Download The Marketing of Gold and Gem Set Jewellery: Dubai`s Story

The Marketing of Gold and Gem Set Jewellery:
Dubai’s Story
Tawhid Abdullah
Chief Executive, Damas Jewellery Group
Good morning, ladies and gentlemen. I have a quick premise: without retailers,
nothing could happen. Imagine what would happen if, on the third of June 2003,
retailers around the world decided to go on strike for six months – how would that
affect all of you here?
Here is a small example of the power of promotion by retailers. On 1 February, we
decided to launch a Valentine’s Day product in Dubai called “diamond in a gold
heart”. The result? In that small city, 17,000 pieces were sold. The customer age
range was 17 to 50, and the cost of the promotion was $300,000.
LBMA Conferences have always been remarkably organised with excellent
speakers covering important topics, but unfortunately with a very humble presence
from the jewellery retailing and manufacturing sectors, which account for 85% of
the world’s consumption. I will elaborate on this later.
This is the first time I have been able to
represent Dubai’s growing jewellery sector at
the LBMA’s annual Precious Metals
Conference, and I am delighted to be here. In
addition to being the managing director of the
Damas Group, I represent the Dubai Gold and
Jewellery Group as their chairman.
To give you a little background, the Damas
Group has over 140 retail stores around the
Middle East region. The Dubai Gold and
Jewellery Group is a non-profit organisation
made up of 450 trade members based in Dubai.
The LBMA has done a fine job of ensuring that
its members continue to meet the needs of the
global bullion market, and I have to say that the
presentations so far have been very informative.
Dubai: a Middle Eastern Hub for Jewellery
At the outset, I would like to emphasise the
Dubai government’s determination to develop
Dubai as an organised hub in the Middle East
and the Indian sub-continent. This applies in no
uncertain terms to the gold and jewellery
industry. Many of you are already aware of
Dubai’s reputation for jewellery. To give you an
idea of the growth in jewellery imports, in 1996,
we imported about 150 tonnes. This figure
increased to over 300 tonnes in 2002.
The LBMA Precious Metals Conference 2003, Lisbon
We are proud to say that Dubai sells quality at
the world’s best prices. This is made possible by
three factors: low import duties, which are
guaranteed by the government as an incentive to
the trade, the very high volume of jewellery we
import, and the fact that suppliers and retailers
operate on very low margins to keep prices
competitive worldwide.
There are over 600 outlets in Dubai selling gold
and jewellery. Our famous gold souk, which
covers an area of only half a square kilometre,
has over 275 retail outlets, one next to another –
this gives you an idea of the density of the
jewellery shops. At any given time, the gold
souk has over 25 tonnes and $500 million of
jewellery on display.
Dubai is a very cosmopolitan place, with over
130 different nationalities, including a large
number from the Indian subcontinent. Over the
years, this has bred a very healthy respect for the
yellow metal in its many different caratages and
styles. The city was therefore always destined to
have a thriving gold industry whether in 18-carat
for European tourists, 21-carat for Arab
expatriates and local residents or 22-carat for
Asians from the subcontinent. The city is also a
major export and re-export centre for gold
jewellery to the Middle Eastern and Asian
regions.
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The Marketing of Gold and Gem Set Jewellery
Promotional Campaigns in Dubai
In 1996, the first Dubai Shopping Festival was
launched and the Dubai Gold and Jewellery
Group was created to act as an umbrella
organisation to collectively market Dubai’s
jewellery trade and the DSF. Together, with
assistance of the World Gold Council and Dubai
Economic Department, the Group decided to
brand Dubai as the ‘City of Gold’. This flagship
slogan has continued to be used
in all our jewellery promotion.
Many innovative marketing and promotional
concepts were created during the annual
shopping festivals that followed. For example,
for the 1999 festival, the world’s longest gold
chain – measuring 4.1 kilometres and weighing
over 200 kilos of gold – was created. The
record-breaking chain was cut up afterwards
and the sections were sold to consumers as a
souvenir of the event. In 2000, we created a
special heart-shaped locket to celebrate that
year’s festival theme, ‘To Mother with Love’.
A whopping 288 kilos of gold were used in
that promotion. Our latest promotion in 2003
involved over one and a half million dollars
in jewellery.
These are just a few of the success stories
resulting from the Group’s participation in
the Dubai Shopping Festival. Such major
promotions could only be possible with the
unified co-operative participation of the entire
jewellery trade in Dubai.
In support of the Dubai government’s vision,
we have been actively promoting the Dubai
jewellery trade both regionally and
internationally. Participating in an event such
as this conference and holding our own annual
conference are both examples of our deep
involvement. Some of you were present at our
first conference in January 2003, where the
theme was ‘City of Gold – a Vision for the
Future’. I would like to extend my invitation to
all of you for our next conference, scheduled for
the first week in December this year.
It should be noted that branding Dubai as the
City of Gold was conceived to cover not only
gold but other categories of jewellery as well,
including gemstones. The sizeable increase in
the volume of gemstone business established
that our branding objective had been well
served.
While I will not speak for very long on
diamonds, it is essential to mention this topic,
as there has been significant growth in diamond
jewellery over the last three years. In 2001,
Dubai became the world’s fourth largest
diamond market, after the US, Japan and India.
The LBMA Precious Metals Conference 2003, Lisbon
Tawhid Abdullah
Today this represents a market size of $1.13
billion, or 395,000 pieces sold. But the amazing
story is that although we are not the largest
market for diamonds, Dubai is the first region in
the world to have been established as having the
highest desire to buy.
One of the factors behind this growth was the
work done by the diamond trading company to
promote the “everyday diamond”. This was a
campaign to encourage consumers that diamonds
were affordable and could be worn for any
occasion. As a result of this and other
promotions, a market that in 1995 was $300
million became $1.3 billion in size today.
There has been a very noticeable move on the
part of the trade to market diamonds. This also
applies to visual merchandising, which has
greatly improved. Traders today realise that a
good display can play an important role in a
consumer’s choice.
In Dubai’s duty-free section at the airport, there
is an 85 square metre area mainly devoted to
gold. This area generated over $42 million in
sales during the past year, which is equivalent to
about four tonnes of gold, or 47 kilos sold per
square metre per annum. This could only be
possible in Dubai, the City of Gold.
Claudia Schiffer, the world-famous model, was
used to promote one of our jewellery brands. As
a result of that campaign for a simple gold
necklace, we sold 3,850 pieces weighing a total
of 400 kilos in the first year. Another gold brand
necklace of ours sold a half tonne in the first
year. Another promotion involved Harmony, a
22-carat brand by Italian designers. Now in its
third year, it remains very popular with Asian
consumers, averaging 600 kilos per annum.
On another front, we also look forward to the
opportunities that are being provided by the
Dubai Metals and Commodities Centre, which
will contain a commodities exchange and
manufacturing and refining facilities. Our
facility so far does not have London Good
Delivery status, but we intend to seek it as soon
as we are in a position to apply.
A tiny city with a population of less than a
million, Dubai is already making its mark on the
global market. Nothing could be more
appropriate than a visit to Dubai to see how
quickly the city is transforming itself to offer the
world’s best opportunities for the future.
An Expression of Concern
After having said all this, I have decided to share
some of my concerns for the future with you, at
the risk of not being invited to speak again – but
I feel that I must bring these issues to your
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The Marketing of Gold and Gem Set Jewellery
attention. My sincere passion for the jewellery
business is the result of having been born into
the business – the third generation in my family
– and having worked hard in it all my life. I hope
my ideas will generate further thinking and
discussion, leading to effective solutions that
will benefit all of us in the long term.
The issue at hand is the marketing and
promotional support required for the gold
jewellery trade from each of you. As people who
are all well aware of what is happening in the
world, you will realise that jewellery has never
faced such a high degree of competition as it
does today. The purchasing power of people
who used to blindly buy jewellery is being
diverted into other products. We offer value –
perhaps other products do not, but people are
still tempted by items such as watches, fashion
products, perfumes, mobile phones,
entertainment, travel and so on. I hardly need to
remind you of the billions of dollars being
invested by the companies concerned into the
marketing and promotion of their lifestyle
products. These efforts are focussed at the grass
roots level – directly at the consumer – where it
matters.
We, on the other hand, are taking people – and
their purchasing power – for granted. Today’s
customer is slowly forgetting jewellery. Soon
they will be content to purchase non-precious
jewellery, because we haven’t been using our
resources to convince them that they should
still desire our products. We should all be
shocked to learn that today’s modern teenagers
prefer to avoid wearing jewellery. Remember
that we depend on them for the future of our
business. The marketing efforts of our
competition are better structured and financed
than ours are. We will receive a shock soon if
we do not act now to protect the jewellery trade.
Organisations such as the World Gold Council,
De Beers and the Platinum Guild deserve our
appreciation for their invaluable contributions,
but compared to the massive benefits they have
gained from the trade, I am sure they could do
much more.
It’s a shame that others in this hall have done
nothing so far. No matter what the limitations
are for the bullion manufacturers and dealers,
bankers or wholesalers, most just enjoy the
benefits with no financial input whatsoever. The
entire burden of protecting the jewellery trade is
conveniently left to the retail trade.
Tawhid Abdullah
and luxurious lifestyles you enjoy are the reward
of the success of your business, but are
ultimately driven by the jewellery trade – and
are you doing it justice; are you giving it the
support it needs to keep it healthy? Take it from
me, if you do not support the trade and promote
the business of jewellery, you will soon realise
that this trade will not be able to support you
any longer.
This is a matter for all of you to think about. As
chairman of the Dubai Gold and Jewellery
Group, I feel I should not miss the opportunity to
convey this serious message to you: please wake
up now and think of the long-term future. Be fair
to the jewellery trade by contributing a better
share of what you gain. Marketing and
promotion is the only answer to competing
effectively. This requires a lot of money – are
you ready to support it?
My inspiration to work hard for the jewellery
trade comes from none other than our leader, His
Highness, General Sheikh Mohammed bin
Rashid al Makhtoum and his vision to develop
Dubai – a tiny city in geographical terms – into
one of the most ideal model cities in the world
for living, investment support, education,
culture, health, entertainment, tourism, security –
you name it. He has done this by strongly
supporting those of us who work in these various
sectors.
In Dubai, we know the value of marketing –
think about the depth of the ‘Dubai, City of
Gold’ branding and the strategy behind it. A
similar global strategy is required to retain and
increase customer interest in jewellery.
The time has come for all of us to work together
under one umbrella – a world jewellery
marketing body. Here we would not allow
ourselves to compete against each other. We
would work together for a common goal: to
promote jewellery, regardless of whether it is
gold, platinum, diamond, pearl or other precious
stones. Every one of us who benefits from the
jewellery trade would participate.
This is the humble dream of a representative of
the jewellery trade. But only all of you as
decision makers can make the dream become
reality. If we could achieve this, do you think
any product category in the world could match
our power?
Thank you for your attention. ■
Many of you spend huge amounts of money on
research and establishment costs. Consider the
benefits you have all received from the hard
work being put into the trade. The posh offices
The LBMA Precious Metals Conference 2003, Lisbon
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The LBMA Precious Metals Conference 2003, Lisbon
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