Senco Gold: Lighter designs sell more

Organised jewellery retail is increasing its market aggressively and Senco Gold is no different. In a candid conversation with Sweta Pal, Suvanker Sen, Senior Executive Director, Senco Gold Ltd. talks about changing trends in jewellery buying.

Sweta Pal (SP): How is Senco Gold increasing its retail footprint?

Suvanker Sen (SS): Retail is a competitive market, and like others we are extremely keen to expand our business too. We expanded our retail network from one showroom in 1954 to 46 showrooms in 2013. As a group, we are a dominant player in Kolkata and have 44 outlets 20 cities across eastern India. We intend to open 10 more stores by the FY 2014 in areas which have a potential market for light weighted bridal jewellery. After booming business in Eastern India, our next target is northern side and as we have already established our flagship with Delhi outlet, our focus is now in Bhopal. But certainly by the next fiscal year we will design our showrooms and expand our business in South India too. Plans are now afoot to double the retail network in next five years.

SP: What was the investment planned for each store? How are you meeting increased demands?

SS: For New Delhi we have invested Rs 6-7 crore, which is exclusive of the franchisee fee of Rs 15 lakh. Today, the company is not just into jewellery retailing but also, in its manufacturing and exports. The capacity utilisation of our plants currently is almost 50 percent, hence sufficient to meet with the demands of the expansion of the retail verticals. Most of the offerings are sourced from our own manufacturing units except some, which are procured from local suppliers, depending upon the taste of the local customers.

SP: Are all stores self-owned, or are you expanding through franchises too?

SS: We are the largest player in the eastern region in terms of the number of stores. We have a total of 27 franchisees in West Bengal and 20 self-owned stores across the country. And certainly we will take more opportunity from franchisee model.

SP: How is Senco Gold keeping above the competition?

SS: Consumers today want lighter designs in jewellery so we keep their style and choice in mind while designing. Our jewellery is light weighted and at affordable prices. Even bridal jewellery in new, stylish designs is cheap. Our group export outfit, primarily to Singapore and Dubai too clocked business worth Rs 300 crore last fiscal. The company aims to achieve 10-15 per cent growth in exports this fiscal.

SP: How are new store staff recruited and trained?

SS: Training is given at the end of every month where we explain the advantages and the features of the product. They should be loyal towards the customers and we train them that our motto is to provide value for money jewellery and to keep the customer coming back to us for future purchases. Thus, it is imperative to build trust and hence training store staff is crucial.

SP: PC Jewellers and Tara Jewellers recently started IPO. Is Senco thinking about doing the same?

SS: IPO and Private equity is gradually aiming ground as the industry is becoming more organized and investors are taking more interest. IPO and PE have lesser risks than a bank loan, but it also has greater responsibility of ensuring returns to investors and to meet market expectations. May be we will also plan to tap the capital market with an Initial Public Offering in the next three years.

SP: Elaborate on your recent promotional and media campaigns?

SS: The company will spend nearly 2-3 per cent of its turnover in branding and marketing to develop a national footprint. Recently we have tied up with Mudra’s for our advertising and promotions and we are planning our all India campaign soon. The best marketing tip for any jewellery business is to be “impeccable” with your word and to stand behind the quality of your work and the quality of your team. I am a firm believer in quality versus quantity and it has worked great for us till now.

SP: Despite the finance minister requesting for lesser gold-buying, gold imports continue to remain high. How can the government reduce current account deficit to a sustainable level.

SS: India’s obsession for gold makes it a leader in gold demand. Hence, we can say gold import continue to remain high.  But now I must say, Imports of gold will gradually fall. Hoarding of physical gold will reduce however, our concern is that the jewellery manufacturing and retailing industry should survive and kariagars should not be out of work. In such a case, inventory management will be the key to tiding over the situation. No doubt main challenge is to reduce the current account deficit to a sustainable level. A moderation in gold imports could be underway in coming two three months. Perseverance with fiscal consolidation should help in mitigating risks to outlook to fiscal and current account deficits. Softer global commodity prices, recent steps to dampen gold imports are expected to moderate current account gap in 2013-14.