Another big challenge Mehta sees is the elder buyer running away from gold and the young buyer spending money on phones and iPads. Professor Arvind Sahay, chairman of India Gold Policy Center, IIM Ahmedabad, says, “Purchase of gold jewellery
is still primarily driven by weddings, accounting for an estimated 40 per cent of the sales in a given year. It is the wearing of everyday jewellery by the younger generation that is under stress. Young people appear not to be interested in gold to the same extent as their parents. Many jewellers are creating new lines of gold jewellery
(including 14 carat products) that are more affordable as everyday wear in order to create a consumption pattern for gold jewellery in the next generation.”
Chirag Sheth, senior analyst, India and UAE at Metal Focus, a London based research firm, says, “There was also a legacy effect of major headwinds that India's gem and jewellery industry has faced during the last five years in the form of regulatory changes. The most notable among them being the compulsory declaration of Permanent Account Number (PAN) cards on purchases above Rs 2 lakh, restrictions on cash transactions, demonetisation and, finally, the introduction of the Goods and Services Tax (GST) in 2017.”
One solace is that the above measures have not led to a huge drop in jewellery demand as prices have remained at low levels and moved in a narrow range. With hallmarking being made mandatory, jewellery sellers who do not sell hallmarked fare will need to comply and keep proper books of jewellery sales.
A Metal Focus survey sees another challenge in the continued growth in market share of regional and national jewellery chains. “The top 16-17 retailers enjoy a 35 per cent market share in weight terms, which we believe would reach 40 per cent over the next 3-4 years as they further expand in tier 2 and tier 3 cities. This expansion is, generally, at the expense of medium-size and single-store retailers,” says the survey.
Sachin Kothari, director at Augmont, a platform for digital gold, sees peoples' preference for investment in gold through non-traditional channels like bars, coins and digital gold as an emerging threat for traditional jewellers.