As a versatile market with availability of a large number of craftmen, the Indian jewellery market needs to be enhanced, and measures taken to make it more successful
CONSIDERING Indian women's love for the yellow metal and precious stones, including the finery that goes along with it, and the prospect of a huge consumer market that India boasts of, it would be natural for more retailers to seek their share in developing the branded jewellery market in India.
With consumers becoming judiciously demanding, brands, today, are seeking to establish exclusive outlets at a fast pace. The Indian market, of late, has also attracted the attention of international retailers. The already very strong Indian jewellery market, with the coming of international brands like DeBeers, Tiffany and Cartiers and other multi-national players, has seen a significant change. Given the opportunities that the branded jewellery market offered, the number of gold retailers in the country increased sharply. However, the share of branded jewellery in the total jewellery market is still small (about Rs 10 billion of the Rs 400 billion per annum jewellery market in 2002), growing at a pace of 20 to 30 per cent annually. The branded jewellery segment occupied only a small share of the total jewellery market because of the mindset of the average Indian buyer who regarded jewellery as an investment.
Moreover, consumers trusted only their family jewellers when buying jewellery. Consequently, the branded jewellery players tried to change the mindset of the people and woo customers with attractive designs at affordable prices.
Jewellery market in India
Jewellery business primarily runs on goodwill and clientele, and no matter where a jeweller moves his base, his customers will still follow him. The Indian jewellery market witnessed a shift in the consumer perceptions of jewellery in the late 90s. Instead of being regarded as only an investment option, jewellery today is being prized for its aesthetic appeal.
According to Mr Vijay Jain, CEO, Orra, “The jewellery market in India is a very exciting and versatile industry with the diamond jewellery market recording a growth of 20 per cent plus.” Similarly, Mr Biju John, Chief Manager Franchise Operations, D’damas Jewellery India Pvt. Ltd, comments, “The jewellery market in India is witnessing a new awakening in the form of arrival of branded jewellery. The lightweight, trendy jewellery with an international flair has sure made its mark thus changing the mind set of a lot of customers in the country.”
The focus of the consumers has shifted from content to design. Trendy, affordable and lightweight jewellery has gained familiarity, and branded jewellery has also gained acceptance forcing traditional jewellers to go in for branding.
According to Mr Jatin R Chhadva, CEO, SIA Art Jewllery, “The jewellery market in India is only three per cent branded, however, the percentage is expected to increase from 24 to 30 per cent in the coming few years.”
Delving on the changes that have occured in the jewellery industry, Mr Jain opines lot of changes have occurred in jewellery industry in India. There is a total change in the attitude of the people as jewellery is no more considered to be an investment. People today are largely going for readymade jewellery, and diamond jewellery is found in shop ‘n’ shop environment in shopping malls. Today jewellery is not bought to kept in lockers rather it is used regularly and people wear jewellery to enhance the way they look.
“During the past few years there is lot of consciousness among people regarding the quality and standard of the jewellery. People today have become more practical and they do not mind wearing art jewellery which was earlier considered to be a bad taboo,” says Mr Chhadva.
Players, such as Tanishq, Oyzterbay, Gili and Carbon, have opened outlets in various parts of the country, and likewise traditional jewellers have now begun to concentrate on lightweight jewellery, with some even launching their in-house brands.
Brands dominating the market
The national and international jewellery brands drawing the attention in the Indian jewellery sector includes Gitanjali Gems, the owners of jewellery brands D'damas, Asmi, Nakshatra and Gili.
According to Mr John, “Considering the huge customer base of D’damas over the years the branded jewellery is here to stay. Depending upon the variety of products or brands offered teamed with the popularity of these brands, the parent company is sure to embrace success.”
Adora, launched by Mumbai-based Concept Jewellery (India) Pvt. Ltd, is a part of M Suresh Group. Adora’s rate of growth has earned it the distinction of being the fastest-growing jewellery brand in India. Each piece of Adora diamond jewellery comes with an authenticity certificate from the International Gemological Institute and a buyback guarantee. It has also ventured into the international marketplace, starting with Dubai to be followed by Malaysia and Singapore.
Inter Gold Gems Pvt. Ltd. is a part of the Rosy Blue Group, world’s largest diamond jewellery manufacturing company with the presence in 14 countries. Inter Gold is India’s largest diamond jewellery exporter. Today Inter Gold Gems Pvt Ltd is present 15 cities across India with 24 stores in two store formats Orra and Inter Gold. From traditional jeweller’s category Tribhovandas Bhimji Zaveri, is the name that strikes. Trendsmith, one of the finest jewellers dealing with diamond and gold jewellery, in association with the Tribhovandas Bhimji Zaveri (TBZ) and Nirmal Zaveri group of Mumbai, has presented exclusive lightweight gold collections from the house of TBZ and Nirmal Zaveri group.
The brand that is leading the race in jewellery industry in India is Tanishq. Tanishq challenged the age-old jeweller's word with Tata's guaranteed purity.
Tanishq introduced innovations like, Karatmeter, the only non-destructive means to check the purity of machine-made gold jewellery, far superior finish and value to the customer, and beautiful handcrafted jewellery influenced by various jewellery traditions of India.
Other than these there are brands like SIA Art Jewellery, Oyzterbay, Carbon, Kiah, Cygnus, etc that are dominating the Indian jewellery market. After having gone through all these upcoming brands it can be estimated that jewellery is growing tremendously. Thus, astonishing is the outcome of the change in the attitude of the people towards jewellery. Today jewellery is no more considered as an investment in fact these days people have come to know the exact significance of jewellery and that is to enhance the beauty and looks.
Franchising has more or less covered almost all the areas of human needs, be it food, clothing, footwear, bags, makeup kits, electronics, education, or the IT sector. Although the jewellery sector is very popular in India, franchising in this sector is yet to pick up.
Starting at a slow pace, franchising in jewellery is expected to flourish in the coming times.
“Franchising is doing very well in the jewellery sector. Tanishq is the leading franchise company in India,” says Mr Jain. Expressing similar views, Mr John acknowledges, “Indeed jewellery franchising is one of the better options for profitable expansion by any company.”
Companies like Eros, Orra, Tanishq, Sia Art Jewellery, and Cygnus, etc, have already adopted franchising as an expansion model.
Mr Jain opines, “Orra has opted for franchise model. The consumer must experience brand in totality and franchising is the best way to expand in a set pattern. Training of the franchisees helps in making consumer experience the product in totality.”
Eros jewellery has expanded in a big way by opening 65 more franchise showrooms in the country within a year. The group has approximately 85 outlets all over India.
It has recently launched a new range of gold ornaments for the firm in Dubai. The company plans to expand in Dubai and Middle East through franchising with retailers.
Gitanjali is the largest manufacturer and retailer of jewellery in India. The company has in place a large retail set up, which includes 26 exclusive distributors across the country, around 620 outlets including those in host stores, five stand alone stores and 17 franchisee stores in 30 cities and towns. It continues to be a leading diamond processor in the world.
Oyzterbay focuses on easy-to-wear, non-traditional jewellery, non-locker jewellery and claims to offer a variety in design, reliability and standardisation. The unique feature of the business model is the franchising structure proposed by the company. It is introducing an innovative store management concept. The exclusive Oyzterbay signature stores will be given out on wet lease to franchisees that will run it on day-to-day basis.
Titan's jewellery arm Tanishq presently has six company-owned boutiques, 29 franchise boutiques and 18 service centres.
Besides, Tanishq is ready for its US foray with the seven-stone diamond collection Aria. The collection will be distributed through US company Highglow, which caters to the ethnic Indian and Asian population there. The collection will be sold under the Tanishq name with no sub-branding so as to cash in on the brand equity Tanishq enjoys. The launch coincides with Mother's Day on May 3. This move is significant for the company as it will be a first stage in testing when to roll out franchised Tanishq stores there as well as in the UK.
Launched by Laxmi Diamond Group, Cygnus is another jewellery brand with range consisting of rings, pendants, earrings, bracelets, neckwear, bangles and designer wear. The range, priced between Rs 1,000 and Rs 30,000, will be originally marketed through lifestyle stores, traditional jewellers and exclusive franchise outlets. Cygnus claims to offer a range for everyone and for every occasion. It primarily targets women in the age group of 18 to 30. The range also offers a variety of gift options.
Pallazzio, a 13,000 sq. ft store at Crossroads, the mega shopping and recreation mall at Haji Ali in Mumbai, is billed as India's first multibranded, multinational, one-stop centre for jewellery, watches and accessories. Pallazzio is managed on a franchise basis where the mother company provides the systems and products while the franchisee enjoys the advantage of being a local entrepreneur.
Says Mr John, “Jewellery franchising has emerged over the years as a preferred option for investing money in. Entrepreneurs invest in a jewellery franchisee outlets because buying jewellery is one of the favourite shopping activity among the Indian women.”
Emergence of international brands
With a large number of foreign brands making their way into the Indian market the Indian brands may perceive a threat.
Mr Jain believes, “The entry of global brands in India in jewellery sector will hardly affect traditional jewelers. They have already started reinventing themselves, and they understand the mind set of the Indian consumer.”
Giving his opinion on the treat, Mr Ashok Verma, Director, Diamond Hut says, “The consumer tries anything new once on an experimentation bases, even ignoring the price tag and other factors. But again, if you talk about the longevity of the product, then, the Indian jewellery companies are in a better position because of their benevolence in the sector.”
“With the entry of global brands lot of restorations will take place in jewellery sector in India whether it is fine jewellery market or art jewellery. The traditional jewellers are required to become more practical in their approach. They need to keep their expansions in pace with the global players and should follow rigorous expansion plans,” says Mr Chhadva.
Steps to consider on franchising
Franchising in the jewellery sector in India is still at its nascent stages. Therefore, it becomes necessary for aspiring franchisees to consider certain cautionary factors before initiating jewellery franchising. Mr Jain believes, “One should go in for jewellery franchising only if one cherishes the love and passion for jewellery as this sector requires lot of understanding and interest.”
Mr Chhadva, suggests the aspiring franchisees to evaluate their investment powers and the investment policies of the companies, study the market and the brand before opting for any franchisee. Spelling out some of these factors, Mr Verma says, “In jewellery franchising, some of the important considerations are to actually look into the market value of the jeweller, the specimen and the quality of the material used, and the guarantee policy of the franchisor. Moreover the number of existing showrooms and their performance should also be taken into thought.”
Future of jewellery franchising
With a middle class population of 30 crore, India will be one of the biggest markets for the premium brands that will also push the concept of branded jewellery in India. What may speed up the process of big brands like Tiffany, Cartier, Zales and Harry Winston in jewellery to come to India is the Finance Minister's announcement in this year's Budget to set up an expert body which will help increase FDI in the gems and jewellery sector.
The future of jewellery franchising, says Mr Jain appears to be quite bright and is expected to grow tremendously in the coming years. He adds, “FDI is not going to make much a difference as jewellery is mainly country specific. More over lot of trust is attached in buying jewellery. People will definitely take time to accept global brands.”
The liberalisation of gold imports will help make India a global hub for manufacturing gold products, while the establishment of a gold trading centre will generate revenues, increase employment and stabilise the trade.
According to Mr John, “With the passage of time trends change and so is the case in the jewellery sector. The product keeps on evolving to suit customer needs.” Expressing positive growth in jewellery franchising due to the huge potential in India Mr Chhadva goes on to say that FDI will definitely affect the present jewellery industry. “With the opening of FDI large number of global brand will enter the Indian market,” says Mr Chadhva. Mr John believes that the opening of FDI will hardly make a difference to franchising in the jewellery sector in India.
Jewellery industry is booming and lot of aspiring entrepreneurs are looking forward to enter into it. Branded and non-branded majors in the Indian jewellery market are offering the best quality products to the consumers who now do not consider jewellery as an investment or something kept in lockers for difficult times. Jewellery sector is quite different from others as there is no fear of depreciation as is the case with other products. Jewellery sector has highest per sq. ft yield. Despite all this there are certain challenges in jewellery industry. It is highly unorganised and there is hardly any code of conduct to business in jewellery sector. There is lot of competition in this sector an dfranchising in this sector requires special interest and skills. Franchising in this sector has been slow in being adopted by investors. However, branded as well as non-branded jewellery companies have identified franchising as the most appealing way to expand business. They have recognised that franchising offers a set pattern of expansion strategy and that the consumer enjoys the same kind of experience wherever he goes.
Input compilation by Pallavi, Akanksha, and Ekta