UAE's gold and diamond businesses need to seriously think digital and blockchain: Tawhid Abdullah
Holding a 'no-expiry' product alone will not ensure survival, says gold industry chief
Dubai: If Tawhid Abdullah had his way, he would fast-forward the UAE’s gold and jewellery sector into the digital space - in one shot.
No, the head of Dubai Gold & Jewellery Group is not thinking about doing away with the dazzle of gold and diamonds displayed at brick-and-mortar stores. What he wants to see is more effort from jewellery retailers to get more out of online channels.
“We lag in the use of tech to generate more sales and we are unable to capture a new type of consumer,” said Abdullah, who also operates the Jawhara network of high-end jewellery stores. “I don’t see the industry doing enough to achieve that – there is a need to know better the young, the trendy and the fashionable."
“Gold is a zero-expiry product – but that should not be the excuse for retailers not to change the way they do business. The industry needs to get digitally savvy.”
“There are many pushers in the Souq’s streets and alleys harassing visitors with cheap products not even remotely connected to gold or diamonds,” said Tawhid Abdullah. “They need to be cleared, because tourists find them annoying and spoiling their whole experience.
“The retailers need government intervention to get the pushers out. The government has done everything to keep the Souq’s heritage and at the same time ensure its status as an integral part of the day-to-day trade. They upgraded the street lighting, improved the facades of older buildings, ensured 24-hour police patrols and installed extra cameras.
“If these street pushers can be removed from the scene, the whole location will benefit even more.”
Before the pandemic, the Souq attracted between 10,000-20,000 tourists a day.
Just an add-on, for now
Abdullah’s on point about what’s missing. In recent years, all of the UAE’s leading jewellery retail brands have launched a limited ecommerce presence. But online sales remain dismally low, and retailers were firmly of the belief that the UAE consumer still prefers the in-store experience when trying on a studded necklace or a must-have bracelet.
During the COVID-19 months, they did push raise the visibility of their online “stores”, brought in facets of Augmented Reality to show how consumers would look if they tried on a particular jewellery they set their eyes on. Shoppers could place orders, make the purchase and have them delivered - even then, the fact remains that UAE’s gold and jewellery market is still heavily reliant on brick-and-mortar.
Need for new ways
None of which dissuades Abdullah – whose family has been associated with the trade for decades, including as owners of Damas – from his digital focus. UAE’s gold and jewellery sector had its worst year ever in 2020 as demand evaporated in the face of the pandemic and skyrocketing gold prices. There has been some improvement in the first-half of this year, but it is still far from reaching a point of safety.
“Those retailers reliant only tourists are badly affected,” said Abdullah. “Our industry is not living in a different planet, and what we need to do is have a different thinking on cashflow. The strategy of midsized retailers have to be upgraded for longer term planning.
“Technology can help them decide better ways to manage their stock – whether they should be holding more or less of a jewellery in a particular carat, for instance. They can take swifter decisions on their stocks vis-à-vis the changing preferences of the consumer.”
Get into blockchain
Abdullah is pressing for blockchain to be an integral part of retailer operations. “We cannot keep having a situation where a piece of jewellery is made and then left as such for three or five years on the shelf,” he said. “Better inventory management, that’s what we need to improve in the next five years. If I buy gold and process it into jewellery, I should have in mind a certain timeframe on what to do with it.
“If unsold, that jewellery needs to be turned after 12- or 18 months. Turn it into a new piece of jewellery that is more suited to what’s trending. This is where being part of a blockchain help – every piece of info and transactions about that piece of gold is stored digitally It will make the industry even more transparent.
“In the next five years, any company wishing to survive has to be part of the blockchain. From ordering to the date of shelfing it; to ensure all operations are registered with the banking system and compliance processes are met. There is no living away from the efficiency derived from blockchain. If all these hypermarket giants with their millions of products, there is no reason why jewellery retailers can’t.
“Blockchain is a must for transparency – the AML (anti money laundering) norms require this. If retailers deploy blockchain into their operations, it will even help as a financing tool. If they ask for inventory finance, no bank is going to refuse. Because all the details are there as blockchain registered transactions - life will be whole lot easier, I tell you.”
Tougher requirements
Those in the gold and precious metal business need to be in full compliance with tough AML related procedures that the UAE’s Ministry of Economy has deployed.
Abdullah says that optimum transparency has been built into the gold and jewellery retail space already. “But there could still be improvements in the gold refinery sector,” he said. “Bullion dealers too should have higher scrutiny. But when we come down to gold and diamond retail, these operations are already linked to import duty and VAT processes, which require a high deal of transparency.
“Being fully compliant with all government requirements – whether it’s AML or VAT – is all part of a process constant change. The one thing that will not change is Dubai and the UAE’s status as the centre of the global gold trade.”
Now, the only detail that needs speeding up is get the business of gold and jewellery to take up position in the UAE’s digital economy.