China
According to the data provided by the World Luxury Association (WLA), China’s total consumption of luxury goods such as jewellery, fashion clothing, leather products and perfume (with the exception of private planes and yachts) topped $8 billion in 2007. It takes up 18% of the global total. China is expected to see a growing luxury market in the coming years.
China’s present demand for gold jewellery reached 300 tons a year, being second only to India.
According to the WLA report, about 80% of world top-brand luxury goods are already present in the China market.
Foreign companies selling luxury goods have already opened their franchise stores in such major Chinese cities as Beijing and Shanghai and also in smaller towns. Their business there contributed to greater interest on the part of Chinese consumers toward purchasing luxury brands, which was stimulating the development of China’s consumption market for luxury goods.
As pointed out by WLA, although the outlook for this market looks very promising, it still faces some problems caused by its wonton growth. According to WLA, some of the Chinese nouveau riche still lack sufficient knowledge of the cultural aspect of top-brand consumption. At the same time, some young white-collars are ready to run into debts to reach their “dream of luxury consumption.” In other words, the Chinese luxury market has yet to go some way to its maturity.
India
The Federation of Indian Chambers of Commerce and Industry predicts that India’s export of jewelry and gems will double in value in the nearest seven years to reach $37 billion. The growing demand for gold jewelry may contribute to pushing gold prices upwards – particularly amid the current feeling, when perception of gold as some value is relatively low. Analysts are sure the present hiatus may induce investors to buy gold on the background of a price correction process. As expected, gold prices in India will go up in the nearest time. India’s demand for gold in ingots has been reported to zoom during recent days, which brought about a jump in spot prices for gold.
According to the World Gold Council, India was the greatest jewelry retail market in terms of volume in 2007.
Gemstones and jewelry of Indian and foreign origin were displayed at the JCK New Delhi-2008 Exhibition.
The fair was participated by more than 210 renowned companies from India and other countries. Among foreign participants there were representatives of Thailand, Dubai, Italy, Belgium, Turkey, Lebanon, the U.S.A. and Japan. The show was visited by some 10,000 guests.
Foreign jewelry market players are aware of the phenomenal growth registered in the Indian jewelry segment exceeding 9% of GNP. It is a fact that India remains the greatest consumer of gold jewelry and the third diamond consumer in the world. India accounts for 4% of the world’s market of gemstones and jewelry.
In the course of the Indian fair there appeared some newsworthy comments: certain multinational jewelry brands, such as Tiffany, Cartier, Zales, Harry Winston and Bulgari expressed their interest to opening their own stores in India now that the local legislation permitted up to 51% of direct foreign investments. Reliance Retail plans to cut a splash in the jewelry retail market launching from 400 to 500 new sales outlets, while Damas India intends to open 16 new stores in the nearest two years.
The soaring inflation may hinder the expansion plans cherished by many retailers, but branded jewelry manufacturers are far from being worried. Large companies like Gitanjali Group, Tanishq and Adora expect a 20%-50% sales growth.
More importantly, they are kicking off new lines of goods, tying up with banks and devising new schemes to push the sales growth further up.
Gitanjali Group chief operating officer Dharmesh Bothra said, “The fluctuating prices of gold may prove to be a good opportunity for diamond jewellery manufacturers as, historically, prices of diamonds have never come down in the last 30 years. Now, diamond jewellery manufacturers have a chance of making up a certain amount of lost profit, which is why they need to drive their marketing message across strong and hard.”
According to Bothra, Gitanjali Group, which manages such reputed brands as Nakshatra, Gili, and Sangini, is increasing its reach through more schemes, and is also introducing ranges at prices lower than top brands.
“People usually buy jewellery as an investment. There may be a temporary setback now, but once prices stabilize, sales will be right on course,” said Adora managing director Prabir Chatterjee. This is why the company has no intention of going slow on its expansion plans.
According to Chatterjee, the company will open eight stores this year, and some franchisee locations.
To drive sales further, Adora is also banking on men’s jewellery and accessories brand, Man’s Ego, which will offer 25 categories, including tiepins, cufflinks, and pendants.
India’s largest jewellery brand Tanishq launched its new collection “Dvaita”, a range of exclusive multi-functional diamond jewellery inspired from the detachable concept representing a new philosophy in jewellery accessorisation.
According to Tanishq Design Studio Head Sangeeta Dewan, Dvaita (which means duality) has been designed keeping in mind the woman of today who is always looking for designs that can suit various occasions in her life. The rationale behind this collection is to create a line of jewellery that gives her options to express her multifarious accessorisation needs.
