Tanishq:

Pricing,
Retail
Selling and
Inventory
Management
of Jewellery
PRESENTATION BY:

Md Asif 23GSOB2010314
Minnat Perwaiz 23GSOB2010434
Md Anas 23GSOB2010432
Mohit Kumar 23GSOB2010311
Monishka Bhardwaj 23GSOB2010317
Nandani Rai 23GSOB2010404
Nishtha 23GSOB2010330
 Agenda

01 CASE 02 03
The Indian Gold and
Jewellery Industry
Titan: A Brief History 04
Tanishq: The Business
Model

05
Product Portfolio and
Design Strategy
06 07
Supply Chain In-store Operations 08
Marketing and
Promotional
Strategies

09 Pricing 10
Competition 11
Future Opportunities
 Ameya Kamat's Sales Performance Challenges and Government
Interventions

• Ameya Kamat, the area business manager for Tanishq in Ahmedabad,

India, struggles with improving sales performance.
• He aims to increase sales by 8% over the previous year, with 40% of sales
occurring in October and November.
• Kamat is juggling price interventions, salesforce training, incentive
restructuring, and inventory management.
Case • The demonetisation of high-denomination currency notes in 2016 led to a
significant upswing in gold sales.
• The government's drive to discourage cash transactions, introduce a
digital economy, and crack down on tax evaders has impacted the gold
industry.
• The implementation of a nationwide goods and services tax (GST) in July
2017 has digitized the gold industry, making it a highly scrutinised and
systemically taxed commodity.
• Kamat is attempting to increase revenues amidst these challenging
circumstances.
 India's Gold and Gems Industry Overview

• India is the second-largest consumer of gold and the world's largest

diamond processor, accounting for nearly 29% of global gold demand.
• The gold and gems sector contributes around 7% to India's GDP as of
2018.
• The Indian domestic jewellery market is expected to grow at a CAGR

THE INDIAN of 5.6% over FY 18–22.

• Gold is the second-largest item on India's import bill, next only to

GOLD AND crude oil, accounting for 8–10% of the country’s total imports.
• India also exports gems and jewellery (G&J), with USD 9.84 billion
JEWELLERY being gold jewellery in 2014–15.

INDUSTRY • The retail G&J market is highly unorganised and fragmented, with
96% of the total players being family-owned businesses.
• The G&J market employs over 4.64 million employees and is
expected to employ 8.23 million by 2022.
• Gold circulation in India is partly recycled gold, with many small gold
jewellers providing gold mortgage services.
• Gold prices in India are not uniform, with different trading centres
creating their gold prices at any given time.
 TITAN: A BRIEF
HISTORY
Titan's History: Titan Watches Limited, formed in 1984 as a collaboration between France Ebauches and the
Tata Group, expanded into the jewelry business with Tanishq in 1995.

Challenges in Jewelry Market: In the late 1990s, the Indian jewelry market was fragmented, and the concept
of branded jewelry was non-existent. Traditional jewelers held sway, doubling as informal bankers.

Tanishq's Initiatives: Tanishq introduced a corporate gold gift scheme in 1998, gaining success with
corporate clients. Despite initial skepticism about contemporary designs, Tanishq achieved profitability by
addressing market feedback.

Changing Trends: By 2018, a shift in consumer preferences allowed organized jewelers like Tanishq to
capture about 30% of the market. Modern designs gained acceptance, and Tanishq had 275 stores across
India.

Industry Challenges: Banking fraud scandals in 2018 impacted the trust in the gold and jewelry industry.
Titan's Managing Director, Bhaskar Bhatt, believed Titan, especially Tanishq, would benefit as consumers
sought trustworthy options amid industry suspicions.
 TANISHQ: THE
BUSINESS MODEL
Store Operations: Tanishq operated both company-owned and franchise stores. In company-owned stores,
Tanishq owned all inventory, while franchise stores had the option to buy and resell.

Management Structure: Store managers in company-owned stores reported to the Area Business Manager
(ABM), while in franchise stores, they reported to the franchise owner. Franchise owners collaborated with the
ABM to achieve results.

Category Management: Each store had gold and diamond targets. Category managers at headquarters focused
on specific jewelry categories, with inventory managers tracking stock turns and facilitating interstore
transfers.

Working Capital Discipline: Given low margins, Tanishq adopted strict working capital discipline. Trust in Tata
and Titan brands allowed leasing 41% of gold, which was forward sold for six months, enabling sales proceeds
to cover gold costs.

Gold Sourcing: Exchange programs and spot buying constituted 40% and 19% of gold sourcing. Tanishq's
franchise-led model kept the business asset-light, with 82% of stores being franchises. The flagship store in
Ahmedabad was company-owned, while the Motera store was franchised.
 Product Portfolio
and Design Strategy
Tanishq, a popular jewelry brand, has a strategy to stand out and gain trust. They focus on two key things:
being different and building trust.
Step 1
DIFFERENTIATION THROUGH
DESIGN
Initially, Tanishq's simple gold jewelry
designs didn't work well in India. People
preferred more traditional and higher-
carat gold. Tanishq learned that their
designs were seen as too elitist and
Western. To fix this, they created a diverse
design team and collaborated with
freelancers. They traveled around India,
gathering feedback and understanding
regional preferences. This led to a wide
range of designs that were updated
regularly. Each store could choose designs
based on local tastes while also stocking
popular designs nationwide.
Step 2 Step 3
TRUST IN PURITY BRAND MARKING FOR
QUALITY
To build trust, Tanishq tackled the issue
Tanishq marked its products with a "Q"
of gold purity. Traditional jewelers used
to assure customers of their quality.
an acid test, but this wasn't entirely
They also implemented programs like
trusted. So, Tanishq introduced
"Mr. Perfect" for their craftsmen and
Karatmeters from Germany, which used
maintained strict quality standards at
X-rays to accurately measure the gold's
every level of their operations. They
purity without any loss. Customers could
test any jewelry, even if it wasn't from made sure to sell only brand-new
Tanishq, and get a printed record of the products to customers.
purity. This move, although initially faced
backlash from competitors, helped build
trust among customers. Tanishq also
focused on quality assurance across all
levels of its operations.
 SUPPLY CHAIN
Supply Chain Management at Tanishq:

Setting Targets:

Each store manager, like Kamat, received specific sales targets from category managers.
Targets were based on the store's location and its assessed potential.
Comparisons were made with similar stores to arrive at category-wise targets.
Demand Estimation:

At the start of the year, store managers, in collaboration with inventory managers, estimated the demand for their store.
These estimations considered the unique demand patterns of each location.
Seasonal peaks and troughs were identified to optimize inventory logistics.
Inventory Logistics:

Tanishq had a vast inventory with thousands of SKUs (Stock Keeping Units).
Inventory managers monitored stock aging at the store level.
Stock rotation was initiated, moving non-moving stock from one store to another where there was demand.
The central inventory system allowed all stores to view and request transfers through logistics partners.
Efficient Inventory Turnover:
 SUPPLY CHAIN

Tanishq achieved an impressive inventory turnover of 4, surpassing the industry average of 2.

This efficiency was crucial for profitability and minimizing excess stock.
Adapting to Local Demand:

Store managers played a role in finding the right mix of SKUs for their specific store.
They could request extra stock for experiments or promotions, agreeing on additional sales targets.
Successful experiments led to the regular introduction of new designs or promotions.
In simpler terms, Tanishq carefully plans and manages its inventory based on specific sales targets and local demand
patterns. The system allows for efficient stock movement between stores and encourages experimentation with new
designs or promotions at the store level. This adaptability contributes to Tanishq's success in the highly dynamic jewelry
market.
 IN-STORE
OPERATIONS
In-Store Excellence at Tanishq: A Snapshot

Store Setup:

Retail sales officers (RSOs) form the in-store sales team, reporting to the store manager.
Larger stores have floor managers overseeing RSOs, and all staff contribute to the store's success.
Common roles include commercial head, cashiers, and in larger stores, a stock custodian and assistant
commercial head.

Customer Interaction:
Greeters, mainly women, welcome customers, making quick assessments of their needs.
Greeters guide customers to relevant sections based on their preferences, introducing them to RSOs.

RSO Responsibilities:
RSOs build friendly relationships, assess customer needs, and encourage a diverse range of sales.
They emphasize Tanishq's quality, transparency, and introduce schemes like the Golden Harvest Scheme.
Morning meetings, performance tracking, and internal competitions foster a motivated sales team.
 IN-STORE
OPERATIONS
Pay Structure and Incentives:
For company-owned stores, Tanishq sets the pay structure; franchise stores follow the owner's decision.
RSOs have a fixed component (90%) and a variable part (10%) tied to meeting sales targets.
Top performers can earn up to 35% of their salary as a variable pay, with monthly salaries ranging from
INR 19,000 to INR 21,000.

Performance Evaluation:
Regular audits, including mystery shoppers, assess RSOs on various factors such as encouraging purity
checks and trial purchases.
A comprehensive 40-parameter assessment gauges overall store performance.
RSO attrition is low at around 8% across all stores.

Challenges for Kamat:

Kamat, the decision-maker, must consider changes in the incentive structure to boost sales toward target
levels.
This brief snapshot provides insights into Tanishq's in-store operations, emphasizing customer
engagement, RSO responsibilities, and the challenges in optimizing the incentive structure for sustained
success.
MARKETING AND
PROMOTIONAL
STRATEGIES

Gold purchasing behavior varies from region to region; Tamils ​buy gold on Akshaya Tritiya (mid-
April), while people in the north and west buy gold on Diwali and Dhanteras (November). Seasons
also have different needs for shopping values ​and religious observances, so seasonal promotional
strategies are created based on geography. While customers in north and west India want platinum
and diamond jewellery, people in Chennai are worried about the price. Tanishq is a leading jeweler
focusing on opening showrooms in smaller cities like Trichy, Nagpur, Amritsar and Patna where the
annual growth rate is higher. All Tanishq stores offer a 100% money-back guarantee on their jewelery
if other jewelery is replaced after approval under ethical conditions. Tanishq also stratifies the
product by market segment and customizes it as per their needs. Tanishq website allows customers
to stay informed about promotions and browse design and price catalogues.
 Competition

Founded in 1956, Joyalukkas Group has grown globally with operations in India, UAE, Singapore, United
Kingdom, Kuwait, Bahrain, Oman, Qatar, Saudi Arabia, Malaysia and the United States. The group has
more than 140 showrooms worldwide, 10 million customers and a dedicated team of 8,000 people.
Bollywood actress Kajol sports her signature collection of ornaments like gold, silver, platinum,
diamonds and rubies. Joyalukkas revolutionized the jewelery market in India by introducing workshops
and creating 'wedding spaces'.
Kalyan Jewellers, India's largest jeweler, opened its first store in 1993 and employs approximately
8,000 people.
PC Jeweler Limited is an Indian jewelery company with a focus on diamonds, offering a wide range of
products including gold and diamond jewellery.
TBZ is an Indian jewelery retailer operating since 1864. The company has 38 stores in 12 states and 27
cities and sells mostly gold- and diamond-encrusted jewelry. The company designs and manufactures
its products in-house or outsourced; It offers a variety of jewelery from India and abroad.
 PRICING
Tanishq, a jewellery chain in India, has a standard pricing policy across its showrooms, maintaining the same list
price across all stores. Gold prices at Tanishq are based on international exchange prices and are displayed in each
store regardless of location. Each jewellery item is labeled with its various components, caratage, and margin of
error as measured in the factory.

Tanishq ensures that customers are aware of all three components of the price. The entry price for Tanishq's range of
jewellery is about INR 3,000 in 2018 for 14-carat gold jewellery items targeted at young women, while heavy wedding
jewellery can cost up to INR 1.5 to 5 lakhs. Profits for Tanishq come from scientific inventory management and proper
demand estimation and design of jewellery.

Tanishq has a higher inventory turn than competitors, with a higher inventory turnover and lower inventory by 30-
40%. The inventory management system is based on the theory of constraints built for Tanishq by Goldratt Consulting
in Israel. Tanishq classified customers according to frequency and amount of purchase, with salespersons having the
authority to give up to 3% discounts on the price.

Large jewellery shops are typically located near each other, and customers often shop around for the best price.
Limited pricing power exists at the store manager and franchise owner levels. About 60% of the jewellery purchase is
related to weddings, and Tanishq's sleek and contemporary jewellery is designed to attract all such customers.
 FUTURE
OPPORTUNITIES
Tanishq, India's first branded jewellery manufacturer and retailer, has successfully
carved a niche in the Indian market by leveraging its heritage design skills and
investing in research and customer-focused studies. The company has changed
customer attitudes and traditional business practices. However, it faces stiff
competition from organized jewellers from south India, who are expanding rapidly.
The Ahmedabad store is now one of the best performing in the nationwide chain.
CEO C.K. Venkataraman has to make quick decisions on pricing, discount structure,
and salesforce incentive structure for the upcoming festive season, with the goal of
increasing sales by 8% for the flagship store in Ahmedabad and the region.