Golden Surge: How Rising Prices Shape Jewelry Retail

As gold prices soar to new heights, organized gold jewelry retailers expect a reduction in sales volume by 9-11% in 2025-26. Yet, with higher realizations, revenue is projected to grow by 13-15%, driven by increased prices and profitability. Inventory gains will slightly boost operating profitability amid rising working capital borrowings.

Gold prices are sprinting towards an all-time high, setting the scene for a potential 9-11% dip in the sales volume of organized gold jewelry retailers in the fiscal year 2025-26, according to a recent report by Crisil Ratings.

Despite this anticipated drop in volume, the report highlights that revenues are expected to grow by 13-15%, thanks to significantly higher year-on-year realizations, building on four consecutive years of over 20% revenue growth in the industry since fiscal 2021.

Retailers are capitalizing on promotions and expanding their reach in tier II and III cities to maintain consumer interest as budget constraints lead customers to purchase smaller quantities. Operating profitability is set to rise slightly due to inventory gains, while higher working capital borrowings are predicted as retailers stock up for both present and future inventory needs.

(With inputs from agencies.)