Recent trends:
The luxury segment is a key customer for jewelry in India as 27% of market
spending in this segment is on Jewelry. The potential for luxury retailing in India is
large considering that Indians attach significant importance to brands. However,
this segment is facing increasing threats from other luxury goods like leather,
perfumes, high end gadgets, watches, etc.
Potential threats:
• Intense competition from leading brands limits pricing power
• Substitutes like cubic zircon or synthetic jewelry
• Big retail players entering the market
• Expensive real estate prices
Diamond Processing and Jewelry Retailing In India
• High gold prices
• Slowdown in US and other economies
• Highly capital intensive business
• Competition from other luxury goods
Apart from the broad issues mentioned above, unbranded jewelry retailing is more like a commodity business with very thin margins, successful players are those who have been around from a very long time and in the process have earned significant goodwill by offering consistently high quality and innovative designs.
On the other hand, branded jewelry has taken off well as evident from the number of brands and top line growth experienced by them. Branded jewelry requires extensive promotional campaigns and a strong distribution network.
Because of a slowdown in sales to US, India’s largest export destination, India laid off about 100,000- 150,000 jobs. There are reports that say the industry also has problems securing import finance and VAT refund from Maharashtra state (hub). In early July the workers in the cutting and polishing units in Surat and elsewhere went on a strike demanding a wage hike.
Also, July saw a roughly 35% downturn in business because of recession. To add to these woes, DTC which controls 80% of global trade in rough diamonds announced a 5% increase in price of roughs shrinking the margins even further.
The supply of roughs has tightened further with several Indian firms being cut by De Beers under its global rough diamond distribution plan.
Also competition is growing as diamond mining countries in Africa are demanding that cutting and processing units be set up near to their mines.
But it does not make economic sense for Indian manufacturers to set up shops there as cost of cutting and polishing a karat of stone
in Africa works out to $70-$75 compared to a maximum $25 in India.
The luxury segment is a key customer for jewelry in India as 27% of market
spending in this segment is on Jewelry. The potential for luxury retailing in India is
large considering that Indians attach significant importance to brands. However,
this segment is facing increasing threats from other luxury goods like leather,
perfumes, high end gadgets, watches, etc.
Potential threats:
• Intense competition from leading brands limits pricing power
• Substitutes like cubic zircon or synthetic jewelry
• Big retail players entering the market
• Expensive real estate prices
Diamond Processing and Jewelry Retailing In India
• High gold prices
• Slowdown in US and other economies
• Highly capital intensive business
• Competition from other luxury goods
Apart from the broad issues mentioned above, unbranded jewelry retailing is more like a commodity business with very thin margins, successful players are those who have been around from a very long time and in the process have earned significant goodwill by offering consistently high quality and innovative designs.
On the other hand, branded jewelry has taken off well as evident from the number of brands and top line growth experienced by them. Branded jewelry requires extensive promotional campaigns and a strong distribution network.
Because of a slowdown in sales to US, India’s largest export destination, India laid off about 100,000- 150,000 jobs. There are reports that say the industry also has problems securing import finance and VAT refund from Maharashtra state (hub). In early July the workers in the cutting and polishing units in Surat and elsewhere went on a strike demanding a wage hike.
Also, July saw a roughly 35% downturn in business because of recession. To add to these woes, DTC which controls 80% of global trade in rough diamonds announced a 5% increase in price of roughs shrinking the margins even further.
The supply of roughs has tightened further with several Indian firms being cut by De Beers under its global rough diamond distribution plan.
Also competition is growing as diamond mining countries in Africa are demanding that cutting and processing units be set up near to their mines.
But it does not make economic sense for Indian manufacturers to set up shops there as cost of cutting and polishing a karat of stone
in Africa works out to $70-$75 compared to a maximum $25 in India.