Indian and diamond jewellery retail major Joyalukkas said revenue from its GCC business operations could fall by 30 percent this year, hit by Covid-induced business disruptions in the recent months and largescale return of expat Indians from the Gulf countries – its core customer base.
The move by countries like Saudi Arabia to strictly implement localisation of employment rules will also lead to significant rise in operational costs, impacting its revenues, the group said.
“Our showrooms have started functioning fully across the GCC area only in the recent weeks, after remaining shut due to lockdowns for various periods in different markets there. We are seeing only a gradual pickup in sales now,” Joy Alukkas, chairman and managing director of the Joyalukkas group, told Arabian Business in an exclusive interview.
“The largescale return of Indians from the Gulf countries is a major concern, as we sell only 22 carat gold jewellery which is preferred by customers from India and neighbouring countries like Pakistan, Bangladesh, Sri Lanka and Malaysia.
“The fall in revenues in the GCC market as a whole could be as much as 30 percent this year,” Alukkas added.
The Joyalukkas Group has about 40 percent of its retail outlets in the GCC region, the biggest outside its network in India. Diamond jewellery sales contribute 25 percent of its total sales.
In an assessment of its operational costs, the Joyalukkas Group has initiated a major retail outlet rationalisation programme in GCC and India, under which it has closed or merged some of its showrooms.
This has brought down the total number of the group’s showrooms in GCC from 60 before the Covid pandemic outbreak to 44 now.
“The retail outlet rationalisation was mainly done in areas where we had multiple outlets. For instance, we had 3 showrooms in one street in Dubai, of which 2 are closed down now,” Alukkas said.
Alukkas, who has started his entrepreneurial journey with the opening of his first jewellery showroom in Abu Dhabi in 1987, said the trend of increasing or imposing VAT (value added tax) is another major concern for the gold and diamond retail industry in the Middle East.
“Saudi Arabia has tripled the VAT rate to 15 percent. Oman has announced its decision to introduce VAT. UAE has 5 percent VAT,” Alukkas said, pointing out that the biggest attraction of Dubai and other shopping centres in the Gulf were its tax-free sales.
Alukkas, however, does not think the rising gold prices will have much impact on the jewellery sales.
“Indian customers will continue to buy gold and diamond jewellery, especially for marriages and festivals. Besides, gold also doubles up as a saving instrument in India,” he said, adding that the gold graph for the last 15 years show a consistent increase in return for the yellow metal.
Aside from India and UAE, the Joyalukkas Group has presence in major western and Southeast Asian countries such as the US, the UK, Singapore and Malaysia.
The group’s business interests now consist of fashion and silks, money exchange and commercial realty such as malls, besides its flagship jewellery retail.