The dream of jewellery is the dream of every woman. This ethereal art crafted in precious stones and metals has solid business significance with commendable trade account. Nearly 20 per cent of Indian export is governed by gems and jewellery and the segment employs approximately 1.3 million people, both directly and indirectly. According to a report by Technopak Advisors on ‘Changing Retail Landscape in India’, the market size of jewellery and watches is about US$ 13.52 billion, and by 2012, it is expected to record a 12 per cent growth bringing it up to US$ 23.54 billion. The sector earns about 12 per cent of the country’s foreign exchange reserves.
Traditional jewellers vs Branded jewellers
Indian jewellery has a rich heritage and the legacy runs through its craftsmanship, which has been enchanting the world for ages for the intricate brilliant designs of various forms like kundan, meenkari, Jodhpuri, and complying with today’s consumer preference, several family-run traditional jewellers have come up with modern shopping experience. The sector has a strong foundation of traditional jewellery retailers who account for almost 97 per cent of the jewellery market. In contrast branded jewellery has a small share though growing at a rate of 20 to 30 per cent. However, the entry of branded jewellery has made the market more competitive and organized. The names like Tribhovandas Bhimji Zaveri & Sons or Mehrasons or Kirtilals can give any branded jewellery retailer a run for money for their brilliant and exclusive offerings and scale of business operations. They enjoy a very loyal customer base and epitomize the outstanding and distinct characteristic of the Indian jewellery, the fact that lures the overseas shoppers who especially look for the touch of originality and authenticity. To beat their dominance, corporate houses who are venturing in this sector are applying business tools like free insurance to ramp up their market share. Ms Hema Mehra, the concept head for Future Navras Jewelry reveals, “We are the only retailer in the country offering 1 year’s free insurance for the jewelry purchased from Navaras. We at Navaras do not charge extra for the hallmarking and our making charges are at par with the local market.” But for the corporate houses, the link is strong with the local artisans. “The current capacity and capability of the Indian jewellery manufacturing industry is quite high and Reliance Jewels believe that it can forge long-term relationships with manufacturing partners to supply all our requirements. Quality, reliability and design inputs are provided by the company while the actual manufacturing is outsourced to our manufacturing partners,” informs Mr Bijou Kurien, President and CEO, Lifestyle Division, Reliance Retail. The same is reiterated by Ms Mehra, “We have business partners who are responsible for the stocks. Depending on the requirements, with respect to local design needs, the merchandise is purchased from across India – i.e, Thrissur, Coimbatore, Rajkot, Mumbai, Ahmedabad and Kolkata. We actively participate with our inputs and learning on creating niche products for our stores.” However, Tanishq, the leading jewellery brand in India, has manufacturing facility for its diamond collections. But the company collaborates with many vendor partners for making all of its gold jewellery and some of the diamond jewellery, informs Mr CK Venkataraman, COO, Tanishq.
Discount scheme is not always the rule
In line with the jewellery retailers of corporate houses, Kirtilals is also planning to scale up its pan- India presence. “Currently we have seven showrooms across India. We have positioned ourselves as the leading diamond jewellers and are seen as experts in the diamond jewellery category,” divulges Mr Balaji Viswanathan, Head- Marketing, Kirtilals. “As far as promotion of the brand is concerned, all our promotional tools are in tune with our customer needs and preferences. Based on very specific objectives our promotional tools vary. We do not believe in discount schemes, but rather we focus on our strengths - quality, trust, value and service,” he further adds.
Welcoming the entry of corporate houses in jewellery segment, Mr Vijay Jain, CEO of Orra, divulges how the brand is promoting without relying heavily on discounts. “Orra operates on a fixed price policy. We don’t encourage any other discounts but only our Annual Anniversary Sale. However Orra does create a huge excitement through its new product launches, and different melas from time to time, for example, Gold Mela, Platinum Mela and Solitaire Mela,” informs Mr Jain. Nowadays, buying jewellery is not a simple form of investment. It has become a collectors’ delight for its aesthetic appeal. The trend is well capitalized in Big Bazaar which houses the Navras, the jewellery arm of Pantaloon Retail.
Other mode of promotion
“Promotional campaigns vary from season to season like special merchandise created during the festive seasons such as Akshaya Tritiya, Diwali, Ganesh Festival, Christmas as well as Valentine Day. Free promotional gifts as well as loyalty programmes are conducted to create interest and to conform to customers’ values and needs,” informs Mitesh Gajera, Director, Laxmi Dia Jewel Pvt Ltd. Electronic media, print media, participation in brand workshop, sponsoring events such as fashion shows and so on are other channels which are explored, adds Mr Gajera. The same is confirmed by Parag Agarwal, the director of Sanguine Industries that owns the brand Fiona of moissanite jewellery. “Apart from electronic media and print media we do participate in B2B and B2C exhibitions such as IIJS,” he informs.
Introducing new designs
With the market heading for organized format, the significant change that has taken over is the frequent introduction of the new designs and endorsing renowned designers to infuse uniqueness. Mr Kurien informs, “Depending on the category of products, new styles are introduced, and in a year approximately 25 per cent of the range is refreshed with new designs.” Mr Jain reveals, “Designing at Orra is a 365 day process with at least 6 new designs being launched. In the past Orra has worked with celebrated Indian artist Anjoli Ela Menon. While internationally we as a group have worked with Wera Wang in India we are hoping to work with some celebrity designer.” “We bring in new products every month,” reveals Mr Venkataraman. For Navras the designs change every 6-8 months. Kirtilals engage 25 designers in-house who travel extensively to understand global design trends. The designs change according to the location, the target group, their preference and their demographics. Kirtilals also has a designing collaboration with the leading fashion designer Rohit Bal.
Expansion beyond metros
It is interesting to note that despite the market slowdown, branded jewellery retailers are all set to expand. “Reliance Jewels has an aggressive expansion plan of establishing 300 stores in 5 years and is well on its way to achieving this goal. Along with other retail formats, Reliance Jewels plays an important role in Reliance Retail’s aspirations for the Indian retail industry,” informs Mr Kurien. Navras too has a big expansion plan as Ms Mehra reveals, “We plan to be the largest chain of jewelry stores in the country and we currently have 60 operational stores in the Big Bazaars. By 2011 we hope to cross 150.” Mr Venkataraman confirms, “We are expanding through large stores which will help deliver considerable choice and comfortable shopping experience.” The significant development of this expansion is transcending the boundary of metros with setting up the outlets in tier II cities. “It is a mixed response. The trust factor still rests predominantly with the family jeweller, especially with gold jewellery. However, the local jeweller does not necessarily sell 100 per cent BIS hallmarked jewellery and as Navaras is a brand that sells 100 per cent BIS hallmarked gold and EGL certified diamond jewellery, we are doing well in the tier II and III cities. We are gradually building a strong set of loyal customers that come to us. The trust factor is causing the shift,” explains Ms Mehra. “The response in tier II and III cities is excellent,” reveals Mr Venkataraman. But there’s a limitation posed by tier II and tier II cities. Explains Mr Jain, “The rate of investment is healthy in tier II cities. The largest challenge is scalability. Once they’ve reached their maximum expandable stage, they can’t go beyond it like in the metro cities.” However, Orra maintains the same merchandise at lower price points. All its key elements like the Heritage Wall, the look, colours, etc. are the same in all stores.
Franchising one option
To expedite expansion, franchising seems to be the most plausible route. Mr Venkataraman admits, “Our franchisees, bring considerable local knowledge and contacts, and also serve as a crucial continuity in that market.” Orra too is in franchising presently having two franchised outlets. Gitanjali, a leading jewellery brand in India, is following the business model after running the operation on its own for approximately two years. “The business model has given us the opportunity to leverage on the goodwill of the franchisees in the local markets and there’s no dearth of prospective franchisees for this is a set business model for a set brand,” explains Mr Karthikeyan V, Vice President -Marketing and Business Development of Gitanjali Retail. “Franchising in the jewellery segment will rule for another 20-25 years; there’s enough room to accommodate,” he concludes.
Matching store ambience
A perfect store décor in a jewellery outlet should exude brilliance and lustre matching with the glitter and sparkle of the gems and jewellery. Juhi Santani, Principal Designer of Retale Design informs that while doing the store décor for ‘J Jewels’ for Total (a brand of Food Express Stores India Ltd) in Bangalore, the focus was on making it a distinct space inside a hypermarket. The requirement is supplemented with the use of 'gilded finishes' like wallpaper, metallic paint to lend a 'luxe' feel to the environment. Lighting plays a significant role. “Lighting is of critical importance, with not only the store but each shelf glowing like a jewel.” The area of the store is 2,500 sq ft where 300 sq ft is allotted for the back office and the rest for the shop floor display. The total project cost was Rs 56,00,000 at a rate of Rs 2,240 per sq ft.
Measures for corrections
The challenges are there in various forms in this industry. As Mr Kurien points out that the jewellery manufacturers are hard hit by economic slowdown in the US and Western Europe and the slew of measures have been proposed. Ms Mehra proposes that there should be standardization in terms of the purity of gold and BIS hallmarking must be made mandatory, for which the infrastructure (hallmarking laboratories) must be available in every important city to avoid delays. Another point she raises is availability of skilled manpower by setting up institutes for jewellery crafts. It is the responsibility of the government to permit direct import of gold by reputed companies, partner with the industry and invest in upgrading the manufacturing standards, opines Mr Venkataraman. Reiterates Mr Jain, “The Government should allow import of goods directly by manufacturers if required.” Mr Jain praises the removal of excise duty by the Government and advocates gold loans for longer duration to retailers and manufacturers.
Budget: a boost and let down
This year budget has generated a mixed response. While 2 per cent excise duty on branded jewellery will be a fillip to many organized jewellery retailers, the hike in the import duty on the gold bar to Rs 200 per 10 gram is a blow for the industry which is already under the impact of global economic downturn.
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