Business Interview: ‘Demand for gold jewellery continues to remain strong’
In an exclusive interview with Muscat Daily, Ramesh Kalyanaraman, executive director of Kalyan Jewellers said despite not so attractive returns in recent years, the attractiveness of gold jewellery is still strong. He said there is a growing interest among younger generation for diamond and other precious stone jewellery.
It’s been more than a year since Kalyan Jewellers started operations in Oman. How has been your experience so far in this market?
Kalyan Jewellers has been welcomed very well in Oman. We started with three showrooms in December 2017, and this year we are adding two more showrooms to take the total number to five. We are planning to invest more after seeing the positive response from the residents. The main advantage of the brand ‘Kalyan’ is its pan India image. People from all parts of India could relate themselves to the brand and this is true for local population here in Oman also. It is our endeavour to become as local as possible in design, offering and the feel for the product. Encouraged by the tremendous response in past one year, we are planning to add more stores in the country in the next two years.
You said one of the two new showrooms is being opened in Seeb area, which is little far from the downtown. What was the rationale behind opening a store in the outskirts of the city?
We already have two showrooms in Ruwi and are opening another one there, whereas in Seeb we are opening our first showroom. So from the beginning of this month, we have three showrooms in Ruwi, and one each in Oman Avenues Mall and in Seeb locality. The rationale for opening up a showroom in Seeb is that we also cater to local Arab clients. Around 50 per cent of the customers walking into our showrooms are Arabs. So, in order to come near to clientele we chose to open a showroom in Seeb also.
In past few years many establishments were looking to reduce costs and wind up operations due to weak economic sentiments, what makes you so confident about your success in such a challenging environment?
Kalyan Jewellers has always been a long-term player. We knew that there cannot be any profit from the first year of operation, but as a brand, we believe that Oman has huge potential. Moreover, as a company we cannot always move with the tide, sometimes we have to move against the tide. We were aware of the fact that it will take a while to establish roots in a new market.
We have 35 showrooms in the Middle East and this is despite the fact that we ventured in this region only five years ago. Within this short span of time, we have become an important player in the region in jewellery segment. We look at this as a long-term investment and are confident about what we are doing.
Kalyan Jewellers is primarily known as an India-based player. How important is the Middle East region and Oman for the company?
The Middle East region is very important for us. This region accounts for 35 of the total 137 showrooms operated by the company. Overall, the Middle East accounts for around 25 per cent of total number of showrooms and roughly 22 per cent of overall revenue. Around ten years back, we had only five showrooms that too in very limited locations. Now, we are present in 17 states across India and have expanded operations to five different countries. Our expectations are that we will continue to grow business in Oman.
Gold prices are currently not providing attractive returns and its appeal as a safe haven investment is also declining. In such a situation, what makes you confident that people will continue to buy ornaments?
Hefty returns are not the only reason for people to purchase gold jewellery. Gold jewellery is essentially a part of our custom. On every important occasion in the family, people buy a piece of jewellery. Jewellery and ornaments are bought not because the prices were going up; they are mostly purchased as part of customs. People, particularly ladies, purchase jewellery because they love wearing it, and if prices go up, they are happy as it gives good returns.
So, some people do consider gold purchasing as an investment. Gold is attractive mainly because of the fact that it is the most liquid asset anyone can purchase, which means whenever you are in need of money due to some unforeseen circumstances jewellery can be very helpful at that time. There are no other assets which can be compared with gold, be it cars, electronic gadgets or any other products, because all of those depreciate with time and are not easy to be sold sometime. But jewellery segment does not have such a problem, it can be sold at any time and at any location without worrying much about depreciation. Besides this, women across the world have a special love for jewellery.
Is the love for gold jewellery still strong among younger generation?
Actually, we have seen reverse in the trend. Younger generation is more inclined towards buying jewellery. Around 20 years back, very few girls were wearing gold ornaments before marriage, but now you can easily find young girls wearing gold, platinum and diamond jewellery. Moreover, I haven’t seen any marriage where a girl refused to wear jewellery with wedding attire. So, there is no decline in the love for gold among younger generation. Besides this, new trends are also emerging such as usage of jewellery for gifting purpose. Earlier people were not gifting jewellery for valentine’s day, anniversaries or other occasions. Our data shows that nearly 30 per cent of our customers come back either for birthday, anniversary or any other celebrations in the family.
What are the new trends emerging in the jewellery segment?
Diamond jewellery or the jewellery embedded with precious stones is the new trend, which is getting prominence particularly among the age group of below 40 years. Around ten years ago, diamond or other precious stones accounted for around five per cent of our total revenue, now they account for around 20 per cent of overall revenue and is growing fast. And in the Middle East region, they contribute around 22 per cent of the overall revenue. However, in India the trend is not similar. Northern states are more inclined towards diamond and other jewellery while southern states such as Tamil Nadu is still more attracted towards gold.