The worst outbreak of coronavirus in the world is changing the way Indians buy gold, accelerating the switch to modern, retail stores.
While consumers are slowly moving away from the thousands of family jewelry stores that control the world's largest gold market, the epidemic has accelerated the process, according to Ramesh Kalyanaraman, chief executive officer at Kalanan Jewelers India Ltd.
"We saw in the last quarter that this change has increased dramatically," he said in an interview. "We've seen a lot of customers come to the shops for the first time, about 50% more than last year. In this case Covid, people don't want to go to crowded streets and small shops but prefer private shops like Kalyan."
India has been struggling under a second deadly wave that has wiped out medical infrastructure and raised its official death toll from the Covid population to more than 318,000 - a number experts say maybe too important. That has led some provinces to restrict economic activity and travel, unlike last year when Prime Minister Narendra Modi announced a national closure, which put the country at a standstill.
Demand for gold declined more than a dozen years last year despite a return to the first three months of 2021 in reducing gold prices and sharp collections in economic activity. Changes in purchasing behavior and strong marriage-related purchases increased Kalalyan profits by 54% in the January-March quarter.
The company, which lists Warburg Pincus LLC and the Singapore government as investors, raised $ 158 million in its first public offering in March, which is one of the best-selling places among Indian jewelers.
‘Reason for Fear’
"The shift to national and regional products is clear as consumers are more comfortable and feel more secure, which is still a problem in the informal sector," said Gnanasekar Thiagarajan, director at Commrendz Risk Management Services. consumers also encourage young jewelers to adopt new government regulations on quality standards in an effort to retain their customers, he said.
Government efforts to bring the country's economy through measures such as digital growth, excise duty and services, and strict quality standards have improved the market share of established chains such as Tata Group's Titan Co, Kalyan, and Malabar Gold & Diamonds.
About 60% of Kalalyan's home stores are located in southern India. The Kerala-based jeweler plans to add twelve stores to the country this year as it remains hopeful of service delivery despite the second wave of the epidemic. It is also expected that switching to chain stores will lead to higher revenue and its plan to open more stores outside of southern India.
Although the situation is different this year with the closure only "the scary thing is very high because we see so many people dying," Kalananaraman said. "But we have the opportunity to experience as we face this kind of difficulties last year, strengthen our balance through our IPO post, and with the way the money was returned last year, we know the need cannot go away, we can move on to different areas."