Malayalee's fondness for gold has always been on the rise and so are the prices of Gold.
All the major jewellers in Kerala are nursing expansion plans and are opening new branches in major cities of Kerala and outside. Some of the established groups have even multiple shops in the same city itself. Even banks and other financial institutions are into selling of gold bars and biscuits. A parallel market for imitation gold ornaments is also booming.
One major aspect to be noted is the scale in which gold retailing has evolved. The outlets are running into tens of thousands square feet and are centrally air conditioned. They also offer other amenities like cafes, play areas for children etc. Another trend seen in gold retailing is introducing textile showrooms along with jewellery showrooms (or vice versa).
Bhima, Joy Alukkas, Chemmanur, Josco, Alapatt, Jos Alukka, Francis Alukkas, Malabar Gold, Kalyan Jewellers, Prince Jewellery, A Geeripai Jewellery…. think of any familiar name in the gold industry of Kerala, everyone is into a path of expansion and growth. All of them are starting new branches, hiring professional marketing and advertising team to handle promotions, employing celebrity endorsements using cinema and television stars, sponsoring mega events and buying lots of ad space in print, air and even online media.
Some leading brands are even venturing into contextual advertising in media like cinema. If you happen to see a very large sized hording of a leading jeweller in the backdrop of an interesting duet or dance in a cinema, do not take it for an accident. Chances are most likely that it was carefully planted.
And how can we not notice the mega schemes and prizes that are being offered. Gone are the days when a suitcase, bag, calendar with a God/Godess’s or Film star’s picture or beautiful plastic bags accompanied a gold purchase. Cars, motor bikes, foreign trips, opportunity to spent time with favourite stars – it is turning out like there will be a gift or prize with every gold purchase, big or small.
Why has there been a boom in gold industry of Kerala?
The answer should be multifaceted. Buying gold has been an age old practice in the Kerala society. It is not just a passion for ornaments; gold is also seen as an investment which will never deteriorate in value. The value of gold has increased many folds in the past decades and even the past quarter has shown more returns than a traditional bank fixed deposit or investment in mutual fund and shares. Portfolio managers have started advising to make some investment in gold or e-gold. Mutual fund companies have also jumped in by offering gold funds.
With the emergence of the new era high paying jobs like IT and management, not just the NRIs, but even local professionals have lot of expendable money. A portion of this directly and indirectly flows into the gold market. The fashion consciousness of the new generation adds on to this. The gift habits have also changed, showing a positive change towards ‘golden’ gifts. The use of gold among men is also on the rise. Gold retailers have stepped in right, to cater to the demand.
It is worth to have an incidental mention about another business that popped up and established during the gold rush – specialised money lending. Lot of people avail gold loans from nationalised and private banks as well as local money lenders. Many of them are not able to repay the loan and interest to recover the gold. The actual value of the pledged gold is more than the total repayment amount. Here enters the new specialist money lender. He helps the debtors to recover the gold from the bank and sell it in the open market. The lender gets some quick, risk free money, bankers save the recovery procedures and the debtor gets some difference money, which he would have lost, if the gold was auctioned. It seems a win-win for all parties involved.
Coming back to the jewellery retailing front, it is not just the gold in demand. Diamonds and platinum usage is also on the rise. Merchants are also interested because of the higher margins that are involved.
Recent estimates have shown that Kerala accounts for almost 35% of the total gold sale happening across India. With very high per capita consumption of gold and gold retailing floor area, it would not be out of place to parody the famous by-line of Kerala Tourism as "Kerala - Gold’s Own Country".
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Saturday, January 16, 2010
