Titan aims to boost jewellery market share
Bengaluru: Titan Co. Ltd aims to increase its market share in the wedding and diamond jewellery segment even as it plans to extend its retail footprint to smaller towns, what the watches and accessories firm terms ‘Middle India’, it said in its 2016-17 annual report.
For its watches and eye-wear segments, which faced a challenging time last year, it will look at new product launches and in-house manufacturing facilities, respectively, to boost growth ahead.
Of the Rs12,717 crore the company earned in 2016-17, Rs10,237 crore came from sales of jewellery retailed mostly under the Tanishq brand. This part of its business grew 17.4% during 2016-17 on an annual basis.
Growth in Titan’s jewellery segment is expected to be propped further by the government’s demonetisation move last year and the introduction of the goods and services tax (GST) from 1 July—both of which are viewed by analysts and industry leaders alike as beneficial to organised jewellers in the long run.
Still, there are areas for improvement for Titan and the company identified four of them in the annual report published on its website. Wedding jewellery makes up almost 60% of the overall market in India but Tanishq’s presence in it is still small and there is a lot of headroom for growth, Titan said.
High-value diamond jewellery, which accounts for over two-third of the total diamond jewellery market, is another area where Tanishq doesn’t have a significant presence. But high-value diamond jewellery can become a big driver of growth and profits and early signs are already visible, according to the company.
Titan has also identified cities where Tanishq has been present for more than a decade and yet is not among the top three brands. The company said it has set up multiple initiatives to ensure its share in these cities gets a boost.
At the same time, it is looking at expanding into Middle India—over 400 towns—where it sees opportunities to establish its Tanishq brand. It has already experimented with stores in towns such as Siliguri, Erode, Durgapur and Guntur and is seeing encouraging results that suggest a need for more aggressive expansion plans for Middle India.
“We expect traction in the jewellery segment to continue on the back of introduction of new collections with higher focus on wedding jewellery segment. In addition, with the rollout of GST, Titan would be a beneficiary of the shift from unorganised to organised players. We expect Titan’s revenues to grow at a CAGR (compounded annual growth rate) of 21% in FY17-19E mainly driven by growth in the jewellery segment,” analysts at ICICI Securities Ltd wrote in a report last week.
The watches category clocked a tepid, single-digit CAGR in sales in the past four years, Titan said. But the introduction of technology, smart watches and other disruptive trends has revitalised the market and rekindled an interest in watches as a fashion statement. Its watches business grew 2.7% annually in 2016-17 and earned Rs2,028 crore in revenue.
Exports of its watches also had a tough year due to geopolitical conditions in the Middle-East and currency devaluations in Malaysia and Singapore. Titan said it is aiming to consolidate this part of its business in 2018-19 while targeting sharper investments.
Its eye-wear business was hurt by demonetisation and intense competition from national, regional and local firms in 2016-17 and displayed signs of higher growth rates only in the fourth quarter of the year, Titan said. Revenue from this business grew 8.4% to Rs406 crore in the last financial year.
Rapid expansion, driving same store sales growth, a focused omni-channel strategy and a focus on the under-penetrated sunglass and contact lens market will be the plan going ahead for the eye-wear business, according to Titan. It is also setting up a frame manufacturing facility, which will become operational during the course of 2017-18, to reduce its dependence on outsourcing.
- PNB fraud: Nirav Modi firms in Surat SEZ diverted duty-free diamonds
- Donald Trump speaks with Vladimir Putin after re-election victory in Russia
- Raymond to raise Rs100 crore via NCDs
- Privatisation of public sector banks in taxpayers interest: Nandan Nilekani
- EESL acquires UK-based utility Edina for Rs493 crore