Gold Demand Sees Sharp Decline Ahead of Akshaya Tritiya Celebrations
As Akshaya Tritiya approaches on April 19 and 20, jewellers across Karnataka are witnessing a significant transformation in consumer behavior, characterized by what industry experts term 'shrinkflation.' With gold prices remaining elevated, demand has plummeted by 40% to 50% compared to the previous year, forcing retailers to rethink their strategies and product offerings.
Economic Pressures Drive Shift to Smaller Quantities
Prashant Shet, secretary of the Jewellers Association in Mangaluru, highlighted the stark decline in gold purchases. "Gold demand fell nearly 30% last year due to geopolitical uncertainty and job loss fears, and dropped another 50% this year," he explained. This trend is pushing buyers toward more affordable options, with many opting for smaller quantities than before.
"We are clearly seeing shrinkflation in action," Shet noted. "Those who previously purchased 8 grams are now choosing 4 grams, and even customers who bought 24 grams or 1 gram are shifting to half-gram pieces." Additionally, lower-purity gold options, such as 14-carat and 9-carat varieties, are gaining popularity as cost-effective alternatives.
Younger Consumers Explore Alternatives
The changing landscape is not limited to physical gold alone. Shet pointed out that younger demographics are increasingly turning to gold Exchange-Traded Funds (ETFs) as a more liquid and convenient investment. Others are exploring substitutes like silver and shell jewellery, which offer aesthetic appeal at lower price points.
"With ongoing global conflicts and this region's dependence on Middle East income, uncertainty is high," Shet added, underscoring the broader economic factors influencing consumer decisions.
Statewide Trend Confirmed by Industry Leaders
Venkateswar Laxman of the Jewellers Association in Bengaluru echoed these concerns, confirming that the demand slump is a statewide phenomenon. "Consumers plan a fixed investment for Akshaya Tritiya, but rising prices mean they get less gold," he said. This has led to a reduction in coin sizes, with offerings now as small as 0.5 grams and 0.25 grams, compared to the traditional 8-gram units.
Supply Chain Challenges and Manufacturing Impacts
On the supply side, KL Harish, district president of the Goldsmith Workers' Association, reported that LPG shortages have adversely affected manufacturing processes. Despite these hurdles, jewellers are absorbing additional costs and offering festive discounts to attract customers. However, demand for diamond jewellery remains limited in regions like Mangaluru, lagging behind larger markets such as Mumbai and Bengaluru.
The combination of economic pressures, shifting consumer preferences, and supply chain disruptions paints a challenging picture for the jewellery industry this Akshaya Tritiya. As buyers prioritize affordability and flexibility, the trend toward 'shrinkflation' is likely to persist, reshaping traditional gifting and investment patterns in the gold market.
