Jewellers in UAE post record surge in pre-VAT sales

Gold and jewellery trade witnessed an unprecedented sales surge over the last week of 2017 across all outlets in the UAE, with some retailers in Dubai reporting up to five times sales volume compared to the same 2016 period as customers went into a shopping spree to take advantage of the special promotions, and their last opportunity to buy gold at tax-free prices.

While the mega jewellery promotion launched by Dubai Gold and Jewellery Group for the 23rd edition of Dubai Shopping Festival (DSF), offering daily prizes of one kilo gold, as well as attractive global gold prices appealed holiday shoppers, adding fever-pitch passion to the buying spree was pre-VAT price available until December 31, retailers said.

"We are thrilled to see the overwhelming sale over the last one week; we have seen very good footfall during the first week of the Dubai Shopping Festival in the past, but this year the pre-VAT sales seemed to have exceeded all expectations," said Tawhid Abdullah, chairman, Dubai Gold & Jewellery Group.

"Further, consumers were moved by the favorable gold price and the mega winning opportunities that are offered by the Dubai Gold & Jewellery Group this DSF. We believe the trend will continue as the gold price is at affordable levels and the jewellery prices in Dubai are still very much competitive compared to the rest of world markets," said Abdullah.

While some jewellery stores claimed to have witnessed over five times sales in the final week of December, as compared to the same 2016 period, it is estimated that the average sales in most DSF participating outlets recorded three times surge ins sales.

Joy Alukkas, chairman and MD, Joyalukkas Group, said the group outlets experienced record sales in December 2017, leading up to the day VAT was implemented.

"This was spurred by several factors, including various other promotions including the DSF campaign offering 33 kilos of gold. Of course, the fact that December is the traditional festive gift-giving month has also contributed to the boost in sales," he said.

"We are yet to see the full impact of VAT on customer buying activities, but the steady stream of loyal patrons in our showrooms across the UAE post January 1, 2018 allows us to expect even better figures in the near future," said Alukkas.

Shamlal Ahamed MP, managing director - International Operations, Malabar Gold & Diamonds, said all group showroom witnessed huge crowds like never before during the last week of pre-VAT.

"Customers queued for hours to buy jewellery to get the five per cent benefit in gold price before VAT went into effect. Gold has always been a preferred form of investment for majority of the people as the gold price in the UAE is still cheaper as compared to Indian subcontinents," said Ahamed.

He said he strongly believed that VAT would not have an impact on the purchase behaviour of people for a long time. "It's only a matter of time - a few weeks or a month, when the people get used to it and the business will come back to normal," said Ahamed.

Chandu Siroya, vice-chairman of Dubai Gold & Jewellery Group, said the last one week saw unbelievable sales frenzy at all jewellery outlets. "People went on stocking up jewellery before VAT at prices that would never again be on offer. Attractive international bullion price and DSF promotions were also catalysts for the record sales," said Siroya.

However, sales across most jewellery outlets, as expected, went down in the wake of introducing five per cent VAT on January 1. The gold trade expects the slump will be short-lived as shoppers will get used to the higher prices due to five per cent VAT sooner than expected and will come back.