Jewellery retailer Malabar Gold & Diamonds today announced a major investment amounting AED335 million ($91.28 million) in expansion plans of its retail network. The plan will see an addition of 24 stores in three months, from January to March 2017, taking the number of total outlets to 185 by the end of March, up from 161 today.
Out of the 24 new outlets, 9 will be in the UAE, 7 in India, 5 in Saudi Arabia, 2 in Bahrain and 1 in Kuwait. Of these, 7 outlets will be opened tomorrow, taking the number of total outlets to 168, including 82 in India and 86 internationally.
The expansion will add more than 1,000 professionals to the group’s existing manpower strength of 9,000 and cross the 10,000 employee mark by March this year.
The move marks a major investment in expansion at a time when many gold and jewellery retailers have struggled to manage their existing operations due to challenging global economic environment.
Despite the tough market conditions resulted by lower demand, higher price of gold and demonetisation process in India, Malabar Gold & Diamonds has decided to push ahead with expansion, which demonstrates it confidence in the growth of market in future.
“This is one of our single largest vertical expansion drives. The expansion at a crucial time reflects our renewed confidence and strong commitment to the Gulf, India and Far East markets,” says Malabar Group chairman MP Ahammed. “Investment in downturn market requires courage and strong risk appetite. Our latest expansion demonstrates our long-term vision and a sustainable business development roadmap that we can manage mostly with our own resources”.
“The expansion is aimed at serving more communities and nationalities, especially people from the Philippines, African Arab communities, the Levant as well as the western countries. The extended network will help us acquire a greater customer base,” he adds.
The price of gold has risen in almost every major world economy during 2016, suggesting that the challenging times might be a thing of the past and good times are coming back. The gold price is almost 10% higher today than what it had been 12 months ago.
“Retail activities are a reflection of the consumer sentiment. Due to the market conditions, consumers exercised caution. However things are looking brighter as we started the New Year with a lot of positive indications,” shares Abdul Salam KP, group executive director of Malabar Group.
“Due to the market conditions, consumers on an average purchased less gold. However, although the average ticket size was low, the transaction value remained almost flat – which means the number of customers have grown,” says Shamlal Ahamed, managing director – international operations for Malabar Gold & Diamonds. “Data from our own sales across the network shows that we have acquired more customers last year – who purchased from us for the first time – that compensated for the lower average purchase transaction value.”
“I believe the current market conditions are best suited for buyers as the price of gold is expected to rise. This year, we expect consumers to be less cautious and buy more – a trend that will lift consumption”, he believes.
Malabar Gold & Diamonds had earlier announced donating 5% of its profits in CSR activities aimed at supporting the societies across five key areas including education, women empowerment, healthcare and research, housing and environment.