Jewellery sector likely to post  revenue surge of 20-22% in FY25: CareEdge

Jewellery sector's growth: India's jewellery industry presents a mixed bag of opportunities and challenges in FY25. As gold prices soar and macroeconomic indicators shift, sector anticipates muted volume growth. However, amidst this backdrop, branded jewellery retailers are likely to post a revenue surge of 20-22 per cent year-on-year (YoY) in FY25, a report by CareEdge showed. 

Bolstered by a projected 5 per cent YoY increase in volume, se retailers are set to benefit from aggressive store expansions, evolving consumer preferences, sustained gold price hikes, and perennial demand during festive and wedding seasons—a testament to enduring cultural affinity of Indians towards gold.

Expansion of Stores

expansion narrative gains momentum with leing jewellery retailers, representing nearly half of organised retail revenue, aggressively expanding ir footprint in FY2024. ding an estimated 260 stores, equivalent to around 22 per cent of store count as of March 31, 2023, se retailers exhibit a bullish outlook, foreseeing continued expansion to capitalise on industry tailwinds.

However, alongside growth trajectory lies challenge of profitability moderation. Front-loed operating expenses for new stores, heightened vertising expenditure and intensified competition leing to increased discounting are anticipated to exert downward pressure on profitability. Noneless, potential gains from inventory and economies of scale offer a silver lining.

situation is furr complicated by volatility in gold prices. With average gold prices rising approximately 14 per cent YoY in FY2024 and heightened volatility in H2 FY24, uncertainties stemming from global geopolitical tensions and macroeconomic shifts persist. Recent escalations in conflicts in Middle East coupled with speculation surrounding potential interest rate reversals by central banks highlight precariousness of gold prices.

Despite se challenges, sector remains resilient. Following disruptions in FY2021 and FY2022 due to pandemic, jewellery retailers have resumed expansion plans, with expectations of more than 20 per cent YoY retail network growth in FY25. This strategic move aims to seize market share gains and cater to evolving consumer preferences gravitating towards branded retailers.