A panel comprising some of the biggest names in the global diamond and gold industry came together at a GJEPC hosted Webinar to discuss a key question that has been uppermost in the minds of diamantaires and jewellers the world over - ‘The Way Forward for the Industry Post Covid-19’.
The thought-provoking exchange of views was moderated by GJEPC vice chairman Colin Shah, who steered the conversation with Stephen Lussier, executive vice-president, consumer & brands, De Beers; David Kellie, managing director, Diamond Producers Association (DPA); David Tait, CEO, World Gold Council; and Ajoy Chawla, CEO, Tanishq in the presence of a virtual audience of nearly 2,000 persons from different centres.
At the outset, all the speakers agreed that the situation prevailing in the industry as a result of the pandemic was unprecedented. While Lussier pointed to the fact that operations across the entire pipeline had come to a halt and all major global markets were virtually shut, something that had never happened before, Tait drew attention to the equally extraordinary fact that almost every government across the globe was looking to fund debt simultaneously.
“While this may be easier for countries like the US, others won’t find it so easy. In such circumstances, currency could be undermined, and this could put incredible rocket under gold as an asset class,” Tait said.
Despite this, all speakers were in agreement, that the crisis would eventually pass and felt that the industry should remain optimistic overall about the future prospects of gold and diamonds, as there was no reason to believe that consumers wouldn’t come back to the stores. But there was broad acceptance of the fact that it would be difficult to forecast the pace of the return to normal. “In a world of frozenness, no one can predict the recovery timetable, but we know that the lockdown will end gradually,” Lussier said.
Chawla, for example pointed out, that gold and jewellery were intrinsic to Indian culture and an integral part of wedding ceremonies and festivals. Hence while there could be some impact on overall expenditure, the Indian consumer would return to the jewellery stores.
Tait stressed, “We are a pivotal point where the global economies either fall into depression or gradually start to recover. And gold will do well in both scenarios, which makes a strong case for its presence in investor portfolios.”
Lussier expressed confidence that the natural diamond industry would rebound from the crisis. He said that after having endured difficult and stressful times, people tend to feel there is great value in products with natural origins and real authenticity.
He further stated that as life returns to normal, the period of separation during lockdown will lead to a renewed focus on re-establishing bonds with friends and family, and this will create an opportunity for products that are associated with those emotions.
Across the board, the speakers also were unanimous that the present situation was not an opportune time for marketing jewellery directly. The consensus was that when people are facing hardships and struggling to survive, aggressive promotions and pushing sales could prompt a consumer backlash.
Responding to a comment that consumers in some markets were queuing up to sell gold jewellery, Tait explained that these were opportunistic sales as many people had lost livelihoods and were bearing down on capital at home.
Kellie said that consumers will be the answer to 99% of challenges the industry is facing today. Respect for nature, sustainability, and a move towards digital, were among the dominant themes that could play out on the consumer front.
Lussier offered some positive news coming out of China, where diamond jewellery purchases had risen post the lifting of the lockdown in some areas. “When people are denied ability to purchase, there is pent-up demand. In China, we have noticed a gradual improvement in business in March. We have seen strong self-purchase sales better than year-earlier levels in Mainland China after the lockdown ended. This teaches me that people are resilient and will continue to desire things as they did before the lockdown,” he said.
Lussier assured the India diamond industry that they need to have confidence in diamonds and believe that they will come through this crisis. “De Beers will work towards ensuring consumer expenditure on diamonds in the second half of 2020. We will make certain that rough diamond stocks in the pipeline are not excessive and will be in sync with market demand.”
Responding to specific questions regarding the expected time frame for jewellery demand to begin picking up, the speakers indicated that the US market could start to recover in the June-September period. They pointed out that China was already on the way back; and India would see a turnaround by Q4 on account of the wedding and festive season.
Ajoy Chawla added, "India is a vast country and there may be a geographical dispersion of sentiment. Customers below age 35 may be more optimistic as compared to those who were older, who would exercise more conservative choices."
Source: GJEPC 21-4-2020
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