Gehna goes modern

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From introducing franchisees to launching e-commerce portals, jewellery retailers are constantly on the lookout for newer channels

While the demand for gold jewellery has remained steady over the years, there has been a huge proliferation of jewellery stores across urban India in recent years, leading to some tough competition in the market. Over the past few years, the jewellery business has witnessed the emergence and growth of organised retail chains, branded jewellery, new retail formats, greater emphasis on purity, and promotional activities around gold-buying festivals.

Players such as the Tata-owned Tanishq and Gitanjali Gems lead the pack of organised players. Their growth both in terms of geography and sales, has forced open the sector that was traditionally run as closely held family business. These developments have, in turn, forced prominent family-owned jewellery shops to innovate on product design and retail formats. Several traditional jewellers have now become more organised, and expanded regionally and nationally, while some have even gone public.

Jewellers like Malabar Gold and Joy Alukkas in the South are pan-India chains now and even manage fledgling global operations. Others like Tribhovandas Bhimji Zaveri, Shree Ganesh Jewellery, Tara Jewels and PC Jeweller have tapped the primary market of late.

The declining consumption of gold jewellery in the US and Europe has also forced some well-known jewellery manufacturers and exporters like Rajesh Exports and Shree Ganesh Jewellery to focus on domestic retail. Most organised chains that have relatively larger presence in the metros and top cities are now penetrating smaller cities and towns.

According to rating agency Crisil, in the coming years, tier-II and III towns will drive growth in branded jewellery, where demand is strong and growing, on the back of rising affluence. Gold jewellery retailers are expected to derive over half their revenues from small towns by 2012-13, against almost 40 per cent in 2009-10.

Branding across categories helps create a niche for the product, higher aspirational value and helps retailers demand higher premium. The jewellery industry too has witnessed the emergence of several brands. Gitanjali Gems has over 20 gold and diamond brands, some of which have been acquired from domestic as well as international markets. Gitanjali’s Gili, Nakshatra and Azmi are Rs 1,000-crore brands each that are retailed through exclusive outlets. Besides gold and diamonds, Gitanjali has also been experimenting with branding other metals and stones. Envi is a range of emerald-studded jewellery, Moira is a brand for freshwater pearls amalgamated with diamonds, Karina is a mix of precious rubies and exquisite diamonds and True Platinum for platinum jewellery.

Among Tanishq’s jewellery brands, Mia is affordable daily-wear jewellery, while Iva a fashion jewellery brand. The World Gold Council too has been launching gold jewellery brands such as ‘Collection G’, ‘Gold Expressions’, and 22-carat bridal jewellery brand Azva.

Most branded jewellery is sold at huge premiums, unlike the price of usual gold jewellery that is determined by the prevailing rate of gold. Jewellers also spend heavily on exclusive promotion of their brands.

Traditionally, jewellery was mostly bought for weddings and worn for ceremonies, till Tanishq came forward and popularised the concept of lightweight, daily-wear and work-wear jewellery. Retailers now offer jewellery for different sections of customers and for different occasions. Segmentation is one way in which jewellers are trying to grow the market beyond wedding and women. While TBZ even has a Gentleman’s Collection, Gitanjali offers a King’s Collection of solitaires for men.

“Men’s jewellery is an important segment for us and are available in most of our stores. Though it has a smaller base, the year-on-year growth is around 50 per cent,” said Mehul Choksi, CMD, Gitanjali Group.

Malabar Gold’s kids jewellery brand Starlet differentiates itself from unbranded kids jewellery with exclusive designs and motifs. “Usually, the whole family comes in when they want to buy jewellery for the women as it is a matter involving big investment. While, men and kids wait for the women to choose their jewellery, impulse buying can happen in other segments too,” said an official of Joy Alukkas.

Organised players were the first to introduce the franchising concept in jewellery retail. Gitanjali, Tanishq and Malabar Gold have rapidly grown large, using the franchisee route. Apart from traditional retail stores, organised jewellers are constantly on the look out for new channels. Several e-commerce portals selling jewellery have mushroomed in the past couple of years. These include, CaratLane.com, Bluestone.com and European jewellery brand Juvalia and You. Jewellers like Gitanjali are also engaging in e-commerce and online jewel souk concepts. Gitanjali, Jewelsnext.com, Juvalia and You have been exploring e-franchising and multilevel marketing.

The industry had initially resisted mandatory hallmarking or assaying the purity of gold, when the government proposed it originally. However, jewellers who took to voluntary hallmarking have since found an opportunity to differentiate themselves in the marketplace. This has paved the way for the government to make hallmarking mandatory for the bullion industry. As there jewellery prices are not standardised and making and wastage charges vary widely, some jewellers have opted for fixed price tags that indicate fixed wastage and making charges on each piece of jewellery.

A decade ago, buying gold was mainly centred on weddings and other important family occasions. Mass buying of gold during festivals like Akshaya Tritiya and Dhanteras has more to do with propaganda by jewellers and has become a trend in the past few years only. These festivals are now celebrated across the country as gold-buying events. There are over 25 such days in the Indian calendar that are considered auspicious for buying gold. Akshaya Tritiya and Dhanteras now account for around 15 per cent of the annual gold sales, while all the auspicious days put together, account for 25 per cent of sales, said Vinod Hayagriv, managing director of C Krishniah Chetty and Sons.

sangeethag@mydigitalfc.com

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