Jewellery chains are growing at the cost of standalone jewellers – and it’s only going to get worse, says World Gold Council report

• The government’s efforts to organise the jewellery industry are paying off, according to a report by the World Gold Council.
• Branded chain stores have increased their market share at the expense of small jewellers.
• Regulatory changes and shifts in consumer behaviour have driven the shift away from smaller retailers to branded chains – and it will only get worse for the small players, the report says.

Tough days ahead for standalone jewellers, says a new report by the World Gold Council, which has found that chain stores now account for over a third of India’s lucrative jewellery market.

India imports a lot of gold – according to government data, India imported $46.14 billion (approx. ₹3.6 lakh crore) worth of gold in FY22, a surge of over 33% from FY21, when the gold imports stood at $34.62 billion (approx. ₹2.5 lakh crore).

Despite this, the gold industry contributes just 1.3% to India’s GDP. The World Gold Council report says that this is because the industry is fragmented, with small and medium-sized enterprises dominating it.

“The majority of jewellers in large cities and towns fall into the organised category. However, the unorganised sector remains a dominant force in rural centres, where many jewellers also act as moneylenders within their community,” the report said.

However, that is changing slowly, with larger regional and national jewellery chains growing – the report shows that the share of small retailers has fallen from 50% in 2015 to 37% in 2021.

“One of the most significant changes in the jewellery market over the last 10-15 years has been the advent of chain stores and the market share they have gained at the expense of stand-alone retailers,” the report stated.

Driving this structural change in the industry are regulations and shifts in consumer behaviour – the report adds that regulatory changes like GST, demonetisation and hallmarking; consumer behavioural shifts like demand for better designs and pricing structures; and after-sales policies have led to the gradual yet important shift towards larger, branded jewellery chains.

The outlook is not very rosy for smaller players.

“National and regional chain stores are nevertheless set to gain market share in the current trend because of their access to credit and the large inventory they carry,” said Somasundaram PR, regional CEO, India, World Gold Council.

According to the report, over the next five years, chain stores – like Tanishq, Kalyan Jewellers, PC Jewellers, to name a few – will expand their market share to 40%, further eating into the share of small and medium-sized retailers.

“Small players need to become more transparent and adopt technology faster if they have to gain similar access to credit and protect market share,” Somasundaram added.

Millennials drive the shift to online sales – aided by Covid lockdowns

Many people consider it risky to buy jewellery online – this industry is one of those few where the share of in-store purchases is likely amongst the highest across categories. However, that is changing gradually, too.

Apart from millennials, the report also credits internet penetration and an increase in smartphone usage for this change – and the Covid lockdowns acted as catalysts for this change.

“The lockdown restrictions and an aversion to going out in public saw many consumers switch to buying jewellery online, and this accelerated the pace of growth in the jewellery e-commerce market,” states the report.

Still, online sales account for only 3-5% of the total jewellery sales value – this could double to 7-10% in the next five years, according to the report.

“Online buyers tend to purchase lightweight daily wear/fashion jewellery in 18-carat gold,” the report says, noting that the average ticket size of purchases has not increased.

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