How gold rally is affecting small jewellers, as big players turn to innovation

India’s jewellery industry has come under pressure as a sharp rise in gold prices has reshaped consumer buying patterns. Gold prices have surged more than 80% over the past year amid geopolitical and tariff-related uncertainty, squeezing margins at a time when jewellery sales volumes are slowing. While big brands are coping through innovation and product diversification, some of these changing trends have left small traders in a lurch. Further, many consumers are opting to move down the purity scale to switch to 18 or even 9 karat variants of the yellow metal, alongside a steady downward trend in gifting. “If I make a rough guess, at least 75% of the volumes (of gold jewellery) have been hit. In fact, many are making losses,” said Raju Solanki, owner of Zaveri Kapoorchand Lalchand, a jewellery store in Zaveri Bazaar, Mumbai’s famous jewellery market. This has been reflected in the stock prices of listed entities — Kalyan Jewellers India has fallen around 19% since April 2025, when US President Donald Trump first announced reciprocal tariffs on trading partners. Other major listed entities such as PN Gadgil Jewellers, Rajesh Exports, and PC Jewellers have also fallen 6-23% over the period. The more diversified Titan has bucked the trend, rising 35% during the period, while Senco Gold has also risen around 23%, but not before crashing by 53% in the beginning of 2025. While revenues of these companies have surged, with most listed entities posting robust business updates for the third quarter of the ongoing financial year, industry participants and experts have revealed that all might not be well behind the scenes. The Q3 earnings will provide more clarity on margins, with most listed jewellery entities set to announce their results next week. Gold jewellery volumes, margins take a hit Gold jewellery volumes have clearly taken a hit over the past few months, though it is not reflected in their sales figure. A report by the World Gold Council showed that India’s jewellery demand fell 24% year-on-year to 430.5 tonnes in 2025, despite the total value of what was sold surging to a record of $49 billion. As a whole, gold consumption in India fell 11% during the year. Smaller jewellers in Zaveri Bazaar indicated a 20-30% squeeze in margins during the gold rally. Margins have been hit across the jewellery retail sector, and demand has been sluggish, various people from the industry said. “Demand has become more selective rather than absent — customers are buying lower gram weight pieces or exchanging old gold instead of fresh purchases. Organised retailers, in particular, have managed the transition better than unorganised players due to stronger inventory management and transparent pricing,” according to Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions and the president of the India Bullion and Jewellers Association. Retailers with deeper pockets have been able to protect margins despite lower volumes. Now, most consumers want to purchase jewellery from big, reputable chains instead of local jewellers as they represent trust during such big-ticket and increasingly occasional purchases. Many are also exchanging old gold in order to buy new jewellery as a means to afford it. Small players bear the brunt; gifting segment collapses While even the smaller listed players have been able to navigate through the challenging times, it is the small local jewellery shops that have been hit hard. Some smaller jewellers in Mumbai’s Zaveri Bazaar even let go of employees in order to mitigate costs and stay afloat. “Its been a struggle in recent months. We are importing new molds in order to offer newer products, but cash is tight. We have started offering 14 karat jewellery recently as customers want lower-priced products,” said a small jewellery shop owner in the area on the condition of anonymity. Moreover, the gifting segment — a big revenue driver for jewellery companies — has come to a standstill. “Gold, in fact silver too, has become unaffordable for gifting purposes. Earlier, 80% of our business used to come from the gifting segment, which has now absolutely evaporated,” said Solanki of Zaveri Kapoorchand Lalchand. Jewellery retailers have increasingly had to innovate and offer more affordable options to compete in this environment. Customers are also turning to lower purity gold to afford it, with retailers now offer jewellery of 9 karat as well. “People now don’t necessarily look if it’s a 9 carat or 18 carat jewellery, as long as it’s gold, it’s fine. What matters is the status symbol (of owning gold),” said Arthi Ramalingam, founder and CEO of online jewellery marketplace Eternz. The outliers: Titan, Tata & Reliance In this scenario, bigger players have enough resources and funds in order to quickly innovate and launch new products to cater to the shifting consumer trends. These companies not only have a wide range of offerings in the jewellery segment, but also have a diversified product range. For example, Titan’s jewellery segment consists of Tanishq (the flagship premium brand), Mia (affordable and trendy jewellery for young professionals), and Zoya (high-end boutique jewellery). The company also offers watches and eyewear, making it a well-diversified conglomerate that can mitigate stress in a particular segment to a large extent. The same goes for Tata group’s Caratlane and Reliance Industries’ Reliance Jewels, which only deal in the jewellery space but have a wide range of products. Meanwhile, experts said traditional jewellers such as Kalyan Jewellers and PC Jewellers have likely been slow to adapt and innovate, which was reflected in the stock prices. They also have a more limited product range. Unsold inventory & tax burden The sluggish demand has led to higher inventories, which has increased the tax burden of these smaller jewellers. Companies are taxed on the basis of the value of unsold inventory. Since inventory has increased, taxes have also been high despite slow sales. “I know people (jewellers) who paid as much taxes as they had earned last year. Even the bigger shops are sweating now,” said Solanki. Jewellery companies are also having to give higher discounts on both the gold and making charges in order to attract customers, which is further squeezing margins. Larger conglomerates such as Titan and Caratlane are better positioned to absorb the impact, while smaller players face significantly greater strain. Smaller individual shops that have a large share of fixed clients with particular preferences find it difficult to switch to high-margin segments such as studded jewellery which is easier for bigger chains. These clients have paused their jewellery shopping recently, and the high discounts and brand value of jewellery chains have made it difficult for small jewellers to attract new customers. The entire industry seems to be at the cusp of a big transition, with gold prices unlikely to slow down, and things have been more challenging down the value chain. While established players will likely remain stable if the situation persists, it remains to be seen how smaller players will stay afloat and navigate the challenges.