Gold is going to be the biggest stumbling block for the jewellery industry this year. Indian jewellery retailers from all over the country including the southern state of Tamil Nadu, considered the contry’s ‘gold sink’, have all, without exception, been saying that business has been hit (by an astonishing 70% in some cases as our report on it in the forthcoming issue of Solitaire International will tell you) badly by the high price of the yellow metal. As this report tells you, even the country’s largest brand is hurting.
Even the US jewellery consuming market, not really tied into intrinsic value the way the Indian one is, has reports of not only a consumer buying slowdown, but an actual reverse flow as people decide to turn gold into hard cash in market that is clearly in recession.
That high prices were hurting sales was proved when the price of gold dropped over the past few days. Consumers quickly leapt into the market to start buying again. But their doing so only stopped the fall in gold prices and the prices may have bottomed out where they are now. And we could still see prices go up past the $1,000 mark in the next few months.
Now more than ever, jewellery desperately needs a strong value proposition. Something that resonates with what consumers believe in or their ideas about themselves. Something that has nothing to do with intrinsic value.
