Branded jewellery: Is it a good investment?

The Traditional Equation:

You know the moment you drive out a brand new car from a showroom its value depreciates massively. You are prepared for this. And there is nothing you can do about it. Until and unless its a limited edition production. Same goes for anything like furniture, electronics, clothes ....whatever. These things are created in assemblies and as long as there is demand, it can be met. On the other hand expenses in gold and land/property is considered an investment which appreciates due to lopsided demand supply equation. You can only produce so much gold which is economically viable and land cannot be produced (unless you are dutch).

Enter branded jewellery:

India is seeing branded jewellery in droves. Adora, asmi, nakshatra, ddamas, gili, orra, ishi's, kiah, nirvana, sangini and sia are some to name. Perhaps one for every letter in the english alphabet. The launch of these brands are the result of 2 key insights. One, a lot of expendable income available to the young adults. Second, the globalizing tastes of the Indian middle class. Branded jewellery turned the traditional jewellery market upside down with their star studded marketing campaigns. They woo the younger generation with star power to make a point. Their designs in gold and diamond jewellery start at couple of thousand rupees.

Is it an investment?

The value of your investment is the money it will fetch in the market when you go selling it. Branded jewellery gets that wrong in 2 ways. Most of the branded jewellery available at store-in-store or even exclusive showrooms have a very clear cut return policy. A consumer loses anywhere from 15-30% of the value, depending on whether you have exchanged or wanted your money back. Much more then the making charges of such an ornament. This makes branded jewellery an accessory rather than a store-house of value. In other words : It epitomizes the culture of use and throw which is slowly seeping into the indian mindset. Secondly the appraised value depends on the price you bought it at and not the day of selling it. So the benefit of any rise in gold eludes the consumer. A fact not liked by many investors in gold. These reasons combined explains why branded jewellery hasn't made inroads into the mind of the older generation of consumers( quite likely the parents of this young generation).

India is the biggest market of gold and diamond jewellery and Indians consider every bit of gold an investment. Branded jewellery in India has not been able to keep in tune with this investment philosophy. And any amount of star power cannot put that value in it. What is your take on branded jewellery? Leave comments below.