Dubai: An Indian jewellery firm has decided now is the right time to get into Dubai’s retail space – despite gold demand having dropped more than 70 per cent in recent months because of COVID-19’s impact on consumers and record prices for gold.
And it’s not just a token presence that Khushboo Jewels, a fairly known name from wetern India, wants. It has leased a ground plus four storey property for its retail and wholesale operations at Dubai’s Gold Souq. One storey is entirely dedicated to gold, another for diamond jewellery, and in a first for the UAE’s jewellery trade, one level exclusively for silverware.
All told, this is a 3,371 square feet building at a prominent spot in Dubai’s famed Gold Souq. “I don’t think we are making a mistake by launching our retail operations now,” said Khushboo Agarwal of the family-owned business. “We had been active in the local wholesale jewellery business for four years – the plan was always to step into retail.”
Getting in now definitely helped secure a lower rent than what it would have paid even a year ago. For Agarwal, that in itself is a big plus.
“We are talking about a 30-40 per cent reduction in rent from what it used to be… and we have secured a three-year lease,” she said. “I don’t think we would have ever been able to secure these rental terms if the COVID-19 had not struck.
“Through these four years, we always had the wholesale operations in Dubai – it was never felt we should get into retail earlier. I don’t think getting in now is the worst possible time.”
After the pandemic struck and shoppers vanished, the Deira Gold Souq has seen many changes in their tenant mix. A few prominent jewellers decided to make an exit when their rent drop negotiations with landlords failed. Some of these retailers had been at these locations for decades.
That was during the epidemic. The last two years have been quite tough for Dubai’s gold and jewellery business. The rise in gold prices was only part of the problem – as the economy tightened, it hit consumer sentiments – and buying jewellery is one category where sentiments matter most. (In another indicator of a fall in the Gold Souq’s fortunes, “key money” – paid to take over the lease on a vacant outlet – dropped significantly in recent years.)
Agarwal acknowledges the tough trading conditions, but says that it’s not a permanent crisis. “There’s COVID-19 and all the other issues – but gold buying is not going to vanish completely from shopper habits here,” she added.
“Summer’s always a slow period for the Gold Souq… this year there was COVID-19 as well. But the moment tourists return to Dubai, the Gold Souq will get its shoppers back. All retailers are waiting for that…. Starting October, we will be there as well.”