Stock gold Dubai
That eternal lure... UAE's gold and jewellery sector is again seeing consumer activity, with the final three months recording 60-75% of what it was before COVID-19. Image Credit: Antonin Kelian Kallouche/Gulf News

Dubai: Around 100 gold and jewellery stores shut down in the UAE this year after the pandemic struck – and that’s not a bad thing, according to the founder of a leading retailer.

“Gold stores were mushrooming all over – and there were retailers who had two or three on the same road,” said Joy Alukkas, Chairman and Managing Director of the network that bears his name. “Our brand too had such locations – it was felt then that this the only way to keep growth happening and the brand name intact.

“But COVID-19 has taught the local gold trade a few lessons… and shedding the over reliance on too many stores was one.”

In recent months, Joyalukkas exited six locations in the UAE and more than a dozen across the Gulf. There are reportedly more than 2,000 gold and jewellery outlets in the country.

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Closures... and some openings

Since July, Dubai’s Gold Souq and Meena Bazar – the two hotspots for the city’s gold and jewellery business – have seen quite a few closures as retailers took a closer look at their network needs. Where landlords have provided rent deferments or waivers, however limited, retailers decided to stick on. (During this period, two jewellery retailers from India made an entry, including Tata Group owned Tanishq with its first standalone store in the UAE.)

FERG-Alukkas-for-web
Thee stores from the same retailer on one stretch of road was always going to be excessive, says Joy Alukkas. Dropping non-performing stores was the best way to cope wit COVID-19 triggered crisis. Image Credit: Supplied

Job losses

But all those store closures have hurt the workforce numbers. Among the many retail categories, gold and jewellery had seen the highest number of job losses, sources say. Retailers have tried to absorb or work around their shifts and annual leaves to keep as many on the rolls as possible.

They are back

But the sector is making progress on another front. After a horror showing in the first eight months, UAE’s gold retailers are seeing shoppers return. November was the best month by some distance in 2020, helped by Indian festive buying. December looks promising, though jewellery sales during DSF 2021 is off to a slow start, said Alukkas.

“Our sales in recent weeks had gone back to around 70-75 per cent of what was there pre-COVID,” he added. “The doubts that were there about job losses, investments, and futures are being swept away… gradually.

“Gold market is settling down, and I think a majority of gold retailers will say the same. We don’t have the same fears as in June 2020. Yes, concerns are there – but there’s also belief that things are improving.

“Shoppers are now returning because they see how gold performed in this all-time difficult year.”

Gold is up $380 an ounce since January 1, 2020, down from the $500 plus it had touched in August on way to an all-time record of $2,058 an ounce.

“Majority of shoppers we see today are not coming to exchange their old jewellery for new,” said Alukkas. “The vast majority – around 80 per cent – are still buying new collections of investment bars/coins.”

$380

Gold's gain in the year to December 25. In August, it had been at $500 plus

All domestic

That the slow rebound in sales is happening because of residents is the biggest positive for retailers. “Tourists are returning, but for now, UAE’s gold and jewellery is entirely driven by resident shoppers,” the chairman added. “If we can get back to 60-70 per cent levels with their help, the return of tourists will speed us towards a full recovery.

"The UAE's gold business will get there - shoppers are making sure it does."