Dubai: UAE’s gold and jewellery retailers are calling in the stars. Some of the biggest names in Indian films are anchoring the campaigns for Diwali — the Indian festival — and retailers hope some of this ‘star’ shine will rub off on local demand as well during this key selling period.
“The month with Diwali [this year falling in the first week of November] averages a 20 per cent-plus increase in volumes compared with other months, which is why retailers are using all manner of persuasion to get consumers buying and buying more,” said Joy Alukkas of Joyalukkas Group, which is running with a campaign featuring the actor Hrithik Roshan. “The only comparable month would be the one having ‘Akshaya Trithiya’ [another Indian festive occasion] where sales tend to grow by a similar margin.”
Gold retailers believe if November volumes get a boost from the Diwali buying, it could be sustained over the holiday buying period in December and January and leading up to the next phase of gold promotions during the Dubai Shopping Festival (DSF). Overall, the year has been topsy-turvy for gold and jewellery buying; volumes had peaked in April and early May, when gold prices fell sharply and local buyers made full use of the opportunity. But demand has been steady since then as gold prices retrieved some of the lost ground from the April low.
It was thought that the US Federal Reserve plans to taper off bond buying would aid gold prices on the upside. For a while, global investors did seem to make such a case, but once the Fed held back on the taper programme, gold prices immediately dropped their gains.
“With November being an important month for the Indian market, [considering the festivals and the marriage season ahead], the fundamentals could start changing, and the market could then make an attempt towards $1,420,” said Gerhard Schubert, head of commodities, Emirates NBD Wealth Management. “However, the biggest challenge that the gold market has in hand is that even when the prices are moving on the upside, it may continue to remain under pressure and may not move as expected. This is because of the continuous outflows out of the ETF [exchange-traded fund] holdings that one has been witnessing, which is and will continue to be a major negative factor for gold.”
Retail buying
Currently, it has been averaging $1,300-$1,350 an ounce, a level that does not set off frenetic buying nor suppress demand. “For a majority of retail gold shoppers here, pricing has never put them off buying; even at historic peaks, buying was still taking place,” said Alukkas. “Only difference was the average transaction in weightage terms would be lower when prices were high.”
So, how do the film star-led campaigns help during Diwali? “It is an opportunity to capture new buyers more than anything — and there are more new buyers coming to the shops during Diwali than at any other phase,” said Shamlal Ahmad, director of international operations at Malabar Gold and Diamonds, which has actor Kareena Kapoor raising the glitter factor on its campaign. “An average Indian buyer would purchase gold three times a year in sync with festive occasions, and Diwali buying is the key.
“The star campaigns are not about making a lot of money, but trying to engage with a new customer and take that relationship forward.”
If a campaign with Hrithik or Kareena, and in Damas’ case with Nargis Fakhri, helps jewellers make that connect, so be it.
