Titan, the watch-maker with the Midas touch, is branching out into a multifaceted corporation
TITAN Industries definitely doesn't believe in resting on its laurels. Over the next two years, India's premier watch maker will metamorphose into a multifaceted corporation straddling areas as diverse as high-precision components manufacture to premium retailing.
This month, Titan will announce a new joint venture company that will retail premium global brands like Rolex and Omega in India. Also on the launch pad is the new Titan range of premium table clocks. Soon, Timex will be sold through its own network of stores. The Tanishq range of jewellery was launched in February.
The last couple of years saw the Titan umbrella unfurling into a multibrand entity with the Timex, Tanishq and Insignia brands of watches. At corporate headquarters, executives say the new emphasis will be on retailing rather than on timepieces. Managing Director Xerxes Desai sees Titan's corporate objectives as turning into a truly global brand in watches, clocks and jewellery and also to sell select international watch, clock and jewellery brands in India. Titan is also considering producing micro-precision engineering products for automobile and telecom industries. Says Desai: "While timepieces are and will remain Titan's core business, it is simultaneously looking at other prestigious personal use products." Like fine crystal, cutlery, leather ware, premium quality scarves and ties and writing instruments. This year, Titan expects a Rs 370 crore turnover, with exports touching, roughly, $10 million.
With Titan's business priorities changing dramatically, Tanishq provides a good example of how the company uses its core competencies to extend its business. The venture into gold—which in India has always had associations with smuggling, handicrafts, impurity and family traditions—was born out of the need to make premium watches. "The jewellery business was conceived by logically extending Titan's precision engineering and inhouse design skills into a huge market (estimated at Rs 26,000 crore) where there was no single national player offering what a brand is supposed to offer: assured quality,'' says Group Manager David Saldanha.
Similarly, manufacturing table clocks was a simple line extension. The company has launched a whole range of clocks—from alarm clocks to the more avant garde designs. Available in the south and east, table clocks netted Rs 3 crore in sales this year. Titan's extensive retail and customer support network sparked off the idea to give a piggyback ride to global brands looking at India. After all, from Titan's point of view, it's a case of "if you can't stop 'em, join 'em". And Titan's expertise in store management led to the concept of launching a new chain of stores which would display some of the world's most exclusive brands.
Says Titan's General Manager (Sales) Bijou Kurien: "Taken singly, these brands won't be able to muster enough sales to support a store. But jointly, they can achieve the necessary sales level." A logical extension to offering retail expertise was having Titan employees trained in after-sales support. Thus, Rolex owners will soon be able to get their watches serviced by Titan in India.
Titan's premium look has already been partly displayed with the new gem-studded Tan-ishq range of jewellery—an extension of the Tanishq brand watches already in the market.
(Titan sold Rs 15 crore worth of gold and studded watches last year.) Saldanha, who heads the project, says the target this year is around Rs 125 crore, of which 10-15 per cent will come through jewellery watches.
Beginning May, Titan will open a range of 50 premium jewellery stores in 19 cities, making Tanishq the first truly national brand. Apart from these upmarket boutiques, Tanishq will be available in 75 stores in India. Gold glitters and Tanishq, with a price premium of 25-30 per cent over the friendly neighbourhood jeweller, is definitely targeted at the glitterati. With an average price of Rs 18,000 per piece, Saldanha reckons that each store will stock around Rs 10-15 crore of jewellery, which explains why Titan has pegged Tanishq's fifth year sales target at Rs 450 crore.
The Tanishq chain of stores has been created to exemplify Titan's new objective of selling premium products to premium customers. "The store is the brand," says Saldanha. The store design, exteriors and interiors, have all been packaged so as to uplift the Tanishq image and attract the top 2 per cent of society. Many of the stores will be franchised, but Titan alone has spent nearly Rs 7.5 crore on land and interiors.
The jewellery itself was a whole new ball game for Titan—it took a little longer than planned to reach the market. Saldanha claims the jewellery will be "something never seen before in India". Most of the designs, sourced from overseas, will be classical European styles as well as modern forms. There will be a few Indian themes also in the 1,000 designs on the anvil. Manufacturing is entirely inhouse, beginning from refining the stones. Last year, the jewellery factory—a Rs 60 crore project—consumed 234 kg of gold and 3,986 carats of diamonds. The main objective, says Saldanha, is to give the customer guaranteed quality.
This year is going to be crucial to Titan's experiment in branding gold. For having rejected the traditional methods of gold pricing—weight plus labour charges—in favour of charging for brand values, Titan has limited itself to the upmarket customer.
A major learning experience in retailing has been Titania—the name of the chain of eight upmarket stores (in Karnataka only) created by Titan to sell its entire range under one roof—a watch boutique of sorts where customers can browse through all Timex and Titan brands. The interiors, the employee dress code, the packaging—are all meant to reinforce Titan's brand values.
Unfortunately, the experiment hasn't worked too well. The idea behind Titania, according to Kurien, was to see whether Titan could create a new identity for a Titan store, what customer perceptions would be, and whether sales would increase. Everything almost fell in place: the Titania image worked, customers were happy, sales increased. Unfortunately, the stores were limited in terms of display space. It became physically impossible to display the 400 Timex watches and 800 Titan watches, the Tanishq range and table clocks.
Titan's plans now include setting up three new chains. According to Kurien, the Timex range has reached a sufficiently high level of sales—Timex sold almost Rs 90 crore worth of watches this year—to warrant a separate retail chain of its own. Another major reason for Timex to venture out on its own is the difference in its customer profile. According to Kurien, the average Timex customer is a teenager whose parents are Titan buyers. Thus, the stores will be designed to attract a different set of buyers. The Timex chain will appear in eight metros this year, leaving the Titan stores to sell the Titan range along with the European collection, Insignia.
Titan is more concerned with setting up the global watch brands chain, which calls for some major real estate investment. Says Kurien: "One store in Delhi will cost us around Rs 2 crore to buy and Rs 20 lakh per annum to maintain." With real estate investments high, Titan is negotiating a joint venture with its Swiss partners.
With growth rates in the watch market falling, Titan hopes the new portfolio of jewellery and clocks will have as great an impact on the bottomline as they do on the shelves. After all, selling premium products to premium customers at premium prices should result, logically, in a premium balance-sheet.