Dubai: Gold sales may not have had a sparkling start during DSF 2012, but retailers are seeing enough of a sliver of demand, suggesting better times ahead. Helping them in their sales — and getting consumers to make up their minds — is the recent softness in gold prices.
From around Dh195 for a gram of 22 carat five months ago, the price is now hovering around Dh180. While in itself that may not represent much of a drop for the casual jewellery shopper, it still has enough impact on the psyche of the committed ones.
Jewellery retailers hope that during the DSF 2012 run, enough shoppers can be tempted to get back into gold buying ways. The early signs are favourable. "We have seen a slight jump in the average sales value from consumers (since January)," John Paul Alukkas, executive director at Joyalukkas group, said. "The reason could be the softening of the prices and also because of the various offers during DSF. We feel starting this week the response will change and we will see a change in demand. Also, we feel consumers are evaluating the various offers and planning their purchase decisions."
Campaign
Apart from the individual retailer promotions, seven of the leading lights in the trade are putting their collective weight behind a campaign that will run right through DSF 2012. It will culminate in a draw for three kilograms of gold.
"With this collective approach, we continue to bring in world-class promotions across the city and offer a chance for customers to win while they shop for jewellery," Anan Fakhreddin, chairman of the Dubai Gold and Jewellery Group and CEO of Damas Jewellery, said. "We are mindful of keeping the costs down and hence the collective promotion."
That is a fair point. Given the current price of the yellow metal, mounting a campaign where half a kilogram is handed over daily and three kilograms as the final prize does add up to an exorbitant cost for the promoters. It was last year that the Gold and Jewellery Group made a return to taking part in the DSF promotions.
All of which also explains why there is quite a lot at stake for the retailers in getting shoppers into the stores. "The average gold jewellery purchase goes up by about 30 per cent during the festival season, and DSF being the most rewarding season for jewellery buyers, we expect sales to be very encouraging," Fakhreddin added.
Also, with the promotions as an incentive, there could be strong inducements for shoppers to opt for jewellery — where the margins are for retailers — than play safe with coins or bars. In a margin-intensive business as the gold trade, such shifts count a lot.
Margins
"We have a majority buying jewellery because they are willing to pay a small premium on making charges for the ornaments," Shamlal Ahmad, who heads the international operations of Malabar Gold, which is projecting a 30 per cent gain in sales during DSF 2012, said. "They can use them as opposed to a coin or a bar which can only be considered as an investment. Moreover, gold's been a steady performer in the investment sector and investing in coins and bars can happen at any other time of the year."
In other words, retailers are making out a strong case for going with jewellery during DSF 2012. And as conclusive proof that this is indeed the right way, there are the daily promotions they have on offer.
But, will enough shoppers be convinced by this argument? One will know for sure by February 5 or immediately thereafter.