The reviving Japanese and US economies are expected to provide a much-needed fillip to the domestic gems and jewellery industry, according to a KPMG study.
The US and Japan together account for over 60 per cent of global retail diamond jewellery sales. Christmas and Valentine's Day are the most "active" jewellery seasons internationally.
Players in the Surat diamond cutting and polishing industry, including the Gems and Jewellery Export Promotion Council convenor Chandrakant Sanghvi and former president of Surat Diamond Association, view this as a golden opportunity for the industry which has specialised in lower price range of diamonds.
"Keeping aside a few exceptions who have carved a niche in the higher segment category, most of the units located here have their expertise in lower end categories," they say.
The KPMG report, which was commissioned by the CII, has categorically called upon the industry to understand the importance of advertising and marketing.
Currently, the global gems and jewellery industry is seen at around $85 billion with key markets registering an average compound annual growth rate of 5-10 per cent over the last decade.
The precious metal jewellery, which is the ultimate end product consumed by individuals spread across different social strata, primarily comprises two segments - pure metal jewellery made of silver, gold and platinum, and precious gemstone studded jewellery including both diamond and coloured precious stones.
While in developed markets jewellery is used as an adornment accessory and as an occasion-based gift item in developing and third world countries, jewellery in general and gold jewellery in particular is viewed as a dependable investment.
According to the report, a "cautiously optimistic" demand pattern has been observed in the biggest gems and jewellery markets. The optimism has, however, been laced with the fear caused by rising unemployment.
In the US, the world's largest market, some retailers have reported earnings increases while some have felt the backlash of the increase in the unemployment rate, the KPMG report says.
One of the important trends observed globally is the heightened interest in the lower price range of jewellery. In the last few years, retail gemstone jewellery sales in the under $500 range have witnessed greater activity than the $500-2,000 range.
Throughout the 1990s, global diamond jewellery sales lagged behind the luxury products sector and gross domestic product. This shortfall has been attributed to inadequate marketing orientation.
While the advertising and marketing spend of other luxury products amounted to around 10-12 per cent of revenues, the diamond jewellery industry spends only one-two per cent of its revenues on advertising and marketing.
"Consequently, the gems and jewellery industry faces tough competition from other "accessory" and "gift" categories when consumers make event-related purchases," the report points out.
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