With the Indian government declaring the domestic gems and jewellery sector as its focus area for export promotion and venturing of more number of organised players into the market have given new heights to the industry, which is offering golden opportuni
The export-oriented and labour-intensive sector of gems and jewellery contributes about 6-7% to the country's GDP playing an important role in the Indian economy. As per a leading industry body, the industry had a market size of Rs 251,000 crore (US$ 40.45 billion) in 2013, and has the potential to grow to Rs 500,000-530,000 crore (US$ 80.59-85.43 billion) by 2018.
Riding high on healthy business environment and government's investor friendly policies, India could see double the growth in this sector in the next five years. Owing to factors like low costs and availability of high-skilled labour, the country is becoming the hub of the global jewellery market.
“The organised retail jewellery sector in India plays a very important role in our economy and is growing with each passing day. The consumer has evolved and with the changing lifestyle of people across regions, the growth of the organised and branded jewellery sector has seen an elevation over the years,” says Sandeep Kulhalli, Senior Vice President-Retail and Marketing, Tanishq.
On the favorable industry, Prem Hinduja, CEO, Tribhovandas Bhimji Zaveri Ltd (TBZ), adds, “We remain committed to investing in our future through calibrated expansion of our domestic operations with improved product offerings, innovative jewellery designs, and trained sales team which will help us replicate our strong performance criteria in all our stores across India.”
“With the changing lifestyles and growing disposable income, the outlook and buying patterns of consumers in the recent years have changed rapidly. Indian consumers now demand greater transparency, better service and a more compelling value proposition driven by brand and fashion. Consumers are now beginning to move towards branded jewellery and are also willing to pay justified premium for high quality and inventive designs,” comments Saurabh Gadgil, CMD, PN Gadgil Jewellers Pvt Ltd.
Franchising and industry
Leading gems and jewellery brands are offering franchise, giving opportunities to many entrepreneurs to have their own venture in this segment. Jewellery is one thing which is commonly bought in rural, small and urban areas, especially during marriages and festivals. To catch consumers even in small towns and have a nationwide presence, the brands are finding franchise route the best way. “A significant part of our target audience resides in smaller cities, hence Tanishq has opted for the franchise route in order to broaden our horizons. This route enables us to cater the jewellery requirements of a wider audience and also makes Tanishq very accessible to people nationwide,” shares Kulhalli.
Pitching for the franchise mode for its business expansion, Hinduja, comments, “Via franchise mode, we aim to reach other important markets and invite young entrepreneurs to open TBZ-The Original stores and retail the brand's product. We want to be present in other cities and towns to cater to the growing demands of customers with the best in class jewellery. It's a go-to-market strategy. The macro-economic conditions are also favourable.”
Despite economic issues in 2014-15, the industry overcame the global effects, including the downturn in China, the political and terrorist unrest in the Middle East, declining European market and the suffering Russian currency Ruble, which led to a downward trend here. However, factors like divesting in the USA and the UAE to boost export trade from India went in domestic industry's favour. The government has also undertaken various measures to promote investments and upgrade technology and skills to promote brand India in the international market.
= The Reserve Bank of India (RBI) has liberalised gold import norms with which export players can import gold, while banks and nominated agencies can offer the commodity for loans to bullion traders and jewelers.
= The Government of India is also looking forward to establishing a special zone with tax benefits for diamond import and trading in Mumbai, to develop the city as a rival to Antwerp and Dubai, which are currently the top diamond trading hubs in the world.
= To beat one of the major problems the sector is facing of shortage of skilled manpower, the Gems and Jewellery Skill Council of India is planning to train over four million persons till 2022.
Increased penetration of organised players in the trade is a good sign for the industry. In the coming years, more number of large retailers will enter the market, providing business opportunities to the prospective entrepreneurs. Besides, these brands will provide variety in terms of products and designs. The big retailers are also offering financing schemes to consumers to further boost sales. Also, the relaxation of restrictions of gold import is likely to provide a major boost to the industry.
On its expansion, Hinduja, tells The Franchising World, “TBZ-The Original is a brand that is nationally renowned and we want to match the brand equity in terms of presence and penetration. We are hopeful to expand in areas where we are not present currently and we will open new avenues for employment and offer our products to the wide customer base. We look forward to expand our reach, footprint and penetration to lakh of brand admirers in different parts of India.”
Adding to this, Kulhalli, says, “We aim to continue to be the market leader in the organised jewellery sector and offer best-in-class jewellery to our customers. We see our products reaching a larger number of people while continuing to offer them the best designs.” Tanishq hopes to have 48 franchise stores by December 2015.