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Jewels get a makeover

Insurance professional Swapna Bhattacharya is always well turned out, whether at her Mumbai office or at social gatherings. Anita Sharan reports. Growth by design

business Updated: Apr 02, 2012 02:03 IST
Anita Sharan

Insurance professional Swapna Bhattacharya is always well turned out, whether at her Mumbai office or at social gatherings.

Jewellery is an important part of her get-up. "I’ve completely switched to branded jewellery. Great designs apart, whenhttp://www.hindustantimes.com/Images/HTEditImages/Images/02-04-biz-05.jpg I exchange some of my jewellery every three years or so, the branded shop from where I’d bought them adjusts the full value of the gold or diamonds into the exchange," she said. "Thanks to hallmarking, the family jeweller is no longer ready to give me the full gold value in my exchange request, leaving me wondering at the authenticity of what I’d bought from him."

Brands such as Tanishq, Gitanjali and several others are targeting working women like Bhattacharya in their growth story. “There are five million working women in India, an attractive target for branded jewellery,” said Sandeep Kulhalli, vice president, Tanishq.

The Rs 11,000 crore organised and branded jewellery market is finding urban consumers beginning to opt for their products over the still dominant unorganised, unbranded jewellers. Although the organised/branded jewellery share of the overall market is 4%, the annual growth rate is 40%-plus.

Retail names such as Tribhuvandas Bhimji Zaveri (TBZ), PC Jewellers and others are quickly scaling up their presence across cities. The success of the Tata Group’s Tanishq, Gitanjali with its Gili and Asmi brands targeting young consumers, Reliance and others, indicates the potential for branded jewellery. Hardly surprising therefore, that De Beers is retailing its Forevermark solitaire diamonds in India, a market traditionally partial to gold.

“Whether it is a shop brand such as TBZ, or product brands such as Tanishq or Geetanjali, jewellers with a strong retail presence will increasingly do better,” said Mehul Choksi, chairman and managing director, Gitanjali.

Kulhalli observed: “Jewellery is a retailing and not a product business. You can’t put any branding on the product; the brand is a shop name, whether a TBZ or a Tanishq. With evolving consumers looking for better designs, convenience, transparency, the assurance of genuine jewellery and a better buying experience, it’s more about modern retailers versus traditional jewellers.”

“Going forward, more urban consumers will buy their jewellery from organised brands,” said Manoj Menon, senior analyst, Kotak Institutional Equity. He added that while gold still dominates, jewellers themselves are driving diamond demand, which delivers better margins, and consumers are responding well. However, putting a market share to branded jewellery over the next five years would depend on “how it outperforms gold growth” with the larger market of unbranded jewellery.

Spiralling gold prices did not dent the 13% growth in jewellery demand in 2011. Nor will the government’s budget proposals to increase customs duty on gold to 4% from 2%, impose 1% excise duty on unbranded precious jewellery, and demand identity proof (pan card) for cash purchases exceeding Rs 2 lakh, everyone agreed. However, they said, the paperwork required for the excise duty will be a massive bother, since manufacturing facilities are varied; and many retail outlets, including organised names, may be sourcing jewellery from multiple facilities.

While the proposals are still in hot debate, everyone agrees that the future will favour branded jewellery, as consumers drive the trend more strongly.