The jewellery industry of India, which is going through a slowdown in consumption demand amid the pandemic would require digital strategies for its growth post the Covid-19 crisis, according to a report by the World Gold Council (WGC).

The report noted that although the online gold market is still in its nascent stage in India, digital and social activity plays a key role in the purchase journey.

“In urban India, consumers browse online and mobile apps pre-purchase and use online blogs and social media for ideas and inspiration. Mobile apps and wallets are playing a key role in the growth of Internet Investment Gold,” it said.

COVID-19 has caused retailers in India to re-evaluate their brick and mortar business model and implement an enhanced digital strategy, said the report on the online gold market in India, adding that successful retailers embrace an omni-channel strategy to boost online sales.

“There is a real opportunity for growth in India’s online gold market if it can improve the end-to-end gold jewellery purchase journey and thus establish the ‘loyalty loop’. To drive market growth post COVID-19 the industry needs digital strategies that will ensure gold jewellery reaches more consumers at the consideration stage of their purchase journey and reaches them more often,” it said. The WGC report noted that the outbreak of COVID-19 and consequent closure of stores from mid-March caused jewellery sales to collapse.

With stores closed, retailers such as major jewellery brands rolled out various incentives and offers in April, such as providing opportunities to lock in prices, discounts on the gold rate, gold ownership certificates or gold vouchers, and exchange of gold coins for jewellery via their e-commerce websites during Akshaya Tritiya, it said.

“Even so, online sales volumes were nowhere near the same period in 2019. COVID-19 has forced jewellery retailers to reconsider their brick and mortar business model and implement digital as a core strategy,a the report said.

This focus on digital will be key to a successful growth post COVID-19, but more importantly the seamless integration of offline and online channels will play a crucial role in driving sales, it added.

Meanwhile, silver has gained more sheen on expectation of a revival of industrial demand as economic activities are gradually restarting despite the Covid-19 pandemic across the globe. Prices of the metal are ruling at nearly a 7-year high in India’s future and spot markets.

Bullion market analysts say silver has attracted investment demand as it is an industrial metal and its demand for jewellery has also gained amid a bullish trend in bullion in the pandemic season.

Silver has even outpaced gold as the Gold/Silver Ratio - which tracks the two precious metals’ relative prices - is down to 93, the lowest in three weeks from the all-time high of 127 in mid-March, said Ajay Kedia, Director, Kedia Advisory.

The ratio had slumped to 31 when silver touched over Rs 70,000 per kg in 2013, he added.

Silver futures rose to Rs53,199 per kg on Thursday in the domestic market, the highest level since September 2013.

However, bullion witnessed a little correction in the domestic and international futures on profit-booking, but the fundamentals are still bullish, said a market analyst.

At the Multi Commodity Exchange (MCX), the silver contract expiring in September was trading at Rs52,766 per kg, down Rs292 from last session, while prices rose to Rs 53,199 per kg during the session, the highest level after September 10, 2013 when silver prices rose to Rs53,955 per kg at the MCX.

August expiry contract of gold was trading at Rs49,040 per 10 grammes, after slipping from the day’s high of Rs49,159 per 10 grammes. At the MCX, gold rose to record high of Rs49,348 per 10 grammes on July 8.

Gold and silver have witnessed temporary corrections and fundamentals are still bullish, said Surendra Mehta, Secretary, India Bullion and Jewellers Association. Silver is an industrial metal and its demand for industrial usage is expected to increase with reopening of industry worldwide after lockdown due to Covid-19 pandemic, he added.

Physical gold sold at a premium in India last week for the first time this year, driven by plunging imports and a near halt in smuggling that offset the impact of high unemployment and a rise in domestic prices across Asia that could deter buyers.

As per market analysts, the medium-term outlook for the economic recovery still looks very uncertain and this continues to provide ample room for gold and silver to float higher.

Indo-Asian News Service