THERE’S a flurry of activity in the goldjewellery market as the results of the liberalisation of the Gold Act startbecoming tangible. Several players—most of them new to doing business in India—are giving finishing touchesto their new retailing outlets countrywide.
Intergold, one of the largest exporters of gold, is scoutingaround for personnel to man its swanky store in south Bombay; TribhovandasBhimji Zaveri (TBZ) is finalis-ing several outlets, in all probability toexclusively retail its new brand, Empress; Gitanjali Jewels, among the top fivediamond exporters and owners of the recently popularised Gili brand, are settingup their dedicated showroom. Titan has opened two luxurious boutiques in Madrasand Bangalore for its jewellery brand, Tanishq. To top it all, Group Beautiful,one of the the largest exporters of diamonds, is starting its boutiqueto retail international trendsetter, Tiffany’s. Other international brandslike Cartier and Chopard too are waiting in the wings.
What is revolutionary is that all this investment is beingmade to retail mainly 18-carat jewellery. The stress is on design, quality ofmanufacture and brand ownership rather than the quantum of gold. And pricesincorporate a hefty premium for these attributes. All this in a country where abuyer allots a price to a piece of gold jewellery based on weight and amore-or-less fixed labour cost. And in a predominantly 22 and 23-carat marketwhere a lesser caratage implies ‘less pure’ or ‘spoiled’ gold.
But the new breed is confident and means serious business.The Tiffany’s entire range of gold, silver and crystal will be available atinternational prices. Group Beautiful is absorbing the duties and licence costs. And plans to do so for the next three years,by when it expects the market to open up completely. Titan has put up a 1.35lakh sq ft built-up space for manufacturing and offers a choice of 1,000designs. Everyone is also investing substantially in showroom space.
Says Binit Bhatt, manager, advertising and marketing, TBZ:"Traditionally, Indians have bought gold as firewood rather than forornamentation." With other, better investment options available, buyingjew-ellery needn’t be like buying postal savings anymore. The 18-caratcategory accounts for more than 70 per cent of worldwide sales. Unlike 22-caratgold in which it is difficult to set precious stones, and is liable toscratches, dents and dulls easily, 18-carat gold can be finished impeccably.This makes it an ideal metal for jewellery.
Even then, to expect an Indian consumer to pay, say, Rs 4lakh for an 18-carat neckpiece weighing about 150 grams may be unimaginable. But the new marketers are convinced that itis not so very farfetched. For one, the new ranges are not being pitted againsttraditional jewellery. Says Rajesh Mehta, executive director, Group Beautiful:"The Indian will always first buy 22 to 24-carat jewellery." It will,instead, be positioned against upmarket lifestyle products which a consumer buysfor status, for aesthetics and for the sheer pleasure of it. "A paintingis, after all, not evaluated on the basis of the cost of paints andcanvas," explains a market observer. In any case, the Indian market—whichconsumes 450 tonnes of gold and Rs 1,000 crore worth of diamonds—has avoracious appetite for jewellery, quite in skew with the average income.
Comments Mehta of Group Beautiful: "Once people startunderstanding fashion, the market will mature." Eighteen-carat jewellerywill sell over and above the 22-carat jewellery, not in its place.
The companyexpects people to start with buying small items to get introduced to the qualityand designs it talks of. And prices aren’t as astronomical as people believe,he says. The bulk of the Tiffany range is between Rs 10,000 and Rs 25,000.Worldwide, the average price of a Tiffany product is the equivalent of Rs10,000. The Empress range is largely between Rs 1,000 and Rs 15,000 while aTanishq piece can be bought for Rs 3,000 upwards. Says Shailesh Sangani,managing director, Gitanjali Jewels: "We have consciously priced every itemunder Rs 16,000." Mehta expects most initial sales to be worth between Rs3,000 and Rs 7,000. The Indian brands claim that their markups will be muchlower than Tiffany’s and other international brands.
THE marketers are investingconsiderably in advertising and brand building. "We would eventually want to create a brandimage," says Bhatt, "such that consumers feel proud to wear thebrand." Each brand promises to be identified by its designs. Declares Bhatt:"When the same technology is available to everybody, the war will be foughton design and trust." While Tiffany’s is getting its tried-and-testedinternational range, Tanishq designs have a European leaning. Gili hasspecialised in small ‘sweet nothings’ but propped with a guarantee of18-carat gold and deluxe diamonds. Empress is incorporating non-Indian motifsprominently, a far cry from the traditional TBZ offering.
Ranges are being beefed up, particularly for men who have dismal options in ungainly rings and chains. TBZ will have"interesting" products which Bhatt is reluctant to reveal. Others aregoing to offer accessories like pens, diaries, photoframes, belt buckles,keychains and what-have-you besides the regular products. There will beconsiderable options in each category. Says Sangani, who is adding on a men’srange too: "Customers will look at these products as a serious option whenthere is a substantial range."
A great deal of effort has gone intodesigning retail outlets, the "public face of the company". You willno longer enter just a plain jewellery shop but a boutique. Customer-friendlystores will give the customer an opportunity to browse around, touch, feel andidentify what he or she may want to buy even at a later date. Personnel arebeing trained to attend to customers without making them feel pres-surised tobuy. The Empress stores are being consciously designed to keep at bay theawesomeness of the parent brand while retaining its values of trustworthinessand quality.
Everyone, in unison, is talking of the "buyingexperience". The first to practise it with fair amount of success was Giliwhich created a a ripple with promotions and free gifts. By audaciouslyretailing through departmental stores Sangani opened up a new market segment.Hectic promotions during Valentine’s Day defied all norms of festivalpromotions. Diamond-studded heart pendants and rings, fine chains sold like hotcakes. Sangani claims a sale every four minutes for those three days.Collegians, young executives and sexagenarians have all shopped, says Sangani.He is confident this has opened many doors. Affordable jewellery is fastbecoming a top-of-the-mind option for a gift or to spend a bonus. Consumers willsoon discover that jew-ellery can be got to match any lifestyle, occasion ortaste.
So while the conservatives shake their heads in disbelief,Mehta defines the response to Tiffany’s at the recent exhibition as"tremendous". He is, in fact, setting up a temporary retail counter ata leading hotel in Bombay to meet demand until the boutique is ready. Gili’sturnover in ’95-96 was Rs 8 crore. Sangani expects to double it this year.There are 35 Gili outlets in 12 cities. By the year-end there should be close toa 100. As most of the entrants are exporters of 18-carat jew-ellery, this is adiversification they were waiting for.
The initial response indicates the wait was worth it. And allthe players claim they are in no tearing hurry. How the marketers will be ableto convert consumer interest into real buys will finally decide their fate.
