The Indian jewellery industry has undergone a metamorphosis with the shift in customers’ preferences. Today’s consumer is more brand and quality-conscious and like wearing light-weight rather than heavy jewellery. The consumers not only buy jewellery as an investment option, they consider it as a stylish accessory too. Until now, India’s gems and jewellery industry was dominated by the traditional jewellers. Now, slowly, it’s started getting more organised. Consumer preferences are nowadays shifting from traditional to innovative to light-weight fashionable designs. If we go by the statistics, the fashion jewellery is comparatively a recent phenomenon in India. Earlier consumers liked to spend on ethnic gold jewellery but as the market opened up with availability of wider choices, they now go for diamond, silver or platinum jewellery too.

India is one of the largest jewellery markets where 97 per cent of the jewellery sales are by family jewellers. Commenting on the present size of the industry, Govind Raj, Vice-President - Integrated Retail Services, Tanishq, says, “The Indian jewellery market is estimated to be over Rs 80,000 crore and is possibly the third largest consumer product market in India after Food & Grocery and Apparels. The market is estimated to be growing at a rate of about eight per annum.”

According to a study conducted by McKinsey, the branded jewellery market in India would touch Rs 10,000 crore mark ($ 2.28 billion) by 2010. According to recent reports, India is the largest consumer of gold jewellery and fourth largest of diamond jewellery in the world. It is also said that organised jewellery sector accounts for 3-5 per cent and is growing at 25-30 per cent keeping pace with the overall retail market. At this time, the share of organised retail jewellery is increasing rapidly; in addition, it is expected to grow from US$ 350 million in 2006 to US$ 2.28 billion by 2010.

Franchising adds to the shine

Gitanjali Group, Tanishq, Orra, Sia Art Jewellery are some recognised companies in the organised jewellery industry, which are aggressively targeting the Indian market through franchising model. Besides strong players, Estelle by Normak, Cygnus, NNoni, Fine Jewellery, PP Jewellers, Diagold, Mehrasons Jewellers, Scintillating Jewellery, Roop Gems & Jewels Pvt Ltd, Aarel Jewellers Pvt Ltd and Anmol Jewellery are the promising players exploring the franchise route to expand in the length and breadth of the country. Reliance Jewels, Mirari Jewels, Swarovski, Joyalukkas, Future Group-owned Navras are few jewellery retailers, who have huge expansion plans to reach consumers.

Talking of the organised segment, Abhijeet Jhawar, AGM – marketing & sales, Estelle, Normak Fashions (P) Ltd, states, “Almost 25-30 per cent of the annual costume jewellery sales (Rs 1,600 crore) in India comes from the organised segment. Estelle commands a lion’s share in the same.”

On the other side, Kunal Roy Choudhary, CEO NNoni, feels, “The franchise model that we are offering is more of a customer-driven format, where pricing plays a strong part and also the brand is focused as a destination brand.”

Jewellery malls today hog limelight in the $12 billion Indian retail industry. With rapidly increasing disposable income of shoppers and easy availability of loans, retailers and realty developers anticipate a massive market for large jewellery formats in the country. For instance, this year Vardhman Group, a realty player, launched western India’s first jewellery mall - Jewel World, located at Zaveri Bazar in South Mumbai. DLF is contemplating to open jewellery malls in India. Other factors driving the growth in this sector are the beginning of value-added services, which comprises certification of gold and diamonds, and lifetime return and buy-back schemes, which has further encouraged the growth of the organised jewellery segment.

Besides the presence of domestic brands, the Indian market is also attracting international luxury jewellery brands such as Opulance by Jewelex, Tiffany & Co., The Gem Palace, Pranda Jewellery and Gordonmax to serve to the affluent class. Seeing the interest of international brands in the Indian market, the government of India has also taken an initiative by providing an impetus to the increasing gems and jewellery industry by allowing 100 per cent FDI in gems and jewellery through automatic route.

High stakes, high aspirations

Established franchise companies are inviting franchisees and promising high return on investment and best franchise models to them. For effectively operating the stores, some of the organised brands offer complete guidance and support in operating the outlet. On offering support to the franchisees, Mehul Choksi, Chairman, Gitanjali Group, adds, “The franchisee will be provided assistance in planning and execution of the store design and VM, recruitment of staff and training and in publicity.”

Raj states, “Tanishq offers its franchisees all support in setting up a store, selection of relevant merchandise, recruitment and training of staff, promotion of store, point of sale software, handholding to run the operations of the store by company staff etc. Franchisees invest in the store interiors as well as the stocks, the company has a system of fixing prices and the franchisee gets a margin on the purchases.” On the other side, Raj Shroff of Dia Gold adds, “We offer minimum guarantee to the franchisee as our brand is new. Throughout India, the pricing and branding policy remains the same.”

Estelle offers training to the franchisees in visual merchandising, sales staff training and marketing with the local catchment area of the store. The day-to-day working of the EBO is looked after by the concerned distribution office and they take the responsibility of managing the day-to-day sales within the store.

Product manufacturing bases

Gitanjali has two jewellery manufacturing facilities in Andheri, Mumbai and small facilities in an SEZ in Surat, Gujarat. The company also has two diamond manufacturing facilities located at Borivili in Mumbai and at Surat in Gujarat.

Normak has two manufacturing units in India. It manufactures many international labels vide the 100 per cent EOU Plant. Normak’s second manufacturing plant is dedicated towards domestic requirements. A major part of the plant is dedicated towards manufacturing of Estelle jewellery only. The company also manufactures corporate gifts for a lot of FMCG brands and companies, 24 carat gold plated idols etc. And on the other side, Tanishq has state-of-the-art factories in Hosur (Tamil Nadu) and Dehradun (Uttaranchal) and in addition has captive units across major locations that produce products to Tanishq’s exacting standards.

Rising in retail distribution

In India, jewellery brands sell all types of jewellery from heavy to light weight, from ethnic to contemporary jewellery through different retail formats such as flagship stores, exclusive store, multi brand outlet and shop-in-shop outlets. The organised brands are located at all the high-visible areas such as high streets and shopping malls to attract the customers to boost sales. Rather than selling through exclusive outlets, it is assumed that multi-brand outlets are the most preferred retail formats because of the convenience at one shop regarding availability of all the brands and price points.

Raj says, “Tanishq is predominantly on the key high streets and has a limited presence in malls. While a lot of franchisees run the business in space that they own, we do help in negotiating lease rentals and locations in case a need arises.” Choksi updates, “Gitanjali is looking to set up modern retail formats in areas with high footfalls and preferred locations are well-established markets, malls or high streets.”

Abhijeet, adds, “Estelle EBOs do well in large shopping malls on the ground or first floors at strategic locations (due to the impulsive sales nature of the product). We also do well on high streets provided the store has a front opening and extremely good front view.”

Surviving the scare

There‘s a lot of competition in the market with the presence of many unorganised players in the country. Commenting on the increasing competition, Abhijeet says, “We face competition mainly from cheap Korean imports, which are being flooded in the country. We have decided to expand our distribution and franchise network to increase the brand presence and availability so as to penetrate to unexplored markets and regions for Estelle.” Raj feels, “The market is very competitive due to its fragmented nature. The superior designs, quality, reliability and Tanishq’s 360 degree approach to marketing have made Tanishq India’s leading jeweller marketer in the last decade.”

Talking of challenges, Choudhary reports, “The challenge we faced was to get the right people to provide us with regular new designs and with credible supply line so that we were never short of stock.”

To reach the untapped regions in the country and serve the consumers of different strata of society, the companies are carrying out strong and efficient marketing and promotional campaigns. Choksi informs, “The company has a large budget for brand-building activities, including advertising at the all India level and the franchisee benefits from this indirectly. There are also local promotions which are carried out on a joint sharing basis.”

Abhijeet adds, “Most of our marketing and promotional activities are targeted towards POS (Point of Sales) promotions because due to the impulsive sales, nature of our product category and high amount of options available for a customer, they prefer to carry the goodies along with their purchase.”

The company also indulges in lot