The bustling sarafa market in Indore, a traditional hub for gold jewellery, is witnessing a severe slump in demand during what is typically its peak wedding season. Soaring prices and unprecedented daily volatility have scared away customers, leading to a dramatic fall in business.
Sharp Price Swings Deter Buyers
Jewellers in the market report that the primary reason for the downturn is the extreme instability in gold prices. Daily fluctuations ranging between Rs 10,000 and Rs 15,000 per 10 grams have created an environment of uncertainty. This volatility has made consumers hesitant, causing them to postpone or significantly reduce their purchases.
Hukumchand Soni, the president of the Indore Sarafa Association, confirmed the bleak scenario. "Business is down by around 40% compared to last wedding season," he stated. "With such sharp price swings during the day, it has become impossible to hold stock, and most jewellers are now working only against confirmed orders."
Traders Forced to Change Business Model
The rapid price changes have disrupted the traditional inventory-based model of the trade. Holding stock has become a high-risk activity due to potential losses from price drops and the associated carrying costs. Consequently, a significant number of jewellers have pivoted to an order-based business model.
Under this new approach, market participants source gold only after confirming specific customer requirements. This shift minimizes their exposure to price risk. While enquiries for jewellery linked to wedding dates continue, the conversion rate into actual sales has slowed down considerably as buyers adopt a wait-and-watch stance, hoping for prices to stabilize.
Changing Consumer Preferences
The market trends also reveal a shift in buying patterns among consumers. Key observations include:
- A sharp decline in walk-in purchases.
- A growing preference for lightweight jewellery over heavier pieces.
- An increase in advance bookings rather than immediate purchases.
Outlook for the Remainder of the Season
The surge in gold prices has undeniably dampened the festive and wedding season spirit for traders. Unless the market shows signs of price stability, demand is expected to remain subdued. This continued slump will put considerable pressure on the annual turnover and profit margins of businesses across the entire sarafa market in Indore.
The ongoing wedding calendar offers little solace, as cautious consumers prioritize budget management over traditional heavy buying, fundamentally altering the dynamics of one of the city's most iconic markets.
