Is India’s love affair with gold jewelry about to end?
Lets start with something interesting. Go to your facebook account and search for an instance where someone shared a piece of jewelley they bought. Your facebook feed might be overflowing with images of foreign vactations, exotic foods, political statements and complaints about broken infrastructure but no pictures of jewellery. It is more likely that you will get images like these
Or the ones like these
Even the men aren’t far behind. At least the women have some aesthetic sense and designer jewelry but men they have just plonked together the thickest chains they could find.
And who doesn't remember the man with the gold shirt.
Why was Jewelry so popular until recently?
I won’t go into details as to why people in the previous generations invested in gold. That’s well documented here. But with better financial inclusion, access to markets and investment vehicles the lure of the yellow metal is waning.
Gold jewelry thrives on the insecurity of the buyer. If you don’t gift your daughter/wife/daughter-in-law jewelry, you risk society judging you. Gold jewelry still is still very much a status symbol among the older generation. If you need evidence do attend a big fat Indian wedding especially in North India. There are pre-wedding events where all the jewelry is laid out for display for close friends and family. These events are cauldrons of peer pressure where families size each other up and calculate how much they will have to spend on their children’s wedding to upstage others or at the least keep up with them.
Recently jewelers have started to target the educated class by gnawing at their insecurities. This Tanishq ad comes to mind. The ad picks on the usual vulnerabilities: pregnancy, the stressed out working mom, the girl in a male dominated office. The ad is no different from a ‘Fair and Lovely Ad’ in which a girl goes from being a loser to a ‘glowing’ success simply by becoming fairer. I am sure that a lot of women will still plonk two month rent to feel like the women in the ad. Meanwhile I couldn’t find a single photo of a female business personality where the focus was on her jewelry.
What’s changed? Is gold becoming a negative social currency for the working class?
People born in the 80s who currently form the biggest proportion of the workforce don’t associate success with jewelry nor do they feel envious of people with jewelry. On the contrary they start associating these people as being bereft of any form of achievement and class. This snap judgement might not be accurate but it is ingrained in our minds that all this jewelry is to hide or compensate for something. Copious amount of gold are usually associated with the sleazy politician, corrupt contractor or a bride who comes with dowry. Note these are snap judgement and may not reflect reality.
For most modern middle class families gold is cumbersome. Every-time you step out wearing jewelry on a crowded street or while returning late night from a wedding you are putting yourself at a risk. Even keeping jewelry at home is not a safe proposition so most of the time the jewelry is in a bank locker. So you are essentially paying the bank to keep the jewelry safe and the bank is not liable in case of theft. Even a simple wedding ring can wreck your peace of mind. Imagine yourself on a vacation, lazing on a beach, drinking beer.
As you adjust your sun-glass you notice that your wedding ring is missing. Your picture-perfect vacation is ruined as you calculate the financial loss and explain to your significant other that you did not lose it on purpose .I always tell my married friends that in this age of Tinder, a ring is not going to stop anyone from swiping right.
Why hasn’t the market collapsed yet?
‘Even the inevitable takes time’. It hasn’t happened yet but that doesn’t mean that the signs aren’t there. You will hear about expansion into tier-2 and tier 3 cities, this might seem as a great strategy to reach more customers. To me it seems like a forced move as jewelry consumption in major metros has reached saturation.
This article is from 2014 and come 2016 you will find that two of the companies mentioned [Senco and Reliance]. You will see that Senco is facing criminal charges and Reliance hasn’t been able to make a dent in the market.
These might be isolated incidents or they might be the proverbial ‘canary in the coal mine’.
The more likely reason that the jewelry market hasn’t collapsed is that the older generation still control the purse strings. Even though their children earn well the parents still influence spending during weddings. Young people reluctantly accept jewelry that is gifted and buy when parents ask them to. The middle class especially the educated ones will shun it completely once the next generation comes to the forefront.
What should Jewelers and Jewelry Manufacturers do?
Some of my suggestions might seem evil and insensitive to my readers. But remember that my allegiance is solely to you my readers alone. If you are aware of the tactics that I list below it is less likely that you will be exploited.
I have suggested some ideas that jewelers should exploit.
1. Find new markets
Instead of targeting the urban, highly educated class in tier 1 cities shift your focus to tier-2 and tier-3 cities. People in these cities are just coming into new found wealth by selling ancestral properties and the older generation among them are gullible targets. Target their insecurities as these are probably your last dying customers. Start looking at geographies beyond India which have become wealthy suddenly by exploiting natural resources of their country. These geographies will have a small section of people with a lot of new found wealth and low self esteem.
2. Move beyond women
By this I don’t mean that you start selling jewelry for men. Instead come up with a TV ad that shows a stressed out working woman being surprised by her ‘caring’ husband gifting her jewelry. Target old parents whose children live in a different city and seldom visit. The ad spot should show how gifting your children jewelry will remind them of you even when you are not around. You can make it more dramatic by showing a funeral pyre and the girl admiring at the last gift that her parents gave her.
Guys/Girls who just started their first job are also a good target. The ad shows how the mother goes through hardship to educate their children. Show the mother pawning her jewelry for the child’s education. The child grows up buys the mother some jewelry with his/her first salary.
Target the subdued guilt of people who have the spending power and you can keep this charade on forever.
3. Change positioning from aspirational to utilitarian
If everything else fails, Gold is still a useful metal, it is inert and with the right alloys it is durable as well. As gold prices fall start venturing into interior décor, plumbing etc.
Why hasn’t the mainstream media uncovered this yet? There are 2 reasons for this
- Jewelers have a large advertising budget, the media bosses will never approve of such articles. You can see such behavior playing out in real estate sector as well. Everyone knows that real estate is in doldrums but even now the media talks about why this is the best time to buy as the prices are at an all time low
- Most importantly they have assumed that Indians will always have the lure for gold. They cannot even dream of a situation where the country decides to shun it en-masse. This is a ‘black swan’ in the making and no one is taking notice because they haven’t bothered to look and ask questions