The bulk of demand for gold in India comes from South. This has boosted the franchisors to tap this market to the fullest.
According to the Department of Industrial Policy and Promotion (DIPP), the cumulative Foreign Direct Investment inflows in jewellery market were US$ 851.34 million in the period April, 2000 to September, 2016. In the coming years, growth in jewellery sector will be largely contributed by franchisors who aim to develop their brand. Established brands are guiding the organised market and opening opportunities to grow. Increasing penetration of organised players provides variety in terms of products and designs. Also, the relaxation in restriction of gold import is likely to provide a fillip to the industry. The consumers in South India are extremely discerning with high exposure to jewellery as buying ornaments for occasions like Akshay Trithiya, Vara Lakshmi and Dhanteras is well entrenched in the culture. Owing to the demand in this region, franchise brands are going for different strategies to expand here.
Franchisors bullish on Southern market
Recently, the Tata Group firm, Titan Company, has decided to discontinue its jewellery brand Gold Plus, launched in 2005 to cater to the South Indian market. Gold Plus has been merged with its flagship offering Tanishq. “With this, we are confident that Tanishq will be able to attract desirable investors,” informs Titan’s official spokesperson to the Bombay Stock Exchange (BSE). Titan was operating 30 stores under Gold Plus. Currently, Tanishq has 17 outlets in Tamil Nadu and seven in Chennai. It is seeking franchisees to cater to the growing demand emanating from this region to open more stores. “We are optimistic about Tanishq gaining a bigger market share in the south. Tanishq will also re-launch its showroom in Velachery,” says the Regional Head (South) of the company.
Senco Gold and Diamonds has four stores in Bangalore at Jayanagar, Commercial Street, Koramangla and Phoenix Mall, Whitefield. The brand is looking at opening more stores to tap the southern market. “We are confident that after establishing the brand in Bangalore, we wish to have franchise association for markets like Mysore, Mangalore, Shimoga and Belgaum in Karnataka. We are also looking closely at Hyderabad and Vishakhapatnam,” says Suvankar Sen, Executive Director, Senco Gold and Diamonds.
South primary location for new entrants
New entrants are also trying to get a bigger share of the Southern market. KSS Limited, a digital and entertainment major, forayed jewellery segment under franchise model and is looking forward to opening 500 stores under brand Bjewelz, which is owned by Birla Jewels Limited, a wholly owned subsidiary of KSS Limited. South is the focal point of expansion for the brand.
Budget positive for franchisors
In the Union Budget 2017-18, the Government of India has offered tax-cuts for the middle class and other sections of society. This will drive consumption, which will favour the growth of gems and jewellery industry. “As the industry moves towards working in a more structured and organised manner post GST implementation, the scope for the leading jewellery brands to franchise their brand in South, and even in non-metro and smaller markets will increase rapidly as standalone jewellery business will gradually become less profitable and unviable,” opines Sen of Senco Gold and Diamonds.