Study of consumer behaviour in the gold jewellery industry in India

Abstract

The gems and jewellery industry is one of the most important contributors towards the growth of the Indian economy. It is a leading foreign exchange earner for the country. Gems and jewellery is one of the fastest growing sectors in the Indian economy with an annual growth rate of approximately 15%. The industry accounts for nearly 20% of the total Indian exports and employs in excess of 1.3 million people, directly or indirectly. The two major segments of the sector in India are gold jewellery and diamonds. Gold is the most preferred form of jewellery (over 80% of the demand is gold) in India. With over 974 tonnes of gold consumed in 2013 alone, India is the second largest gold industry in the world, only behind China. Gold has always been indispensable in the Indian social fabric and economy. Apart from being valued for its ornamental and aesthetic uses, gold is increasingly being seen as a mode of savings and as an investment vehicle. It is the second most popular savings instrument after bank deposits. Until recently, the industry has been highly fragmented among thousands of unorganized players with as many as 100,000 gold jewellers present in the country. The sheer size of the industry and the tremendous growth potential has lured many big players into the market such as Tanishq, Reliance jewels, Kalyan Jewellers etc. Given the size of investments by the organized players into the industry, the market share of organized retail is only expected to increase in the future. Meanwhile, traditional jewellers such as GRT, Paras, Senco, Bheema etc who have had strong relationships with their customers for generations are facing severe competition for the customer’s share of wallet. Hence, it is essential to assess the impact that the changing dynamics of the industry has made on the consumers and their purchase decisions. Typically, the purchase of gold jewellery industry in India has been influenced by various factors such as the product's price, the quality and purity of the ornament, relationship that the customer has with the jeweller, the jewellery design, influencers such as friends & relatives and advertisements. Through this study we aim to assess the impact of these factors in the consumer purchase journey.