivery that is likelyto happen due to the lockdown, Nebula by Titan has announced a‘Nebula Certificate of Ownership’ that can be immediately sent to the customer. Additionally, online customers can also avail Easy Returns on Nebula," Rangamani said.
Gold prices on Friday rose by Rs 315 to Rs 46,742 per 10 gram in futures trade as speculators created fresh positions on firm spot demand.
On the Multi Commodity Exchange, gold contracts for June traded higher by Rs 315, or 0.68 percent, at Rs 46,742 per 10 gram in a business turnover of 16,400 lots.
The yellow metal for August delivery edged up by Rs 269, or 0.58 percent, to Rs 46,696 per 10 gram in a business turnover of 16,383 lots.
Fresh positions built up by participants mainly led to the rise in gold prices, analysts said.
Globally, gold prices traded higher by 0.06 per cent to $1,746.40 per ounce in New York.
Digital buying
Digital buying will grow as an alternative going forward, but the touch, feel and trying out factor at retail stores will remain as strong as before, said Padmanaban.
World Gold Council Managing Director (India) Somasundaram PR said prices are high and volatile, local market prices have sharp discounts, logistics have limited physical availability of gold, artisans are perhaps dislocated and jewellery stores shut.
“In this scenario, Akshaya Tritiya will be a subdued occasion for gold... We could see jump in digital transactions not just through platforms such as SafeGold and MMTC-PAMP, but also on-line BTC (Business -to-Consumer) sales with some jewellers," he added.
Deliveries are bound to be post-lockdown, but advance booking, buying simple, standard gold or jewellery, and a more robust digital engagement may be promoted in the market, he suggested.
“After a strong rally in prices for the past few weeks, prices are correcting... as risk-appetite returns slowly. The major reason behind the recent rally is global growth concerns emanating from the ongoing pandemic. This apart, central governments have been providing stimulus packages and these two factors make a solid case for a bullish rally in gold prices going forward,” Commtrendz Research Director Gnanasekar Thiagarajan said.
Kalyan Jewellers Chairman and Managing Director T S Kalyanaraman said traditionally, the majority of the company's sales on the occasion of Akshaya Tritiya is driven through its showrooms.
“This time, though our showrooms are closed due to the lockdown, we got many queries from regular customers who wanted to keep the tradition of buying gold during Akshaya Tritiya going. That's how we came up with the concept of the Gold Ownership Certificate, which can be bought on our website. What makes this unique is that upon order confirmation, customers will receive this certificate via email or Whatsapp on the day of Akshaya Tritiya,” he added.
The company is hopeful that this will bring some good results, and that its regular customers will be able to make their purchases, he added.
Echoing a similar view, Senco Gold and Diamonds Executive Director Suvankar Sen said the jewellery industry might get a traction of 10-20 percent of normal sales this Akshay tritya since offline stores are shut and the economy is in a standstill.
“To make sure customers can do a token buying this season we are using an online platform to sell or get bookings for future sales,” he added.
Industry to be credit-negative: ICRA
The coronavirus outbreak and the lockdown ahead of Akshaya Tritiya is a credit negative for the gold jewellery retail industry in the short term, according to ICRA.
Over the last two years, the domestic gold jewellery retail industry has been affected by factors like weak consumer demand amid slowing economic growth, rapid rise in gold prices and faltering rural output, regulatory policy interventions and cautious lending environment, ICRA said in a report.
“Given this background, the widened outbreak of COVID-19 and subsequent lockdown, ahead of the critical Akshaya Tritiya season is a credit negative for the gold jewellery retail industry in the short-term,” it added.
Retail demand down
Retail demand for physical gold suffered this week in top Asian hubs as jewellery shops remained shut due to coronavirus restrictions, but some regions saw steady buying from investors hunting for a safe haven.
Dealers in the world’s biggest gold consumer China continued to sell bullion at hefty $50 an ounce discounts versus benchmark spot prices this week. This compares with last week’s $50-$70 discounts, the biggest on record according to data going back to 2014.
“Some shops have opened, but people are in no mood to buy gold on the retail side, it’s still a high-end purchase,” Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong.
Global spot prices are now well above $1,700 an ounce.
Investment demand was steady in Hong Kong and Singapore but retail buying was poor.
“Dealers like us are taking pre-orders to be fulfilled on a later date, and clients are settling for higher premiums and for whatever inventories that are available,” said Joshua Rotbart, managing partner, J Rotbart & Co in Hong Kong.
Premiums of $0.40-$2.00 an ounce were charged on average in Hong Kong, versus last week’s $0.50-$1.00, although some dealers quoted premiums as high as $4.00.
In Singapore, gold was sold at average premiums of about $1.50 to $5 an ounce for gold bars.
“No jewellery shops/businesses are open until 1 June,” said Spencer Campbell, director at Precious Metals Consultants SE Asia Consulting, adding premiums on retail gold were still high with new stock “based on promises right now”.
“Exemptions are not being granted for this industry as they do not see refining and minting as essential businesses.”
Japan saw premiums of $0.50-$1 an ounce amid muted activity with top gold retailer Tanaka Kikinzoku shutting all its stores.
Other options
Gold is a hedge against uncertainty and a good investment vehicle, especially in the current scenario, said Pankaj Bobade, Head - Fundamental research, Axis Securities.
"With the COVID-19 pandemic bringing the world economy to a standstill and a possible contraction ahead, gold seems an attractive option. Moreover, as the Central Banks of developed nations have been on easing spree to fight the economic contraction, the fiat currencies are expected to face pressure in the near future. In such a scenario, gold is likely to emerge as a safe-haven asset. One should have a part of the portfolio invested in Gold ETF as an insurance against the possible volatilities expected in the global financial market. So, if this Akshay Trithia you are looking to buy gold, Gold ETF would be a good option from a long-term perspective," Bobade said.
--With inputs from agencies
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