A rapidly growing luxury retail sector in India, jewellery business has room for new and enterprising entrepreneurs. The trust to win the market is the only mantra for survival in this industry. Check out the various other ways to carve a niche for a new
The jewellery industry has a rich heritage in India. It is huge in size, worth more than Rs 70,000 crore. With a mixed patronage, from fabulously rich down to the lower middle class, nowadays, this fragmented industry is getting more and more organised.
Opening a jewellery store can be fascinating and challenging at the same time. However, the dream to be a part of the most rapidly growing luxury retail industry, especially for any newcomer in the industry does have its own share of ordeal that every jeweller has to face.
Choosing the format
A new entrepreneur has two formats to choose from: the existing traditional jewellery store or the branded jewellery store. A traditional jewellery store specialises in heavy weight, highly ornamental, tailor made jewellery. Whereas, a branded jewellery store specialises in light weight, contemporary designs of a wide variety which suits every occasion, be it marriage or a corporate party.
For start-up, one can choose either of the formats or can keep a combination of both. Arun Bhatnagar, COO, D`damas , opines, “It is advisable for a new jeweller to tie-up with a brand for a number of reasons. Jewellery business thrives on trust that requires a stipulated time to grow. A brand brings in that trust factor due to its established goodwill in the market. The product is sold at a market price and hence is not affected by the fluctuation of gold prices. There is a standard maintained in terms of service, store decor, etc. The advertising or the promotional campaigns are taken care of by the company itself, so that makes work much easier for a new entrant in this trade.” However, whichever format you choose to operate, there are some basic factors to consider before plunging into this venture.
A thorough knowledge of the product to stay on the safer side is required since fakes are present in abundance. A tie-up with an experienced person can be helpful for the selection of products, since the commodity itself is expensive, and any loss will take heavy toll. The knowledge can be enhanced through study, visiting well-known jewellery exhibitions like IIJC and JCK. It keeps you in touch with modern trends at the same time building up your own business network. Vipin Sharma, CEO, Retail, Rajesh Exports Limited, says, “The simplest way for a new entrant in this trade would be to tie-up with a renowned brand by taking a franchise. The brands come with an accepted standard of quality merchandise that goes with their goodwill in the market. It is a safe option for a new generation jeweller.”
The basic cost for starting a jewellery store can start from Rs 50 lakh and go up to multiple crores. Commenting on the gestation period, Prabir Chatterjee, Managing Director, ADORA (Concept Jewellery India Pvt. Ltd) says, “It takes about 12 to 18 months for a jewellery store to come to a break-even point. However, it depends on the business plan. If the jeweller plans to start with one store and expand his business further over a five years span, the gestation period may extend upto 6 to 7 years.”
A properly carried out market research helps you to identify your target market. Broadly, there are three key areas that one needs to consider while doing the market research. Firstly, you need to estimate the demand for your jewellery. Secondly, you need to consider who your potential customers are, which is clearly influenced by the nature of the local population, their financial conditions, living standards, age and occupation. Finally, you need to analyse the level of competition you are going to face. Surveying at different jewellery stores will help you in this regard.
Location is crucial to any business and a jewellery store is no exception. However, care must be taken so that the rental of the premises does not go beyond four per cent of your sales. Study the catchment area. Ensure there are enough parking spaces. Speaking about the ideal location, Sharma says, “There are two main factors that you should consider. First, Jewellery being an expensive product, safety and security is to be given utmost importance. The second factor is its proximity to other jewellery stores.” Explaining this, he further adds, “Customers like to walk through a number of stores before purchasing a high end product like jewellery. Locating the store in close proximity with other jewellery stores ensures a better footfall which can eventually lead to a higher possibility of sales.” The range of products you keep in your store is largely determined by the location.
Even the product range in neighbourhood shops varies with localities. According to Bhatnagar, “If a jewellery store is located on a high street, it should be the most prominent part of the high street. If it is located in a mall, it should be on the ground floor with a good frontage. It is advisable to put up jewellery store in a luxury mall or product specific malls like Gold Souk.”
According to Sharma, “Target market is defined by the product range and location of your store. It is all about how these two factors complement each other to make it the ideal target market for your store.”
The main target customers in this trade are women. Today the growing number of working women has also fuelled the growth of branded jewellery industry to a great extent. White look is gradually capturing the market and today`s women has specific liking for jewelleries for occasions and office. So, they must be catered accordingly. Men too play a vital role as a customer base. A trustworthy appeal of a shop always compels men to invest in jewellery, mostly as gifts.
For a new entrepreneur in jewellery business, trustworthy and experienced employees serve as a good resource. In many cases their experience pays off by guiding the entrepreneurs in understanding the finer aspects of the trade. Streamline your staff. Keep number of staff small. Ensure that your employees are well behaved and efficient in customer service and salesmanship. Chatterjee suggests, “Employees should be hired very carefully followed by insurance as you are dealing with a product that is highly expensive and susceptible to theft. A proper inventory management should be done as a safety measure.” He also adds, “Employee of a jewellery store should be a good communicator and swift in marketing. He should have adequate knowledge about the product and design so that he can guide the customer in making the right choice.”
Having some personal contacts with the suppliers is an added advantage for sourcing merchandise. Speaking about the popular sources in India, Chatterjee says, “In India, the most trusted source for diamond is Mumbai, while coloured stones are mostly sourced from Jaipur. In terms of design and quality, different parts of India offer a variety of expertise, each unique in its own way. But, since it is a capital intensive trade with low profit margins, sourcing should be done at reasonable rates.”
Business strategy of your jewellery shop includes branding and advertising your products, pricing and marketing. Branding carries the essence of your product lines. According to Bhatnagar, “Name of a jewellery store is very important as it is the name around which the customers` trust and loyalty builds up.”
Chatterjee says, “Advertising your product can create awareness, but it cannot build in the trust that develops as a result of consistent personalised service to your customers. There is no point in getting into waste advertisement. If you have a jewellery store in Kolkata, there is no point publicising it all over the country. Rather approach a good advertisement agency and logically figure out the right promotional campaign and advertisement that is required for your store. But all said and done, nothing popularises a jewellery store more that a word of mouth. Hence, proper emphasis should be given to public relations.”
Bhatnagar also opines, “You should train your counter staff so that they can deal with the customers in a smart way. Identifying the customer`s needs and taste is very important while displaying a set of designs in front of him.” Elaborating further on marketing strategies he says, “Occasional discounts like anniversary discounts or seasonal sale can be given to boost up the sale. However it is better avoided in the very initial stage of the business.” Most of the branded jewellery stores tie-up with the banks in order to run an instalment scheme for their customers.
On pricing of the jewellery, Chatterjee says, “Jewellery is usually sold at fixed price or on a day to day pricing policy. Diamond jewellery can be sold at fixed price, but it is advisable to sell gold on a day to day pricing policy because the profit margin on gold is very low and its value keeps fluctuating..” He further says, “There is usually 2 to 3 per cent profit margin if the volume is very high.”
The interiors of a jewellery store should be kept simple and organised. Intelligent use of mirrors can brighten up the interior and will augment the glitz of the jewellery items. Chatterjee says, “Jewellery is an art by itself. So the interiors should not be too loud. It should be well lit. Dark colours should be avoided and the store should not be too crowded. Each jewellery piece should have enough breathing space and should be given the utmost prominence.” Bhatnagar on the other hand tells, “Flooring of a jewellery store should ideally be done in Italian marble. The décor has to be rich. Rich colours like brown, beige, etc should be used by consulting a good store designer.”
Once a business name has been decided, it has to be registered. This ensures that no one apart from the owner can run a business under that particular brand name. Complete all the pertinent legal formalities to avoid any kind of hassle.
If you have the desire, you will succeed. Collect your courage and confidence and open the doors for your customers. Throughout the ages jewellery has been adorned by all. It is an option for investment, offers security and has traditional association with customs and emotions. It is a fashion statement. Jewellery gives you the scope for experiment and that can lead you to put the hallmark of excellence to your enterprising endeavour.