A product without an expiry date
The COVID-19 pandemic has challenged the global retail industry. Several transformations have come about, globally, in a matter of four months since the start of 2020. The gold and jewellery sector is undoubtedly not immune to the effects of the pandemic, although the price of the yellow metal has been shooting up. Towards the end of April 2020, gold prices were up around 35% compared to the same period last year.
“COVID-19 has proved to be a massive crisis, even though we have faced two crises in the past 50 years – Gulf War in the 1990s (August 1990-February 1991) and global economic recession of 2008. The current crisis is much bigger in scale, but we have enough experience and resilience to overcome the challenges,” stresses Tawhid Abdullah, chairman, Dubai Gold & Jewellery Group (DGJG). “It is tough, but we have the mechanism and measures in
This year will be challenging. But Dubai is the ‘City of Gold’, and we will work tirelessly to overcome the crisis and regain our shine.
place to overcome the crisis, thanks to our strong leadership and government entities. We are fortunate to be part of the UAE and that we are trading here. Importantly, we are dealing in a product that does not have an expiry date – if anything the value of gold is appreciating!”
At a time when the financial market is suffering, gold remains a “safe” investment.
“Gold is a superhero in the commodities market. From the country to Central Bank, traders to customers, there is trust in gold as a safe form of investment,” Abdullah emphasises. “Having that said, it will take some time for jewellery business to completely bounce back, because, after all, it involves discretionary spending. On the other hand, since gold is also looked upon as an investment, recovery should happen within a certain period.”
As Deira Gold Souk reopens, following the directives of the
Supreme Committee of Crisis and Disaster Management, business continuity and recovery are probably on the horizon. Starting April 26, retailers within Deira Gold Souk began operating at reduced trading hours. Before the opening, Dubai’s Al Ras and Naif areas, Deira Gold Souk and individual stores have completed an extensive sterilisation programme following stringent health and safety guidelines, announced by Dubai Economy.
“We express our gratitude to the leaders of this country, government entities, Dubai Police, CID and all the first responders who worked tirelessly to get us to this point. The UAE has led by example and left no stones unturned before easing the COVID-19 restriction and opening shopping malls, markets and commercial outlets. It is our collective effort aimed at successfully implementing the retail protocol mandated by Dubai Economy in a manner that is both safe and effective, as we prepare in stages in the coming months to work towards 100% capacity operations,” Abdullah states.
“As on April 30, we were already 35-40% functional, and by the first week of May it will go up to almost 90%,” he shares. “However, the visitor number is low. We have and will continue undertaking every measure possible to reinstate confidence among consumers to start coming back to Deira Gold Souk. We will continue following health & safety guidelines. We have installed several hand sanitisation stations, those entering the premises are undergoing temperature checks, and they must wear face masks and gloves. We are also following social distancing norms.”
When asked about rent relief, an area that retailers are looking at intently, Abdullah says, “We are getting some relief; some shopping malls have offered three-month rent relief. But three months is too short because our industry is dependent on the tourist market. Bigger shopping malls, particularly, will have to come forward proactively. They need to understand how critical it is to rethink the rent structure. A good way ahead could be charging a percentage of sales as opposed to full rent until the situation improves. We need to remove obstacles to achieve positive results collectively.”
As consumption behaviour is shifting towards online, one of the only sectors that are still more brick-and-mortar based is gold and jewellery retail. Abdullah agrees. “Jewellery is one of the last items that consumers desire to buy online. Consumers want to touch and see how jewellery pieces look on them or their loved ones. It is part of a long tradition and culture. It will not be easy for our segment to shift to e-commerce. However, if online buying is at 3% today, it might go up to 5% next year.”
In summation, Abdullah says,
“This year will be challenging. But Dubai is the ‘City of Gold’, and we will work tirelessly to overcome the crisis and regain our shine.” ■