Gold has traditionally been the bulwark of the global economy. Its intrinsic ability to serve as an investment option as well as be used for alluring ornamentation, has combined to sustain its enduring appeal. In India the love for the yellow metal runs very deep due to these double whammy qualities of the metal. But with the prices of 22kt. gold sizzling at unbelievable rates, the average Indian is now beginning to temper his love for gold with prudence.%%The industry believes that gold will touch Rs17,000 per 10 gms by August ’09, shattering all the price surges of the yellow metal in the recent past. Yet the popularity of gold remains undiminished, with the Indian consumer anxiously waiting for a climbdown in prices to indulge his passion for the yellow metal. Ashish Pethe, partner at Waman Hari Pethe Jewellers, remarks that “even when gold rates were at Rs 14,000-Rs 15,000 per 10 gms, people were still buying gold jewellery, that’s how much Indians love their gold. It’s only now when prices are close to Rs 16,000 per 10 gms that clients are waiting for prices to come down.” %%

{{Difficult Gold Market :}}$$ He admits though that the volume of sales of gold jewellery has declined precipitously as consumers are deferring their purchases till prices stabilize at more realistic levels. Bachhraj Bamalwa, partner, Bamalwa & Sons, agrees that “consumers are now buying gold jewellery only for absolutely essential occasions like marriages. They are also trying to exchange old gold jewellery for new jewellery as a way out of a difficult situation.” A few retailers like Binaisha Zaveri, director, Tribhovandas Bhimji Zaveri-The Original, have discerned a shift in the buying patterns of gold jewellery. “We have noticed that if a client has a certain budget for a wedding,” she says expansively, “it is divided between gold, diamond and colored stone jewellery, possibly as a way of circumventing the high prices of gold, where the client buys less gold and purchases other pieces of jewellery which may be cheaper.”%% As the economy settles down into a numbing deflation, the market for gold jewellery is slowly turning tepid. Vinod Hayagriv, managing director, C. Krishniah Chetty & Sons Pvt. Ltd, has noticed that the market is not vibrant at all. “I get a weekly report on the market situation and we have noticed that there is a definite slowdown of about 15% to 25% as compared to the same period last year. The price is a deterrent and overall, due to the economy, there is also less spending.”%% {{New School of Thought :}}$$ In a market where high spending has been curbed by extravagant prices, there exists a slowly emerging school of opinion which believes that plain 18kt. gold jewellery could be a sensible way out of the current impasse, where the Indian consumer loves his gold jewellery but cannot purchase it due to prohibitive prices. In markets across the world, especially in the west, gold jewellery of varying caratage like 18kt., 14kt. and even 9kt. are favoured by consumers. Sanjeev Mathur, director, Viola 18K Gold Jewellery, is convinced that the concept of 18kt. gold jewellery is an idea whose time has come even in the irrevocably conservative Indian jewellery market. Mathur has been exporting 18kt. jewellery for the last 15 years to the United States and for the last five months has been selling his chic, trendy and affordable jewellery in the Indian market.%% His company commissioned a sample survey of the modern Indian woman in the age group of 16yrs-60 yrs of age to investigate their requirements and preferences. The survey was conducted in the metros of Mumbai, Delhi and Bangalore in a period of four months “which actually saved us six months of mistakes that could have been fatal in this market,” grins Mathur. “It also helped us to get the product right.” His jewellery targets the middle and upper middle class of the country in the very affordable price band of Rs2000-Rs30,000. Mathur firmly believes that buying patterns of jewellery are changing swiftly and radically in the Indian market, with the Indian consumer adopting a more flexible and liberal approach to new forms of jewellery. He is convinced that in the not-too-distant future 18kt. jewellery will be de rigueur in the non-traditional sector of jewellery. “Women are buying jewellery not just for purity, but also for design,” he says quietly.%% {{Dissenting Opinions :}}$$ But not all jewellers are equally sanguine about the demand for 18kt. gold jewellery sweeping the market. Many jewellers are hesitant about manufacturing a product which they stoutly believe has limited appeal in a traditional market. One such unbeliever is Ajay Mehra, MD, Mehrasons Jewellery who vociferously claims that “the market for 18kt. jewellery will always remain small. It is a niche market. It is design related jewellery meant for the classes, not the masses.” He also points out rather expertly that the production of such jewellery is difficult and laborious as 18kt. gold is a tougher metal to work with than 22kt.. The difficult nature of the work also results in higher labour charges which ould make potential customers sniff at these products.%%

{{Wait & Watch Attitude :}}$$ However, Mehra admits that he is critically analyzing the market and has observed that “as prices are rising, the age of the population is declining and a lot of jewellery which is popular in Italy and the United States sells well here too. As a retailer, I am dictated to by my consumers, so if a number of customers want 18kt. gold jewellery, I will manufacture it. In fact, I’ll produce silver jewellery too!”%% Another jeweller who is scrutinizing the market carefully is Binaisha Zaveri who apparently has adopted a wait and watch strategy. She is convinced that the Indian consumer is willing to experiment “with 18kt. gold jewellery, but not 12kt. or 9kt. jewellery – the Indian customer is not yet ready for that. We have done two or three exhibitions of 18kt. gold jewellery, including one in Indore and they were very popular.” Zaveri’s flexibility translates into a willingness to adapt to shifting market trends in an effort to satisfy consumers demands and retain a market edge. “If the market wants 18kt. jewellery, we’ll adapt,” she says easily. “In fact, everyone should try manufacturing it. We won’t mind doing it either once we are sure of our customers.” As many retailers testify, the traditional mindset of the Indian consumer is notoriously difficult to change, but if research and development is incorporated into 18kt. gold jewellery with the right design and price, the market may sit up and take notice. To begin with, the market would be urban and niche, focused on the working woman who may be prodded into purchasing such jewellery due to affordable price points and attractive designs. In fact, according to some jewellers like Hayagriv, the new jewellery which would noticeably break away from traditional design could even alter the dress line of the Indian working woman. Since the emphasis of 18kt. jewellery would be largely avant garde, the target group of such an initiative would be women in the group of 20 yrs-40 yrs of age. The launch of the new line of jewellery would also have to be accompanied by a dedicated and persevering advertising and publicity campaign to nudge people to change. Says Hayagriv: “You need to persevere with your advertising campaigns for a couple of years, only then can you sustain a new product line.” %%{{Flexibility to Kickstart Growth :}}%% Contrast the current rigid attitude towards this new line of jewellery with the easy acceptance of 18kt. gold in diamond and colored stone jewellery. Retailers familiar with the psyche of their consumers point to the formidable knowledge of their customers who realize that only a lower caratage of gold will ensure the safety of their gemstones. Says Mehra: “With diamond and colored stone studded jewellery, 18kt. gold is acceptable to customers because they know 22kt. gold is too soft for studded jewellery. On occasion, many of my customers have even asked for 14kt. gold for studded jewellery!” In a market buffeted by economic turbulence, it is difficult to forecast an accurate time period for the emergence of 18kt. gold jewellery. But industry sources au courant with evolving trends and the deep changes which may alter the trade in the wake of the recession, believe that these products may be sold freely in the market in the next six months or one year. While a large section of the industry may currently react with disdain to such a development, there is no doubt that 18kt. gold jewellery presents a viable option in a market with mercurial price surges. There is also an emerging clientele which is willing to experiment with such jewellery. By exploring new possibilities, the industry will not only keep abreast with new trends, it will also open up new avenues for growth.