Festivals remain high point for gold sales in UAE

Dubai: At the levels gold prices have been hovering in recent months, there was no way the local retail trade in jewellery could have kept pace. By all available indication, the first half of the year was largely indifferent for local jewellers. Now, with gold having just crossed the $1,300 (Dh4,773) an ounce level, the present does not look all shiny and bright for the trade.

However, Yogaani Bhatia, the UAE country manager at the World Gold Council, begs to differ. Of course, as head of the global agency singularly responsible for spreading the good word on gold, Yogaani is well within her rights to do so. But she does so by putting up a solid case for why the local jewellery trade has nothing to fear about losing its collective lustre.

In an interview with Gulf News, Yogaani sets out the reasons for her bullish analysis.

Gulf News: The local jewellery retail sector has had a tough time of it in the first-half of the year. Given that gold prices are still headed north, do you see local retailers changing tack to drum up sales in the second-half?

Yogaani Bhatia: The price of gold has risen steadily for the past nine years — it is not an overnight jump in price. The market continues to evolve though, and retailers who are benefitting are those evolving alongside the market.

Consumers are more sophisticated than ever before, and retailers can no longer ignore this.

Merchandising [shop display] and the whole retail experience needs to become more sophisticated, and a range of designs from traditional through to contemporary are now expected.

All the retailers need to realise this. Those that have are beginning to reap the rewards.

You work closely with the retail trade on new initiatives. Do you see a trend by consumers towards higher weightage jewellery, but reducing the frequency of buys?

No, not really. We have been working with AU Finja to develop a new range of jewellery, which has been designed based on solid market research and understands what the consumer is looking for.

We discovered there was a bracket that was not being catered for in the midrange.

It is difficult to estimate frequency as detailed records are not so common in order to track this.

Is it something that you are seeing happen in the primary markets such as India or Turkey?

There are consumers in all of these markets for both lightweight and heavy jewellery. The acquisition depends on the occasion of the purchase.

If there was one particular trend discernible in the local market during the first three quarters, what, according to you, would it be?

In the UAE, the Akshaya Trithiya festival during mid-May met with good interest from consumers. Over the course of the year, the World Gold Council has continued to develop and implement initiatives to stimulate and sustain the demand for gold, with first half-2010 seeing a 4 per cent increase in consumer demand for gold compared to first half-2009.

We have seen strong growth in demand in Saudi Arabia, and in the UAE it continues to remain strong around religious festivals. We expect this trend to continue. We have also witnessed strong interest in gold bars and coins.

There's a concern that the many marketing campaigns launched during the first-half of the year resulted in gains for the retail trade, but was limited to just the bigger players. Your comments?

I don't think this is the case at all. If you walk around the gold souq areas during one of these festivals or general marketing campaigns, most stores were getting traffic.

Indeed Sanjay Jethwani, partner in Meena Jewellers, one of the smaller retailers, saw his sales more than double over the previous year during the Akshaya Tritiya festival. They even had one customer who spent more than Dh200,000.

Of course campaigns where we partner with a specific retailer are going to boost only that retailer's sales, but general marketing campaigns benefit all.

Is there a concern that the local retail trade has way too many players?

Competition is healthy in any market, and in addition to Dubai's position as a tourist location that people visit to buy gold, there is a sizeable population of people from South Asia, the Far East and across the Gulf who have an affinity for gold. So, there is enough business to go around.

Do you see any major shifts in gold demand from Dubai's traditional feeder markets during the first-half?

We have not seen any major shifts — demand from feeder markets remained strong in the first quarter in part due to Dubai Shopping Festival. The second quarter was more skewed towards the local market due to Akshaya Tririya and the wedding season.

In addition to India and Saudi Arabia, gold continues to hold a place high on the shopping list of visitors from Central Africa and Europe.

Going forward, is the WGC planning any major initiatives in the all-too crucial fourth quarter?

Absolutely, we have a very busy fourth quarter. We are collaborating with a number of partners on marketing campaigns, including working closely with AU Finja on the launch of a new line of jewellery — this is something we have worked in partnership on from design and creation through to bringing to market and promoting it.

We conducted significant market research and developed a set of products that fit the needs of consumers today. We are also working closely with Liali on another interesting campaign.

Diwali will both see a host of campaigns from our partners which we are supporting and collaborating on. We also have on-going marketing partnerships with Sky Jewellery, Malabar and JoyAlukkas.

As things stand now, what are your expectations during the upcoming Indian festival season? Any feedback you can provide on the sentiments prevailing in India as well?

The signs for this year's Indian festival season seem to be positive. We have an active campaign schedule over the fourth quarter and will be working with some of our key partners to deliver truly inspirational collections. Together we are working to grow and develop the gold market in the UAE even further.

We are confident the campaigns we have planned will help make it a successful season for retailers in the UAE and indeed the region.