Pure Gold eyes overseas markets

The Dubai-based group plans a massive expansion drive in India and across the Gulf States as its business has increased 35 per cent between January to August 2010 compared to same period last year, Firoz G. Merchant, the chairman and founder of Pure Gold Jewellers, told Khaleej Times in an interview.

“We have plan to open 15 mew stores in India by the end of this year. The group has already opened eight outlets in India so far and the remaining seven will be inaugurated by December,” Merchant said.

He said Pure Gold plans $200 million investment in India to open 200 outlets over a period of five years. About the expansion in GCC countries, the Pure Gold founder said the group is all set to make foray into Saudi Arabia and Qatar this year by investing D150 million to expand operations in Gulf states.

“We will open 50 stores in Saudi Arabia in three to five years,” he said adding that the five stores will be inaugurated by the end of this year. The five Saudi stores will be located in Jeddah, Riyadh, Dammam, Medina and Makkah.

“Saudi Arabia is a big market and even 50 stores are not enough to cater the demand of local market,” he said. Merchant said Pure Gold will also make foray into Qatar market this year. “We are going to open two new outlets in Doha by December,” he said adding that the group will open 10 stores in Qatar by 2015.

In reply to a question, Merchant said Pure Gold has hold on expansion in the UAE. “We will consolidate in the home market and review the performance of non-performing units in the country.” However, he said the group would continue to open new outlets in major malls to expand in the domestic market.

“The expansion in the UAE is subject to availability of space in major malls and prime locations,” he said.

Pure Gold Jewellers, established in 1989, is one of the fastest growing jewellery houses in the UAE and the GCC countries. The group, which counts a jewellery and accessories line in its portfolio, operates 86 outlets in GCC and India and it employs over 2,000 people.

Merchant, who belonged to an Indian family engaged in the real estate business, said the gold demand would go up despite higher prices.

“Pure Gold’s sales are likely to record up to 25 per cent per cent growth this year as the regional economies are coming out of the recession,” he said.

He said the company recorded “significant sales growth” during Dubai Shopping Festival and Dubai Summer Surprises in first half of 2010, which shows consumer confidence, is back on track.

“The sales growth in first half went up due to recovery in the region, an increase in tourists to the UAE and more consumers looking to gold as an investment after watching the price rise continuously over the past year.”

Recently, the group reported a 55 per cent rise in diamond jewellery sales in January-June period this year compared to the same period last year. Merchant attributed this rise to the increasing price of gold.

“Diamond sales are on the rise as the customers are diversifying from gold into diamonds due to its rising price. We’ve seen around a 20 to 25 per cent rise in gold jewellery sales, but the volume is dropping,” Merchant said adding that the group is also diversifying its business more towards diamond due to high fluctuation in gold prices.

Gold for immediate delivery touched an all-time high of $1,387.35 an ounce this week. By late Friday on the London Bullion Market, gold rose to $1,367.50 an ounce, up from $1,341.50 a week earlier. The yellow metal has rallied more than 25 per cent so far this year as the prospects of instability in the financial markets linked to quantitative easing prompted investors to buy the precious metal as a safe store of value.

“We’re still expecting good sales in the second half despite high prices,” Merchant said, adding that investors will continue to invest in the precious metal due to volatile oil and fear of double-dip recession in major economies of the world.

“The increase in gold prices has led to increased customer confidence in this commodity along with a shift towards diamond buying as well. So it has benefited both, the gold and the diamond business,” Merchant concluded.

muzaffarrizvi@khaleejtimes.com