Jewellers bet big on studded jewellery

KOLKATA | MUMBAI: Jewellers have increased the mix of studded jewellery in their showrooms ahead of the upcoming festival season, which kicks off with Tuesday’s Raksha Bandhan, because the margin on diamonds is much more than that on gold at a time when the precious metal’s prices have become volatile.

Gold prices have risen by 25% in the past seven months as opposed to a 10-15% rise in diamond prices. Gold in Mumbai has gyrated between a record high of Rs 19,240 per 10 gm on June 8 and a low of Rs 17,619 on July 29. It traded at Rs 18,841.5 on August 19.

With the wild fluctuation in gold prices, many jewellers have increased the component of studded jewellery in their showrooms against stocking plain jewellery. This, according to Umesh N Shah, vice president, Shrenuj & Co, is because margins are higher in studded jewellery than in plain gold jewellery.

In a falling price scenario, plain gold jewellers’ margins tend to get further squeezed. In such a scenario, if they increase their portfolio of studded jewellery, their margins are protected from further downside. “When gold prices rise drastically, footfalls reduce. In such a situation, if a jeweller has a higher mix of studded jewellery, he can offer this to customers,” said Mr Shah.