How The Gems Industry Lost Its Lustre Due To COVID-19
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The inevitable effect of the coronavirus has sent shockwaves to the jewellery industry since March. The jewellery demand for the wedding season and a series of festivals have been a missed opportunity as social distancing has crippled the retail market.
The nationwide lockdown has further depleted the liquidity flow in the jewellery industry. The booming jewellery industry rolled out the red carpet with an accelerated growth that only lasted in the first leg of the previous year. The businesses suffered significantly as 6-10 carat diamond pieces and high-end chunky jewellery, which are widely popular in the middle east, hit a low. As profitability became a distant dream, the management of key players duly intervened to combat every hurdle with a full-fledged action plan in place.
The pandemic outbreak has further aggravated the timid state of this industry. Technically, the rough diamond prices from miners were predominantly high while polished diamond prices in the market were nominal leading to a noticeable gap. Hence, the businessmen were already incurring huge losses in the Asian market. The existing trade war between China and the US has further triggered the fallout of the diamond business. In Hong Kong, almost half of 2019 was sacrificed owing to the riots in the city that largely affected the business. As China and Hong Kong contribute to 25-30 per cent in world's consumption of diamonds, the business undoubtedly witnessed a major breakdown. These factors coupled with COVID-19 in the beginning of 2020 has brought the operations to an absolute halt across the globe. The three main hubs of diamond market—China, Europe and the US—have been either completely or partially under lockdown owing to the preventive measures undertaken by the government.
The industry was still reviving itself back from the slowdown prior to coronavirus with increasing focus on realistic goals than exponential growth. In the light of pandemic outbreak, the nation-wide lockdown has dampened a customer’s feel-good factor that dominates jewellery shopping. Consumer sentiment plays a pivotal role in buying experience but the fear of contagion has caused increased anxiety across the globe. Emotions and a happy state of mind are very integral to customer’s buying behaviour for jewellery in India as people often flock to the offline stores on auspicious occasions. Hence, it is crucial to maintain social distancing as the new social norm and withstand the adverse effect of coronavirus until the markets stabilize.
The gems and jewellery industry has suffered an enormous blockage in its operations as the industries have reached a stagnant state. The businesses are still fathoming the financial roadblocks that await them as the aftermath of coronavirus seems unnerving. It appears that the buoyancy in jewellery market is heavily influenced by colossal liquidity across all assets and it will take quite a long time to the market to resurrect back to life. The wedding season coupled with Diwali seems like a ray of hope and we hope that the third quarter will be more advantageous compared with the first quarter.
During these challenging times, we must look at the silver lining and utilize this precious time to train the staff by leveraging cutting edge technology. This practice will ensure smoother operations in near future when things get back on track. We, like any industry, want to lead by example so, it is the need of the hour to act like responsible adults and adhere to protocol set by the government and healthcare frontline workers to curb the spread of coronavirus. To strengthen brand recall value, business can use this time to pledge their unwavering support to the coronavirus warriors.