Consolidation of jewellery sales in favour of a few large retailers got accelerated after demonetisation. Top 18 jewellers in the country now account for one-third of jewellery demand in the country, finds GFMS.
The consolidation of sales in the industry started a few years back when some retailers got organised and started expanding their presence to become regional and national chains. The top retailers also used hallmarking and sale of assayed jewellery to differentiate themselves in the market.
“In 2012, top 50 jewellers accounted for 30 per cent of sales and now one-third of the sales is in the hands of top 18 jewellers. They have grown rapidly in size by expanding their footprint. Demonetisation has further accelerated their growth,’ said S Nambiath, lead analyst (precious metals demand), GFMS (South Asia).
Demonetisation started reining in cash transactions in the industry and GST was meant to unravel the transaction trail behind every purchase. “Post-GST and demonetisation, there has been a discernible shift in the number of customers opting to buy from organised players. Apart from this, revoking of PMLA has worked in favour of the organised jewellery industry as a whole,” said TS Kalyanaraman, chairman and MD, Kalyan Jewellers.
GFMS finds post-demonetisation there has been a significant capacity buildup by the retailers in the organised segment. The demand from the retailers, who have moved their business to formal transactions and have been expanding their presence in 2017, has resulted in higher fabrication volumes.
This explains why the full-year fabrication demand, as per GFMS, has increased by 56 per cent, while consumption has risen at 32 per cent. GFMS also finds imports in 2017 went up 68 per cent to 857 tonnes, while the total demand was only 28 per cent up to 762 tonnes.
Malabar Gold added 27 stores last year and will be opening another 50 stores this year.