The Retail Revolution

1st India Gold Conclave – Chennai

19th July 2008
 Flow of presentation

• Background of Indian jewellery Industry

• Changes taking place within the Industry
• Coping with these Changes
• Gazing at the Future
• Future requirements for the Industry
• Some example from Tanishq
 How big is the jewelry market in India?

R e la t iv e S iz e o f In d ia n
C o n s u m e r M a rk e ts

1 1 1 .8 7 Jewellery is
T e le c o m 88 amongst the
75 largest and
A p p a r e l 9 .6 most broad based
8 .6 S e rie s 1
consumer markets
W a tc h2 .5
in India
0 50 100 150
R s T h o u s a n d C ro re s
 Background

• The Indian jewellery Industry is one of the largest

domestically (and in the world) and has some unique
characteristics

• Recent Changes in the Lifestyle goods industry and the

diamond industry have created some opportunities and
challenges

• The family jeweler segment is the largest segment of

the market and hence most likely to be impacted by
these changes

• If the industry needs to initiate changes at the firm or

Industry level , the leaders need to agree on the
challenges facing them and the strategies needed to
cope with them
 Indian Jewellery Industry

• Market Size
• Fourth largest consumer market in the world
• Jewellery Market Size: Rs75,000 crores
• Diamond jewellery: Rs10,000 crores
• Largest market in terms of volume of gold
• India accounts for more than 22% of the total gold
used for jewellery purposes
• Growth
• Gold jewellery Market Growth: 8-10%
• Diamond jewellery Market:18%-20%
 Per Capita consumption

180 170
160
140 123 It a ly
115
120 USA
100
Japa n
80
60 C h in a
40 In d ia
12 10
20
0
P e r C a p it a c o n s u m p t io n in U S $
 What’s Changed

• Gold as a share of wallet is decreasing in the younger generation.

Traditional jewellery is still the dominant design pattern while
contemporary styles are emerging fast
• Although guarantee of the retailer is important in ascertaining
quality, hallmarking is gaining acceptance
• In the past choice of stores used to be 1-2 stores, but customers
now look at 4-5 stores for range and choice of jewellery
• The main occasions to buy are still marriage and festivals
• Customers in the high value category are becoming more informed
because of exposure to media and fashion trends
 Indian Retail M arket -2006
Retail SegmOrganised
ents retail making a dent Value- Rs Crores
Food & Grocery 743900
Clothing,Textiles & Fashion accessories 113500
Jew ellery 60200
Catering Services (F&B) 57000
Consum er Durables, Hom e appliances/Equipm ents 48100
Pharm acetuicals 42200
Furnishings, utensils, furniture - Hom e & Office 40650
Entertainm ent 38000
M obile Handsets accessories & services 21650
Footw ear 13750
Books,M usic & Gifts 13300
W atches 3950
Health & Beauty care services 3800
TOTAL 1200000
 Fragemented Value Chain
Job
workers
MMTC
Gold

Banks Intermediaries Independent

outlets

Direct A+ outlets
Imports Chains
Large A category
Jewellery outlets
Manufacturers
Open
Whole
Market
sellers
Independent
A+,/A,someB
Diamonds Branded outlets in
Mining Sight
companies Holders Shopping malls
 Share of Organised retail in the
market
95%

Family
jewellers
Organised
5%
Retailers

2005

Despite its large size jewellery retail is unorganised and

very fragmented
 US Retail Scenario

In d e p e n d e n ts
53% 49% 49%
D is c o u n t
s to r e s
22%
23% 24% J e w e lle r y
C h a in s to r e s
20% 20% 20% N o n s to r e
4% 7% 9% R e ta ile r s
1987 1992 2004
 Organised retail making a dent

% Organised Retail

50%
40%

30%

20%
10%

0%
W atch Footw Clothin Books, Health Consu Furnis Mobile Caterin
Others
es ear g,Texti Music & mer hings, Hands g
% Organised Retail 46% 38% 19% 13% 11% 10% 9% 8% 7% 11%

% Organised Retail
 Industry standards are set

• Diamond Trading Company (DTC)

• World Gold Council (WGC)

• Platinum Guild International (PGI)

 How they aid organised retail

• Educating the customer about different kinds of precious metals,

stones and jewellery as a whole

• Creating Brand pull in customers

• Promoting jewellery by increasing usage and appeal occasions

• Putting a good vendor base to ensure continuous supply of

products and better service for the customer

• Positioning jewellery as a lifestyle product rather than a

traditional product

• Responsible for the emergence of a jewellery industry value

chain
 Value chain redefined

Merchandising
& Manufacturing Marketing Retail
Design

Unlike the traditional jewelers in the past who had a single owner
manager structure, clear streams of specialization emerging in the industry
Design Differentiation becoming the
USP
• Traditional industry relied on Karigar skills

• Now, More emphasis laid on formal design training in

jewelry category especially by the organized players

• Design Training in NIFT, SNDT,GIA, JDTI

• Players like Tanishq, Ganjam, TBZ have specialized

Design Studios which have won laurels at international
forums as well
 Manufacturing

• Hallmarking - Standardization in Material quality is fast

becoming a pre requisite especially for Gold jewelry
• In case of diamonds, Increased awareness of diamond quality (
4 Cs)
• Special EOU in hubs like Mumbai (SEEPZ) which supply to
stores across the world but face stiff competition from Hong
Kong and China
• Platinum has few manufacturers in the country in comparison
to Gold and Diamonds
 Marketing

• Creating Newer opportunities to buy jewelry

Festivals like Akshay Tritiya, Occasions like Mothers Day,
RakshaBandhan, Valentines Day etc
Fashion campaigns in vogue- Tanishq’s Fashion Earrings,
Colors of royalty
• Creating a desire in the Indian Woman to buy jewelry for its
design value/for accesorisation/ to make a statement about
her personality.
 RETAIL

• Retail
• Seduce the consumer in the retail space as competition
is not only within jewelry category but categories like
electronics, wellness services and luxury items
– Evolve a distinct retail identity – in terms of
product, store look and customer experience
• Trend of the speciality Jewellery markets/ malls
• Increasing traditional players renovating/refurbishing
store spaces
Concept of strong retail brand in jewellery industry
gaining strength
 …What else is changing?

• Disposable income rising faster as the economy is growing

• Rs “One Crore Per Anum” Income households among the

fastest growing population segment in the country

• This Trend also visible further down the pyramid

 Mapping of India’s Income classes

Classes 1994-95 1999-00 2006-07

Rich 1million 3 million 6 million

(above 2.15 lac) Households Households Households

Consuming 29 million 66 million 75 million

(0.45– 2.15) lac Households Households Households

Climbers 48 million 66 million 78 milion

(0.22-0.45) lac Households Households Households

Aspirants 48 million 32 million 33 million

(0.16-0.22) lac Households Households Households

Destitute 32 million 24 million 17 million

Less than 0.16 lac Households Households Households
 Projected Growth

140000
120000
100000
80000
60000
40000
20000
0
5
6
7
8
9
0
1
2
3
4
200

201
201

201
200
200

200
200
201

201

Indian jewellery market is expected to grow at an overall rate

of 8%
 Entry of strong players into the
jewellery industry
• Reliance
• Big Bazaar
• Giant
• Subiksha
• Metro
• Bombay stores

Big Bazaar has already launched a gold section

Departmental stores like Shoppers Stop have jewellery outlets

 New Channels of Distribution

• Direct selling
• Modicare launching jewellery sales
• Pantaloon acquiring a 10% stake in Goldiam

• E-retailing
• Fabmall/Gold Palace starting e-retailing of
jewellery
 Different stages-Different strategies
Strategies
Strategies
Market
maturity
Transition • Cost cutting measures
• Jewellery is used adopted by most
as a status symbol jewellers
Mature
• Jewelelry has little • Management of the
differentiation and distribution chain
adopt a “me to” • Alliances
strategy Consolidated
• Local partnerships Risks
are important to • Industry Restructuring
succeed Fragmented
• Loss of customer trust

Risks Time
• Loss of customer Strategies Risks
trust • Creation of a •Unclear market
• Low customer local brand segmentation
protection • Use of • Unclear offering
innovative • Loss of customer
distribution trust
channels
• Local alliances
 Lessons to learn from apparel

• Traditionally dominated by small Fact Files:

and family run stores
• Strictly made to order
• Fashion element and design
content minimal
• Emergence of big brands and retail
outlets, tremendous competition
• Increasing preference for ready-made
garments, with rise in urbanization
• Increasing importance of Fashion, style
and brand management
• Second largest organized
sector in the country
• Total Apparel industry
worth Rs 1000 billion with
readymade garments
worth 300 billion
• Export of Readymade
apparel constitute 46% of
total
• Percentage of apparels
sold through single large
format stores is 44%
• India viewed as a hot
destination for global
retailers
• The rapid growth of the organized retail market was
unforeseen in the apparel space, and this is predicted to
continue growing the market as a whole

• An industry that believed that individual customization that a

family tailor offered was irreplaceable, found customers
increasingly amenable to picking up “off the shelf”
alternatives, now available in a wide range of design and size

• Primarily driven by people who found they had a lucrative

domestic market when fighting pitched battles in the export
market
 What do we need ?
Expertise to be developed in..
Areas Success factors

Marketing • Identification of valuable target

and segment and effective positioning
Brand building • Communication of differentiating factors
Capabilities • Consistent communication
• Strong customer relationship management

New Product • Strong design capabilities

Development • Strong manufacturing support
• Strong product planning process
• Strong IT integration
 What do we need?
Expertise to be developed in..
Areas Success factor

Distribution • Strong retail management capabilities

Management • Strong franchisee management capabilities
• New avenues, e-tailing, mail order catalogue
• Strong IT integration

Supply -Chain • Efficient sourcing and procurement

Management • Efficient production & inventory management
• Efficient logistics management

Service Quality • Store staff reliability, responsiveness,

assurances, empathy
 Therefore

• As the retail boom has arrived in the country, jewelry industry

cannot ignore it.
• Will have to take giant steps so that can meet customer
expectations and offer value to the customer which is higher than
the material cost they pay for
• Separation of the ownership from the management in the jewelry
industry
• Need for more specialized people in each of the above mentioned
fields
• Immense opportunities for young professionals from varying
fields
 The Tanishq Story
Building a successful retail brand
• Retail has traditionally been regarded as a sales and distribution channel
• Brands - in FMCG, durables, fashion categories – like to dwell on their
extensive retail distribution reach

• But, truly speaking, retail can impact the minds and hearts of customers
as strongly as it can reach the vicinity of their homes

• Because retail can make the magic of brands come alive, in an

environment that consumers can experience, feel and touch

• Retail can deliver the brand value proposition to consumers in a

compelling yet cost-effective manner
 Products need to tell a story- Retail
Showcase
• Retail space can showcase product far more brilliantly
than advertising ever can
– sexy product displays, which completely mesh with
brand personality
– Attractive store windows
– the alluring play of colour and lights
– key product features can be emphasized, often
dramatically
– relatively long consumer attention span
 BRAND is what the customer sees

• Retail space is uniquely positioned to surround the

customer’s senses with multiple facets of the brand’s
personality
– Can deliver visual, audio and olfactory cues
– in-store visual merchandising
– music that brings alive the moods of the brand
– online audiovisuals that inform, excite & stimulate
– in many cases, even the fragrances and smells that
define the brand and draw the consumer
 Communication with the customer

• Unlike most advertising, retail space permits an interactive

process of communication about brand
- An effective salesperson can communicate brand in a clear,
compelling, customized manner
- Catalogs, “take-one” leaflets, online dialogue counters in
the store can further enhance this process of speaking to
the customer about key brand benefits
- Within the retail space, the customer is captive audience as
he listens to you and experiences your brand
 Captivate

• The first three Ss (showcasing, surround effect and speaking

effectively) make the captivating magic of the brand come
alive

• This is truly the moment of truth for every retail brand – the
point of seduction, leading to consumer choice & purchase

• Magic, by its very nature, cannot be captured in words – but

we see it in our showrooms, 365 days a year
 Unanimity in the story- Paheli

– Communicate to create brand association and

generate interest
• TVC
• Print and Magazine
• Instore
• Outdoor
 BRAND PROPOSITION- NEW TALES
OF TRADITION

• Communicating your brand values and your unique

proposition to the customer.

• Synergy between your products, store,advertising.

 CHALLENGE NORMS

• Challenge existing norms and wake customers

• Taking a strong stance in our campaigns

• Education into why customers should buy into

organised retail.
 Own an Activity- Anmol Saheli

• Seeing ourselves as a complete wedding jeweller

was one proposition but communicating the same
to the right TG another task.
• Anmol Saheli- Emotional Bonds talked about rather
than hardselling jewellery.
• Hit the right cord with the right TG and overnight
walkins grew and sales as a factor of this.
“The best way to predict our future
is to invent it”
- Alan Kay