The jewellery retail sector needs to be ever-changing in tune with the likes of the consumers to grow and progress. The preferences of the patrons are never static, they change with time, fashion and occasion.
The jewellery retail sector needs to be ever-changing in tune with the likes of the consumers to grow and progress. The preferences of the patrons are never static, they change with time, fashion and occasion. Thereby the jewellery retail players have to continuously work on their business model to offer the best to their investors and customers.
Jewellery Market on the Rise
The Indian gems and jewellery market is predicted for robust growth in the forecast period, FY2022 to 2027, with a Compound annual growth rate (CAGR) of 8.34 per cent. This prediction is clearly on account of changing lifestyles, rising disposable income, changing consumer preferences for branded jewellery products, and growing urbanization. Few other factors which are attracting urban consumers are as follows:
All these factors are anticipated to further drive the growth of the India gems and jewellery market in the coming five years. India being one of the world's major silver importers and the world's largest diamond cutting and polishing center has a growing demand for diamond and platinum jewellery. The nation has become a center for premium jewellery manufacturers and is home to the world's biggest diamond processing center.
Looking at the popularity of silver ornaments, recently a Maharashtra based jewellery firm, PNG Jewellers has revitalized its silver jewellery brand-Silvostyle Fashion Next by rolling it in a shop-in-shop model across 35 of its stores. The brand aims to further create a 100 crore business in three years around silver jewellery and semi- fine fashion jewellery.
Regarding growth in the Jewellery sector Balram Garg, Managing Director, PC Jeweller shares, “Jewellery retail sector in India is growing at around 8.4 per cent CAGR. Presently it is estimated at Rs 6 lakh crore but expected to reach the level of Rs 9-10 lakh crore in next 5 years. Organized jewellery market is growing at a very fast rate, which can be estimated around 24-25 per cent.”
Jewellery Surging Employment Pan India
As of February 2021, India’s gold and diamond trade contributed 7.5 per cent to India’s Gross Domestic Product (GDP) and 14 per cent to India’s total merchandise exports. These figures will surely increase in the present and future years, making India one of the leading nations in Jewellery trade. This would most likely lead to more employment in the country. In 2022, the gems and jewellery sector is employing 8.23 million persons, which was 5 million in 2020. The figures have drastically increased in the last couple of years, giving us the proof that employment is on the rise. As shared by Suvankar Sen, MD and CEO, Senco Gold Ltd, “We have a dedicated design team, comprising 13 designers as on January 31, 2022 focused on developing new products and designs that meet customers’ expectations. We also customize jewellery catering to individual requirements in terms of design, size, polish and weight. The manufacturing of our jewellery is carried out mainly by over 100 experienced Karigars in Kolkata, West Bengal and other parts of India under Karigar Agreements. We believe that our scale of operations enables us to commit significant volumes of work to Karigars; which in turn enables them to offer quality finished products to us at competitive prices while allowing us to maintain exclusivity of our in-house designed jewellery.”
This is just one of the hundred of aspects of jewellery business leading to employment in the country where unemployment is one of the biggest stumbling blocks.
Changing Trends in Jewellery
Gold and diamond are considered significant components of India’s culture, serving as a symbol of wealth and prestige, along with a store of value, and essential factors of numerous celebrations. However, now-a-days due to changing preference of consumers light weight and daily wear jewellery is making waves in the country. Office going women prefer adorning themselves with delicate and graceful pieces of jewellery.
According to CRISIL, an Indian analytical company, the share of working age population (15-64 years) has risen from 65 per cent in 2013 to 67 per cent in 2020. With this the demand for light-weight, daily-wear fashion jewellery is expected to rise as the younger generation enters the workforce. Few other trends expected in jewellery Industry are:
Regarding new trends, Suvankar Sen said, “Through our D’Signia Showrooms and Vivaha collection we aim to cater to customers seeking heavier or premium designer jewellery. Through our Everlite (light weight jewellery), Gossip (silver and fashion jewellery) brands and our Aham collection (jewellery for men), we aim to cater to the younger generation and the ‘upwardly mobile’ of India by building brands focused on jewellery of smaller average ticket size.”
Jewellery Biz decked out by Organised Players
Jewellery business is a sustainable business. However, it is transforming at a fast rate with business shifting from unorganized players to organized players and brands. Compulsory hallmarking, increased preference towards diamond jewellery where brand trust is essential, customer friendly market practices of established brands, increasing corporate governance and regulatory requirement, and higher customers expectations are creating challenges with old family jewellers. Band-width with a single shop owner is limited and, therefore, many of such jewellers are inclined to convert their business into franchise business. In addition to the existing jewellers, aspiring entrepreneurs are also entering in jewellery line by taking franchise of established brands.
More recently, a report titled ‘Jewellery Market Structure’ by the World Gold Council (WGC), highlights the transformation of the gold jewellery market in the country over the last few years The market share of retail store chains in the Indian retail jewellery market is expected to grow to 40 percent in the next five years. Till a year ago, chains of jewellery stores accounted for 35 percent of the Indian retail jewellery market. Moreover, it is believed that the top five retailers are expected to open 800-1,000 stores in the next five years.
“The demand for better design and consumer experience, increasing awareness about hallmarking, better pricing structures and competitive return policies, along with GST and demonetization, have driven the trend towards retail store chains,” said WGC.
Jewellery Players Adorn the Franchise Industry
Mostly all successful brands take the franchise route for expansion as it is most guaranteed to spell success for both the partners. As shared by Balram Garg, “In franchise business model goodwill and social relationship of franchisee and brand value of franchisor both help in successful running of the business. Creating of a brand is not so easy-it takes years. Franchisees start enjoying expertise and support from day one.” PCJ was incorporated in the year 2005 while franchise business started in the year 2016. The brand presently has 10 franchise showrooms against 70 company owned. Balram Garg on this adds, “Due to Covid-19 we could not expand during the last two years. We are now committed to increase our geographical presence using the franchise model. We have our own team for looking after the franchise business development.”
Tanishq, noted jewellery brand from the diversified conglomerate Tata Group, has drawn up plans to set up nearly 45-50 new stores during the current financial year. “With customers moving to organised jewellery shops, the company was making huge investments to open 45-50 new stores across the country to add to the existing 385 stores present in 220 cities.” said Vijesh Rajan, Head Retail, Tanishq-Titan Company. Interesting point here is that 90 per cent of the stores are operated by franchisees.
Senco Gold Ltd, a pan-India jewellery retail player with a history of more than five decades has also adopted the franchise way. Their ornaments are sold under the ‘Senco Gold & Diamonds’ trade-name through multiple channels, including 70 Company Operated Showrooms and 57 Franchise Showrooms (including four franchisee owned and Company operated Showrooms).
Kalyan Jewellers, which became an IPO in 2021 also plans to enter the franchise model to accelerate expansion mainly in the non-southern Indian market. This was announced looking at the kind of momentum and accelerated demand the brand has seen in the last fiscal.
Tribhovandas Bhimji Zaveri Ltd (TBZ) another noted jewellery retail chain based in India since 1864 took to franchising in 2015. The company presently has 37 showrooms (32 company owned and 5 franchise), for gold jewellery and diamond studded jewellery.
Jewellery Brands going the E-commerce way
Its true that E-commerce has been slow to make a significant entry into the gemstone and jewellery market. However many industry analysts believe online shopping is approaching a tipping point, beyond which it will gain significant momentum over the coming years. Forbes had predicted a doubling of the e-commerce jewellery market share (from 5-10 per cent) between 2016 and 2020. Jewellery e-shopping is now more sophisticated, competitive and user friendly than ever before.
Younger consumers are increasingly willing to shop online, and Gen Z and millennials represent two-thirds of all diamond purchases. Moreover, brands that have developed sophisticated e-commerce operations are increasingly popular with consumers.
Moreover Indian e-commerce has been the biggest beneficiary of the pandemic as people realised the convenience of online shopping during the lockdown period.
Keeping the trend in mind, Tanishq had launched a dedicated e-commerce site along with opening physical outlets which marked the start of the brand’s omni-channel strategy. The jewellery division under Titan Company Ltd that houses brands like Tanishq, Mia, Zoya and online-born Caratlane, is continuously innovating new online strategies.
PC Jeweller also started jewellery sales online. As informed by Balram Garg, “We have almost a decade of experience in e-commerce space. We are leveraging the latest developments in technology for managing our online store and we see a great potential for it in near future. We focus heavily on digital marketing through various channels like Facebook, Instagram and google digital advertising.”
Rising Government Support
In order to encourage the growth of the gems and jewelry sector, the Indian government is continuously coming up with various initiatives and plans. Another initiative in 2021 was that the base custom duty on gold and silver was cut from 12.5 per cent to 7.5 per cent. Additionally in 2021, the World Gold Council and the Gem and Jeweller Export Promotion Council (GJEPC) decided to collaborate to market gold jewellery in India. According to the terms of the agreement, both parties would support a multi-media marketing campaign aimed at increasing gold jewelry awareness, relevance, and acceptance among Indian consumers, particularly millennials and Generation Z. These factors are expected to further propel the growth of the gems and jewellery sector of India.
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