Dubai: Do the UAE’s young have the same feelings for gold as their parents? Do they see it as only a piece of jewellery, more suited for an occasional purchase? Or do they see it as a store of permanent value?
In particular, what do the Gen Z think? Because it will be on the generation-nexters that the fortunes of UAE’s gold and jewellery sector hinge.
“The feel for gold has to cut across generations — today’s youth may have no issues with renting clothes or choose Uber over owning a car,” said Anil Dhanak, Managing Director at Kanz Jewels. “But I hope, with gold and jewellery, they will still want to own.”
This is what the World Gold Council had to say about Gen Z (all those born after 1997) had to say in its latest report: “The most significant generational difference appears when we look at Gen Z. They have bought, and intend to buy, significantly less gold jewellery than their parents.
“They are more likely to want to see exponential growth from their investments, less likely to invest for the long-term, and less likely than the average retail investor to worry about the impact of a financial crash on their savings.”
This seems to be the prevailing attitude whether it is a Gen Z in India or China, the two top gold consuming markets in the world. In China, only 12 per cent of those in 18-22 year category want to buy gold, while in India that percentage rises to 24. But the WGC report warns that even in India, the attitude towards the yellow mental among the young is waning.
Will their peer in the UAE think the same?
Refine their tastes
Dhanak reckons that it is up to retailers to mould tastes. “Rather than focus only on the 22K [the favourite of Subcontinent shoppers] or the 21K [which is popular with Arabs], jewellers need to think 18K for the young,” he said.
“We have to find ways to make 18K both fashionable, accessible and as something that retains value. And we need to reinforce the image of Dubai/UAE as the most affordable place to buy gold.”
Import duty cut
Industry sources suggest that this can be done by removing or cutting the 5 per cent import duty on jewellery. “It’s more of an issue with 18K,” said Dhanak. “Because for 22K and 2K, jewellery retailers can still source it from within the UAE or from other Gulf markets, and thus not have to bear the import duty.
“But all of the 18K jewellery sold in this market is imported — and the duty factor adds to ex-showroom prices. If we are to target a new generation of shoppers, there has to be some give-and-take on the price elements.” (Jewellery also carries a 5 per cent surcharge for domestic shoppers.)
A cut across the board
Dimple Jethwani, Director at Meena Jewellers, echoes a cut would be good sentiment on import duty. “If it happens, the benefits pass through the entire gold sector. Even though India raised its own import duty in July [to 12.5 per cent from 10], Dubai/UAE prices are still close to India’s.
“Import duty removal here could have a major say in what an Indian tourist wants to buy as gold from here. And how much she is willing to spend.”
As for the youngsters’ fancy, Jethwani says “polki” has been all the rage this year. “Sure, 18K remains popular, but polki — essentially uncut diamonds set in 22K or 18K — have found buyers in the 25 year and plus category,” she said. “Obviously, with Indian film stars showing up in polki jewellery had done much to popularise the category.
“Polki jewellery is mostly imported — if there’s a review of the import duty, any jewellery category that relies heavily on imports will benefit.”
If such a move also manages to make jewellery more accessible to the price-conscious young shopper, it will future-proof the UAE’s jewellery sector.
Selling gold to Gen Z
According to the World Gold Council report, jewellers will have “perpetual challenges” in getting Gen Z to pick up the baubles. This will require the “jewellery industry … to address on a global scale,” the report notes. “For Gen Zs, fashion and lifestyle habits in general are less traditional and more focused on experiential purchases, as well as those that have an ethical connection. In their eyes, gold can be perceived as brash or showy; they are not as loyal to gold’s heritage as their parents or grandparents might be or have been.”