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The Retail Revolution
1stIndia Gold Conclave Chennai
19th July 2008
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Flow of presentation
Background of Indian jewellery Industry
Changes taking place within the Industry
Coping with these Changes
Gazing at the Future
Future requirements for the Industry
Some example from Tanishq
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How big is the jewelry market in India?
2.5
8.6
9.6
75
88
111.87
0 50 100 150
Rs Thousand Crores
Watch
Apparel
Telecom
Relative Size of Indian
Consumer Markets
Series1
Jewellery is amongst
the largest and
most broad based
consumer markets in
India
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Background
The Indian jewellery Industry is one of the largest domestically(and in the world) and has some unique characteristics
Recent Changes in the Lifestyle goods industry and the diamondindustry have created some opportunities and challenges
The family jeweler segment is the largest segment of themarket and hence most likely to be impacted by these changes
If the industry needs to initiate changes at the firm or Industrylevel , the leaders need to agree on the challenges facing them
and the strategies needed to cope with them
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Indian Jewellery Industry
Market Size
Fourth largest consumer market in the world
Jewellery Market Size: Rs75,000 crores
Diamond jewellery: Rs10,000 crores
Largest market in terms of volume of gold
India accounts for more than 22% of the total gold
used for jewellery purposes
Growth
Gold jewellery Market Growth: 8-10%
Diamond jewellery Market:18%-20%
2006 data
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Per Capita consumption
115
170
123
12 10
0
2040
60
80
100
120
140160
180
Per Capita consumption in US $
Italy
USA
Japan
China
India
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Whats Changed
Gold as a share of wallet is decreasing in the younger
generation. Traditional jewellery is still the dominant design
pattern while contemporary styles are emerging fast
Although guarantee of the retailer is important in ascertainingquality, hallmarking is gaining acceptance
In the past choice of stores used to be 1-2 stores, but
customers now look at 4-5 stores for range and choice of
jewellery
The main occasions to buy are still marriage and festivals
Customers in the high value category are becoming more
informed because of exposure to media and fashion trends
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Organised retail making a dentRetail Segments Value- Rs CroresFood & Grocery 743900
Clothing,Textiles & Fashion accessories 113500
Jewellery 60200
Catering Ser ices (F&B) 57000
ConsumerDurables, Home appliances/Equipments 48100
Pharmacetuicals 42200Furnishings, utensils, furniture - Home & Office 40650
Entertainment 38000
obile Handsets accessories & ser ices 21650
Footwear 13750
Books,Music & Gifts 13300Watches 3950Health & Beauty care ser ices 3800
TOTAL 1200000
ndian Retail Market -2006
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Share ofOrganised retail in the market
Despite its large size jewellery retail is unorganised and veryfragmented
95%
5%
2005
Famil
je elleani e
Re aile
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US Retail Scenario
4%
20%
23%
53%
7%
20%
24%
49%
9%
20%
22%
49%
1987 1992 2004
ndependen s
Disc uns res
eweller
Chain s resN n s reRe ailers
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Organised retail making a dent
% Organised Retail
0%
10%
20%
30%
40%
50%
% Organised Retail
% Organised Retail 46% 38% 19% 13% 11% 10% 9% 8% 7% 11%
Watch
es
Footw
ear
Clothin
g,Texti
Books,
Music
Health
&
Consu
mer
Furnis
hings,
Mobile
Hands
Caterin
gOthers
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Industry standards are set
Diamond Trading Company (DTC)
World Gold Council (WGC)
Platinum Guild International (PGI)
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How they aid organised retail
Educating the customer about different kinds of precious metals,stones and jewellery as a whole
Creating Brand pull in customers
Promoting jewellery by increasing usage and appeal occasions
Putting a good vendor base to ensure continuous supply of productsand better service for the customer
Positioning jewellery as a lifestyle product rather than a traditionalproduct
Responsible for the emergence of a jewellery industry value chain
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Value chain redefined
Merchandising
&Design
Manufacturing Marketing Retail
Unlik di i n l w l in w d ingl wnn g u u , l f i liz i n ging in indu y
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Design Differentiation becoming the USP
Traditional industry relied on Karigar skills
Now, More emphasis laid on formal design training in jewelry
category especially by the organized players
Design Training in NIFT, SNDT,GIA, JDTI
Players like Tanishq, Ganjam, TBZ have specialized DesignStudios which have won laurels at international forums as well
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Manufacturing
Hallmarking - Standardization in Material quality is fast becoming a pre
requisite especially for Gold jewelry
In case of diamonds, Increased awareness of diamond quality ( 4 Cs)
Special EOU in hubs like Mumbai (SEEPZ) which supply to stores acrossthe world but face stiff competition from Hong Kong and China
Platinum has few manufacturers in the country in comparison to Gold
and Diamonds
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Marketing
Creating Newer opportunities to buy jewelry
Festivals like Akshay Tritiya, Occasions like Mothers Day,
RakshaBandhan, Valentines Day etc
Fashion campaigns in vogue- Tanishqs Fashion Earrings, Colors of
royalty
Creating a desire in the Indian Woman to buy jewelry for its design
value/for accesorisation/ to make a statement about her personality.
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RETAIL
Retail
Seduce the consumer in the retail space as competition is not
only within jewelry category but categories like electronics,
wellness services and luxury items Evolve a distinct retail identity in terms of product,
store look and customer experience
Trend of the speciality Jewellery markets/ malls
Increasing traditional players renovating/refurbishing storespaces
Concept of strong retail brand in jewellery industry gaining
strength
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What else is changing?
Disposable income rising faster as the economy is growing
Rs One Crore Per Anum Income households among the fastest
growing population segment in the country
This Trend also visible further down the pyramid
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Mapping of Indias Income classes
Classes 1994-95 1999-00 2006-07
Rich
(above 2.15 lac)
1million
Households
3 million
Households
6 million
Households
Consuming
(0.45 2.15) lac
29 million
Households
66 million
Households
75 million
Households
Climbers
(0.22-0.45) lac
48 million
Households
66 million
Households
78 milion
Households
Aspirants
(0.16-0.22) lac
48 million
Households
32 million
Households
33 million
Households
Destitute
Less than 0.16 lac
32 million
Households
24 million
Households
17 million
Households
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Projected Growth
0
20000
4000060000
80000
100000
120000
140000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Indian jewellery market is expected to grow at an overall rate of 8%
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Entry of strong players into the jewelleryindustry
Reliance
Big Bazaar
Giant
Subiksha
Metro
Bombay stores
Big Bazaar has already launched a gold section
Departmental stores like Shoppers Stop have jewellery outlets
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New Channels of Distribution
Direct selling
Modicare launching jewellery sales
Pantaloon acquiring a 10% stake in Goldiam
E-retailing
Fabmall/Gold Palace starting e-retailing of jewellery
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Transition
Different stages-Different strategies
Strategies
Jewellery is used
asastatussy b l Jewelelry as little
differentiati n and
ad ta eto
strategy
Local artnershi s
are i ortanttosucceed
isks
Lossofcustomer
trust
Low customerprotection
isks
Unclearmarket
segmentation
Unclearoffering
Lossofcustomer
trust
Strategies
Costcutting measures
adopted by most
jewellers Managementofthe
distribution chain
Alliances
Risks
Industry Restructuring Lossofcustomertrust
Strategies
Creation ofa
local brand Useof
innovative
distribution
channels
Local alliances
Fragmented
Consolidated
Mature
Time
Market
maturity
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Lessons to learn from apparel
Traditionally dominated by small
and family run stores
Strictly madetoorder
Fashion elementand design
contentminimal
Emergenceof big brandsand retail
outlets, tremendouscompetition
Increasing preference forready-madegarments, withrise in urbanization
Increasing importanceofFashion, style
and brand management
FactFiles:
Second largestorganized
sector in thecountry
TotalApparel industry
worthRs 1000 billion with
readymade garmentsworth 300 billion
ExportofReadymade
apparel constitute 46%oftotal
Percentageofapparels
sold throughsingle largeformatstores is 44% Indiaviewed asahot
destination forglobal
retailers
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The rapid growth of the organized retail market was unforeseen in theapparel space, and this is predicted to continue growing the market asa whole
An industry that believed that individual customization that a familytailor offered was irreplaceable, found customers increasinglyamenable to picking up off the shelf alternatives, now available in awide range of design and size
Primarily driven by people who found they had a lucrative domesticmarket when fighting pitched battles in the export market
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What do we need ?Expertise to be developed in..
Areas Success factors
Marketing
and
Brand building
Capabilities
Identification of valuable target
segment and effective positioning
Communication of differentiating factors
Consistent communication
Strong customer relationship management
New Product
Development
Strong design capabilities
Strong manufacturing support
Strong product planning process
Strong IT integration
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What do we need?Expertise to be developed in..
Areas Success factor
Distribution
Management
Strong retail management capabilities
Strong franchisee management capabilities
New avenues, e-tailing, mail order catalogue Strong IT integration
Supply -Chain
Management
Efficient sourcing and procurement
Efficient production & inventory management
Efficient logistics management
Service Quality Store staff reliability, responsiveness,
assurances, empathy
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Therefore
As the retail boom has arrived in the country, jewelry industry
cannot ignore it.
Will have to take giant steps so that can meet customer
expectations and offer value to the customer which is higher
than the material cost they pay for
Separation of the ownership from the management in the
jewelry industry
Need for more specialized people in each of the above
mentioned fields
Immense opportunities for young professionals from varying
fields
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The Tanishq StoryBuilding a successful retail brand
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Retail has traditionally been regarded as a sales and
distribution channel
Brands - inFMCG, durables, fashion categories like
to dwell on their extensive retail distribution reach
But, truly speaking, retail can impact the minds and
hearts of customers as strongly as it can reach the
vicinity of their homes
Because retail can make the magic of brands come
alive, in an environment that consumers can
experience, feel and touch
Retail can deliver the brand value proposition to
consumers in a compelling yet cost-effective manner
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Products need to tell a story- RetailShowcase
Retail space can showcase product far more brilliantly than
advertising ever can
sexy product displays, which completely mesh with brand
personality Attractive store windows
the alluring play of colour and lights
key product features can be emphasized, often dramatically
relatively long consumer attention span
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BRAND is what the customer sees
Retail space is uniquely positioned to surround the customers
senses with multiple facets of the brands personality
Can deliver visual, audio and olfactory cues
in-store visual merchandising
music that brings alive the moods of the brand
online audiovisuals that inform, excite & stimulate
in many cases, even the fragrances and smells that define
the brand and draw the consumer
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Communication with the customer
Unlike most advertising, retail space permits an interactive process of
communication about brand
- An effective salesperson can communicate brand in a clear,
compelling, customized manner
- Catalogs, take-one leaflets, online dialogue counters in the store
can further enhance this process of speaking to the customer about
key brand benefits
- Within the retail space, the customer is captive audience as he
listens to you and experiences your brand
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Captivate
The first three Ss (showcasing, surround effect and speaking
effectively) make the captivating magic of the brand come alive
This is truly the moment of truth for every retail brand the point of
seduction, leading to consumer choice & purchase
Magic, by its very nature, cannot be captured in words but we see it
in our showrooms, 365 days a year
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Unanimity in the story- Paheli
Communicate to create brand association and generate
interest
TVC
Print and Magazine Instore
Outdoor
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BRAND PROPOSITION- NEW TALES OFTRADITION
Communicating your brand values and your unique
proposition to the customer.
Synergy between your products, store,advertising.
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CHALLENGE NORMS
Challenge existing norms and wake customers
Taking a strong stance in our campaigns
Education into why customers should buy into organised
retail.
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Own an Activity- Anmol Saheli
Seeing ourselves as a complete wedding jeweller was one
proposition but communicating the same to the right TG
another task.
Anmol Saheli- Emotional Bonds talked about rather thanhardselling jewellery.
Hit the right cord with the right TG and overnight walkins
grew and sales as a factor of this.
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The best way to predict our future
is to invent it