Indian jewellers add brand lustre to retail ops

MUMBAI: Jewellery brands like Oyzterbay, Gili and Orra — now familiar to a growing clientele — look all set to expand their presence as Indian jewellery makers step up investment in retail outlets to lure freer-spending consumers.

With prices starting at as low as Rs2,000, branded jewellery is now affordable even for people with average pay packets in the country’s fast-growing metros, manufacturers said.

“Traditionally, it has been a commodity type of product. It is slowly going the branding way," V. Govindraj, vice-president, retail and marketing, jewellery division of Titan Industries Ltd, said.

At $12.2 billion, India now has 8% of the global retail jewellery market. This is estimated to grow 8.8% annually over the next decade to touch $28.8 billion, according to Neelesh Hundekari, principal, AT Kearney. Which is why jewellery makers like Classic Diamonds (India) Ltd, Flawless Diamond (India) Ltd and Rajesh Exports Ltd are on a retail expansion drive.

Also, according to a report by the Gem & Jewellery Export Promotion Council and business advisory firm KPMG, India’s share of the diamond-processing pie — 57% — will drop to about 49% in value terms by 2015, while retail is set to grow.

Watchmaker Titan Industries — which is also India’s oldest branded jewellery retailer with over a decade in the business — saw sales of its brand ‘Tanishq’ surpassing watch sales in FY06, accounting for 53% of turnover.

Its jewellery sales have topped Rs10 billion so far this year. “Jewellery would grow at a higher rate and the contribution of jewellery would possibly increase," Govindraj said.

Rajesh Exports plans to showcase three retail brands — Laabh, Shubh, Oyzterbay — in 180 stores in the first phase of its expansion and aims to draw 30 percent of its revenues from retail in three years, Chairman Rajesh Mehta said.

Flawless Diamond is setting up 25 stores under its ‘Aum’ brand by March 2007 with an investment of about Rs250 million. It expects retail revenue at Rs2 billion to Rs3 billion by September 2007, Director Rajiv Kamdar said.

Still in the rough

But branded retailing could come in for some very stiff competition from family and local jewellers and may also be hit by a lack of ideal retail locations for ‘niche’ brands.

“Trying to find the right location is very important," said Nirav Bhansali, director, Classic Diamonds. “We are still learning the retail business. We still prefer to walk properly and then run."

Classic Diamonds is moving slowly with its retail plans. It has lined up 10 stores over the next 3-4 years from five now, at an investment of $1-1.5 million in each store.

While precise figures are hard to come by, a report by Morgan Stanley said India’s organized retail market had the potential to grow to $64 billion by 2015. But speciality retail — such as jewellery — would make up just 5% of this, it said.

But manufacturers are not just thinking local and are keen to go overseas where margins are higher. AT Kearney’s Hundekari said gross margins in India for jewellery range between 10% and 25% — much below the 50% to 60% in developed countries.

Gitanjali Gems recently bought U.S.-based Samuels Jewelers Inc, while Shrenuj Co. & Ltd with 10 stores in Hong Kong and one in the U.S. is eyeing China, which along with India is set to take on the U.S., the world’s largest jewellery market. REUTERS

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