Glistening path of growing sales

A glistening piece of jewellery, light or heavy, accentuates a person's grace, be it a woman or man. No occasion is complete without the sparkling of jewellery. And when wedding season is going on full swing, jewellery is the one category that's seeing the rise in sales. With 24 billion US dollar Indian jewellery market, where gold holds the major pie (almost around 80 per cent), India accounts for 20 per cent of gold consumption in the world. Comparing the year 2006-7 when gold consumption was 60-70 tonnes / month, 2008 sales suffered the setback due to the recession and high gold prices with just 26 tonnes of consumption per month. Things are looking up now as Mr Vinod Hiyagriv, Chairman, All India Gems and jewellery Trade Federation, says, "In the last three years, economy has shown positive response and so has the market, though the gold prices are surging high, clocking the sales figure at 600-650 tonnes approximately (40 tonnes/month + 10 tonnes of recylcled gold) in FY10." Constituting around 2.4 per cent of Indian GDP, the Indian jewellery market, like any food grain retailing, is also highly unorganised (85 per cent) and traditionally localised in its spread; given family jewellers holding the lion's share, the challenge would be to bring this fragmented segment to more organised retailing format. However, Tanishq, Gitanjali Jewellers and Reliance Retail, some big players to name, are doing their best to spruce up the market by introducing organised retail formats, considering the growth rate of industry at 10-12 per cent. Sales speak Also, jewellery has become a necessity in terms of investment; so, the demand is astonishingly increasing as in India the crowd is more in to traditions, rights and rituals where jewellery plays a very important role. In past few years the economic growth of our country has increased considerably, so the purchasing power has also increased. According to All India Gems and Jewellery Trade Federation, the market has reportedly not performed that well as expected in the first quarter (Apr- June) of the FY 11. But in comparison with the performance in FY10, jewellers are quite satisfied with the sales figures and are expecting that the demand would soar in the next quarter. Mr Abhiram Mishra, COO of Mehrasons Jewellers opines, "Our performance was quite well in FY09-FY10 showing 18 per cent growth Y-o-Y." On the other hand, PP Jewellers recorded a sales figure of Rs 319 crore in FY 09 and Rs 413 crore in FY 10. The company has a vibrant range of merchandise along with the discerning level and quality of customer services to add impetus to its sales figures. "We did fairly well in the previous financial year. By launching more than 20 retail stores pan India, the number has touched 50. Also, the company has successfully met the yearly sales targets. Our seasonal sales have also doubled", reveals Mr Santosh Srivastava, MD, Gitanjali Jewellery Retail Pvt Ltd. To tap more sales, the company has also introduced customised jewellery designing concept called 'Me Solitaire' and 'Me Design Studio' for niche buyers. Without disclosing much on the figures, Mr Vijay Jain, CEO, Orra says "We had a growth of around 25 per cent at same store level." Diamond jewellery in trend From the past, gold jewellery forms the major portion of the Indian jewellery market. However, from last2-3 years, due to skyrocketing prices of the yellow metal, the market is witnessing a shift in taste towards lighter weight products and other precious stones and gems, especially diamonds. Diamond-studded contemporary designs have become flavour of the season. Mr Mishra of Mehrasons comments, "Diamond is no longer only for the SEC A+; more middle class customers are moving to diamonds. Also, there is an increasing demand for colour stone and pearl jewellery, which is the preference of a lot of working women." To a minimal extent, high gold prices have also given way to platinum jewellery. The preference is mainly for wedding gifts in the form of rings and neck pieces by the niche class due to high price range (23K for 10 gm, approx). Other important gems and metals in the market include silver with modern and aesthetic blend in designs; titanium metal jewellery to add variety to the collection; and emerald, sapphire, zirconium, ruby, etc. to match the 'costume attitude' of working ladies. Design rules the demand Further, a new trend has been noticed from the last decade. The consumer has become more sensitive towards the piece of art while buying. It is laying more emphasis on creativity and novel patterns to decide the overall cost of the product. Most of the consumers, especially young, prefer glamorous, trendy, contemporary designs to hanging weights on their necks and ears. "Change in fashion, worsening security position, high gold prices are the main reasons for light-weight jewellery preferences," emphasises Mr Ashok Luthra, CEO, Ambica Jewellers, Malviya Nagar, New Delhi. "We have introduced a collection in 18k gold called Grazia which is gradually gaining popularity among the masses," says Mr Srivastava of Gitanjali Jewellery. Today's consumer-centric assortment of jewellery merchandise includes light weight trendy, exquisite piece of art, polki sets, kundan, fligree designs, various inspirational designs, heritage collections, etc. to cater to the needs of every customer for different occasions. Manufacturers are using in-house innovative techniques to make better offerings for its customers to stand out in designs and collection varieties. "To cater to the needs of today's audience, our light weight merchandise offers chains weighing a gram, jhumkees of 2 gm and many such types", reveals Mr Rahul Gupta, CEO, PP Jewellers. There is also an accelerated shift from viewing jewellery as investment to aesthetic ornament for wearing purposes. "Both traditional and contemporary jewellery are popular in the market. It all comes down to the occasion and the taste of individual consumers. Contemporary designs are popular throughout the year, while traditional jewellery sells well during the wedding seasons. Prices start from Rs 25,000 onwards", informs Mr Shehzad Zaveri, Creative Director, Minawala Jewellers. What wins a customer? In jewellery retailing, not big name that matters, but the long-lasting trust through the entire transaction is the mantra. Local family jewellers have always played a pivotal role in winning the trust of its buyers for generations. In order to augment spending by consumers, several jewellery brands are coming up with innovative schemes and services. This also becomes a major tactics for winning the customer loyalty. These are the occasions when many jewellers even launch their fresh and novel designer collections to tap and increase the visibility among the consumers. Gitanjali outshines its sales (almost 60 per cent) in these occasions but emphasises that occasions decide the type of jewellery in demand. For instance, light gold jewellery is popular during Valentine's Day, and for gifts, birthdays, etc. and heavy gold jewellery is the flavour for weddings and traditional festivals. Mr Gupta of PP Jewellers comments, "50 per cent of our sales come from festive and auspicious occasions. During Diwali, we sell bejewelled idol of Maa Lakshmi and Ganesha to add to the variety." Traditional vs branded jewellery India being the undisputed single largest gold bullion consumer in the world until now has given enough reason for the corporate brands like Tanishq Of Tata Industries; Gitanjali Group's Gili, Asmi, D'damas and Agni; Orra; Oyzterbay; and De Beers to look at this segment seriously. These brands forayed in 1990s and through their coercive market initiatives, buying a jewel piece is witnessing a positive trend among the urban consumers. They are luring the customers through various transparency schemes, especially purity of gold through hallmarking, better retail ambience with larger presence and other encouraging offers. On the other hand, traditional or family jewellers still earn the loyalty of their consumers who have generational tie and trust being maintained between them. Average Indian buyer still regards jewellery as an investment. Mr Luthra of Ambica Jewellers presents a different angle to it: "Jewellery has over the years become a very transparent business because of BIS hallmarking, diamond grading labs, RAP prices, etc. So it is very easy for consumers to make price comparisons between different brands and jewellers. And in terms of product quality, design and finish, many jewellers like us can provide a similar quality product, which is often manufactured in the same factories as branded products, at a fraction of the price of branded goods. In a price comparison, a branded jewellery product can be at least twice or thrice as expensive as a similar product from other jewellers." Also, traditional jewellers offer much better exchange returns in comparison to the branded jewellery sellers. Since the diamond market is valued at around Rs 12,000-15,000 crore and growth pace recorded at 15 per cent, branded jewellery market has enormous opportunity to spread its wings. It is commendable that these branded jewellers are leaving no stone unturned to earn the loyalty of the customers. Only time would testify their results. The various retail strategies applied are: • Gitanjali: Tamanna is the monthly installment scheme where customers pay on a monthly basis and get benefited towards the end. • Mehrasons Jewellers: 100 per cent buyback service to the customer; installment schemes, "Get Lucky", where they give jewellery worth Rs 24000 every month to a lucky customer, drawn by a lot! • PP Jewellers: 100 per cent buyback, easy installment with Rs 2000 per month, weekly customer meet to maintain the jewellery. • Minawala: Offers a convenient way to buy jewellery with the unique JOI (Jewellery On Investment) scheme. This scheme helps customers to purchase jewellery by making regular monthly installment payments with discount on MRP. Special Schemes during festive seasons are a regular feature at Minawala. • Cygnus: Money to Diamond Harvest Scheme allows slab-wise installment schemes, and the last month money is paid by the company. Occasions are big sales time Indian festive and wedding seasons play pivotal role in boosting the sales numbers. Most of the festivals are listed as • Akshay Tritiya • Diwali • Makar Sankranti • Eid • Ganesh Chaturthi • Wedding Seasons Profit Metre Q1, 2010 Net profit Q1, 2010 Q1,2011 Q1, 2010 Q1,2011 Rajesh Exports 3,672.17 4,283.19 18.45 47.40 Gitanjali Gems* 1,352.16 1,865.91 45.45 78.70 Shree Ganesh Jewellery* 600.82 1,349.25 28.84 64.20 Su-Raj Diamonds 686.30 803.20 12.17 23.40 Shrenuj & Co.* 325.71 465.69 10.06 13.58 Suashish Diamond 236.56 253.24 18.65 16.88 Classic Diamonds 121.08 164.37 3.05 2.27 Thangamayil Jewellery 87.61 125.55 3.46 6.50 *Consolidated Source: Business Standard