The retail trade of gold and jewelry in India is witnessing a significant increase with the increase in customer traffic, the diversity of wearing options, and the strengthening of trust between customers and brands, especially with the improvement of the purchasing experience from outlets.
The size of India's gold retail sector has risen to $80 billion in FY24 from $50 billion in 2018, according to a report by Motilal Oswal Financial Services.
The report said that the drivers that led to the rapid growth of this industry include rising per capita income, enhancing product offerings, building confidence through mandatory stamping by the government, and improving the purchasing experience from retail outlets.
The report indicated that the size of organized gold retailers represents only 36 to 38% of the total retail sector share. However, the majority of the retail jewelery market is still dominated by local players, which include more than 500,000 local jewellers.
The report explained that the total gold consumption in India amounts to 66% for jewelry and the remaining 34% for bullion and coins, as imports dominate India’s gold supplies, and the country’s gold market has witnessed noticeable fluctuations in imports from fiscal year 2018 to fiscal year 2020.
The report stated that India's gold imports reached 980 tons in fiscal year 2019 before declining to 720 tons in fiscal year 2020. This fluctuation was caused by various factors, including the decline in global gold prices, and buoyant economic conditions that led to higher individual incomes. There is a huge demand for gold due to traditional celebrations and weddings.
However, in FY2020, there was a significant decline in gold imports due to escalating import duties and the early stages of the economic slowdown.
Tamil Nadu, Maharashtra, Karnataka, West Bengal and Uttar Pradesh are the top five states for organized jewelery retail stores in India, the report said.
The report indicated that weddings and festivals in India are the main reasons for purchasing jewelry, as wedding jewelry still constitutes a large portion of demand, contributing 55% of the total demand for jewelry.
Everyday jewelery accounts for 30-35% of the Indian jewelery market, and the industry is now strategically focusing on manufacturing lightweight pieces to cater to the preferences of younger consumers, especially those who want to wear gold jewelery on a daily basis that complements western style attire.
On the other hand, fashion jewelery contributes about 10% to the Indian jewelery market.
In the jewelry products sector, bracelets and chains are the major contributor to local jewelry consumption, accounting for 60-70% of total sales. These are preferred for daily wear by women. Necklaces contribute about 15-20% of sales volume, and their sales increase during special occasions, such as festivals and weddings. The remaining 5-15% of sales are attributed to rings and earrings.
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