KHALEEJ TIMES, Monday, Jan 18, 2021 | Jamadi Al Thani 5, 1442
Dubai's jewellery trade braces for 'corrections'
Emirates:
After navigating the disruptions caused by the pandemic, Dubai’s
resilient gold and jewellery trade is undergoing “a healthy correction”
phase with major retailers reducing the number of outlets, in particular
low-yielding stores in their network.
Tawhid Abdullah, chairman of Dubai Gold &Jewellery Group, said Covid-19 offered
lessons that the industry could not shake off easily.
“One of these will be the need by retailers to reduce the number of stores
within their networks.
Already, some of the leading jewellery retailers have started right sizing their
operations by shuttering outlets that were not performing well. Some of them
have reduced their operations by downsizing networks by upto 20-25 over the past
20 months, industry sources said.
“If they find there are stores that are not returning yields of 5-6 per cent,
they are better off without them. There are some corrections influenced by the
pandemic that, indeed, are healthy,” said Abdullah as he addressed a media
briefing on the group’s “Non-stop Winning” jewellery campaign on Sunday.
Abdullah said the gold and jewellery sector is getting ready for a full swing
comeback as it expects the “City of Gold” would be the destination of choice for
shoppers from overseas once travel restrictions are gone.
Abdullah said during the challenging days of the pandemic the gold and jewellery
sector had succeeded in keeping job losses to a minimum, in large part helped by
temporary salary reductions that the workforce agreed to.
Abdullah said since January 1, full salaries of the staff are being reinstated
at gold wholesalers and jewellery retailers. “There were two key considerations
from the salary cuts that were brought in from April,” said Abdullah.
“First, we had to stabilize the cash flow of these businesses after the pandemic
struck, and this had to be done in ways that inflicted the least pain on the
employees.
“Right from the outset, in April, we were telling members of the group not to
sack people and don’t send people back home.” This was when a majority of the
group — there are more than 500 members — brought in staggered pay cut schemes.
Those with entry-level salaries had to take in 15-20 per cent cuts, mid-level
had to make do with a 25 per cent reduction in take-home, upper management level
executives had 35 per cent cuts, and in the top echelons by 50 per cent.
“Those who were earning more had to put in a greater sacrifice — but it was done
for the collective good, the industry’s future well-being,” said Abdullah, who
is also chairman of Jawhara Jewellery.
“From January and February, our members are going back to their full salary
structures. We had the support of the HR Ministry and other entities such as
Dubai Municipality in making these efforts work… and to keep down job losses to
a minimum.”
After a torrid first quarter, gold sales in the UAE rebounded from the latter
half of the third quarter and then building nicely towards higher sales in
November and December. “I will even say that third-quarter 2020 was even better
than the one we had in 2019,” he added.
On whether Saudi Arabia raising VAT to 15 per cent creates another opportunity
for UAE retail, especially its gold category, Abdullah said: “Let’s say that
it’s an additional window of Saudi shoppers making use of the lower VAT here.
But Saudi Arabia has a lot of domestic gold and jewellery manufacturing, and
they get exemptions.
“But yes, there will be some additional business from Saudi visitors to the UAE.
But it will take time, say by the second quarter. We are still seeing only a
small number of Gulf visitors because of the travel restrictions.”
But jewellery retailers did notice more tourist-led buying in the final days of
2020 and in the first two weeks of this year. A lot of them are Indian tourists,
many flying in from states that do not require mandatory quarantining on their
return.
“Sure, ongoing promotions are helping — but there still need to be buyers to
make those promotions work. And there are buyers out there waiting to return...
to Dubai.”
Abdullah said the “Non-stop winning” jewellery campaign, held in association
with Dubai Festivals and Retail Establishment is turning out to be a compelling
reason amongst the jewellery buyers to shop, thereby, increasing the
participation in this year’s Dubai Shopping Festival.
With more than thousands of participants in the first 30 days of the season, the
gold campaign is acting as a major catalyst for the recovery of the sector. Till
now, 60 lucky jewellery shoppers have grabbed15 kilos of gold and 40 shoppers
still have a chance to win 10 kilos of gold, he said.
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