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Indian Gold Jeweler Market: Consumption, market dynamics, and Growth Strategies

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In this presentation, we share a deep dive analysis of Indian Gold Jewelry market with insights on the market requirements, consumer purchasing trends, gender differences, expansion strategies that …

In this presentation, we share a deep dive analysis of Indian Gold Jewelry market with insights on the market requirements, consumer purchasing trends, gender differences, expansion strategies that may be pursued by both branded and unbranded jewelry players.

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  • 1. Browne & MohanIndian Gold Jeweler Market: Consumption, market dynamics,expansion and Growth Strategies V Usha Murthy, Assistant Consultant All images used in the report belong to their respective owners. © Browne & Mohan, 2013
  • 2. Golden facts….. India’s appetite does not take a hit even in worst economic times. India imported 800 tons, valued at $56 Bn gold in FY 2012-13. Gold is the third highest imported product after crude oil and capital goods. Gold also dictates a very lucrative parallel economy. Directorate of Revenue intelligence impounded around 200kg gold worth $15 Million in 2012 compared to $2.1 M in Fy2011. Many a wise men believe this may be the just the tip of a giant Iceberg beneath. On the brighter side, more than 50% of the gold jewelry manufactured in India is for wedding purposes. Most exports happen to primarily Indian diaspora living in Middle east, US, and Europe. Sources: World Gold Council, Ministry of Commerce and other reports © Browne & Mohan, 2013
  • 3. Region-wise gold consumption in India-2012350 320300 Consumption in Tonnes250 216200 176150 9610050 0 North South East West Sources: World Gold Council, Ministry of Commerce and other reportsDelhi, Punjab, Haryana contribute 65% of North sales.Junagadh, Ahmedabad, Mathura, Rajkot, Mumbai, Pune are the major consumption centers ofWestern India.Kolkatta, Chhattisgarh, and Raipur major consumption centers in Eastern India.In FY2012, 63% of the demand comes from tier-2 cities and consumers recycled about 100 tonsof gold. © Browne & Mohan, 2013
  • 4. The big fat Indian wedding India witnesses approximately 10 Million weddings in an year. Gold is a compulsory element in all the weddings. $528 Million or around 380 tons get consumed by weddings alone! © Browne & Mohan, 2013
  • 5. Average Spending 250000 200000 200000 150000 100000 100000 100000 50000 50000 50000 50000 25000 25000 25000 0 0 0 0.5 to 5 yrs 5 yrs to 12 yrs 12 yrs to 18 yrs 18 yrs to 30 yrs 30 yrs to 60 yrs 60+ yrs Male FemaleFemale0.5 to 5 years – Piercing ear, Gold bracelet(light weight), Finger ring, Chain5yrs-12 yrs- Ear-rings12 yrs -18 yrs – Ear-rings, chains, pendants18 yrs – 30 yrs (Marriage) – Bangles, Necklace, Chains, Finger ring, Mangalsutra, Ear-ring, Nose-ring35 yrs + - Daily wear bangles, chains, ear-rings, Studs, finger ringsMale0.5 yrs to 5 yrs – Ear piercing, Bracelet, chain, finger ring5 yrs – 18 yrs – Chain, finger ring18 yrs – 30 yrs (Marriage) – Chain, finger ring, bracelet30+ years – Finger ring, chain, bracelet © Browne & Mohan, 2013
  • 6. Gold consumption Life cycle - FemaleStage 1 – 0.5 to 5 years – Piercing ear, Gold bracelet(lightweight), Finger ring, Chain (Rs 1 to 1.5 lakh)Stage 2 – 5yrs-12 yrs- Ear-rings (a few thousands of rupees)Stage 3 – 12 yrs -18 yrs – Ear-rings, chains, pendants(Approx Rs 50 thousand)Stage 4 – 18 yrs – 30 yrs (Marriage) – Bangles, Necklace,Chains, Finger ring, Mangalsutra, Ear-ring, Nose-ring ( uptoRs 2 lakhs) Sources: Browne & MohanStage 5 – 35 yrs + - Daily wear bangles, chains, ear-rings,Studs, finger rings (a few thousands every few years) © Browne & Mohan, 2013
  • 7. Gold consumption Life cycle - MaleStage 1: 0.5 yrs to 5 yrs – Ear piercing, Bracelet, chain,finger ring (upto Rs 1-1.5 lakh)Stage 2: 5 yrs – 18 yrs – Chain, finger ring (a fewthousands)Stage 3: 18 yrs – 30 yrs (Marriage) – Chain, finger ring,bracelet (Rs 1 to 1.5 lakh )Stage 4: 30+ years – Finger ring, chain, bracelet ( not awide spread practice in India for men to purchase gold Sources: Browne & Mohanjewelry after a certain age) © Browne & Mohan, 2013
  • 8. Design preference90% 78%80%70%60%50% 43%40% 36%30% 21%20%10%0% Plain gold jewelry with Plain gold jewelry with Gold jewelry with stones Gold with ethnic/traditional design contemporary designs Platinum/pearl/diamond Sources: World Gold Council, Browne & Mohan Plain gold jewelry with traditional designs is consumed the highest in South India, Kolkata, Delhi and Pune, while contemporary designs are preferred by the working women and youngsters. Gold jewelry with pearl combination is preferred in Hyderabad while Jaipur and people in Mumbai prefer gold and diamond combination. © Browne & Mohan, 2013
  • 9. Popular designs across India Consumer section Preference PuritySouth India (TN, AP, Kerala, Motifs of Mango, rice, grains, 22 KKarnataka) melon, cucumber seeds, antique (Interpretation of religious symbols & gods). Gold along with semi- precious stones (signet stones, ruby emerald), diamond, pearls.Delhi, Punjab, Amristar, UP Gold along with diamonds & 22K, 18K stones. Sindhis prefer rhodium and gold combination.Rajasthan Deep enamel + wax (meenakari) 14K, 16k, 18K (moving towards 22K)Gujarat Kundan, Chakri 22 KWest Bengal Gold along with Light enamel 22 K (meenakari), Filigree © Browne & Mohan, 2013
  • 10. Gold jewelry Demand60% 54%50%40% 36% 35% 32%30%20%10% 0% Finger Rings Ear-rings (Studs and Chains Bangles (for daily wear hangings) and Occasional wear)20% 17% Sources: Browne & Mohan 15%15% 10%10% 5%5%0% Necklace Pendants Bracelet (Chain form and Gold jewelry set bangle form) (Necklace & earrings) Sources: World Gold Council, Ministry of Commerce and other reports © Browne & Mohan, 2013
  • 11. Gold jewelry purchase pattern 100% 95% 80% 80% 65% 60% 60% 40% 40% 22% 15% 20% 0% Wedding Festivals Availability of Investment Baby Birth Anniversaries No specific (Akshaya surplus reason tritiya, money Sources: Browne & Mohan dhanteras) Decision makers/influencers are women in the age group of 40-60 yrs when it comes to bulk buying for weddings. (3-5 lakhs). For a girl child, buying and storing gold jewelry for her marriage begins at young age. Atleast once in 5 years, the family buys a gold ornament for the girl. Men’s suggestions have a string influence on multiple-item purchases. For any bulk purchase (wedding) a minimum of three and a maximum of six people are involved. Men above 60 years are buying to gift their children and mostly buy gold coins, finger rings, ear rings etc. Their association with store experience is highest amongst all buyers. © Browne & Mohan, 2013
  • 12. Gold Jewelry: Buyer insights.. Age group Decision Makers Decision Influencers For Kids and teenagers Parents In a joint family, elders act as decision influencers For unmarried Working women Self Friends, colleagues, Mother For married women and men Self Spouse, In-laws (for women), Mother(sometimes for the woman) For Marriage Self (25%) Parents, Older siblings and relatives - (75%) For Women and Men (30 + and Self (75%) In-laws (for women), Spouse above) Sources: Browne & Mohan Average time spent by a genuine buyer – 2-3 hours in the jewelry store. 36% make more than one item purchase. 18% repair or rework brings the customer to the store again!. When only with friends, a women’s purchase is not more than Rs. 10,000 (light weight, contemporary jewelry for the working women and students are bought). Women are the major investors into gold chit funds (Approx Rs 1000 per month) and 96% of them buy a gold accessory from the same store after the term. Sources: Browne & Mohan © Browne & Mohan, 2013
  • 13. Marketing vehicles 80% 75% 60% 55% 40% 35% 20% 15% 15% 0% Print Tv/radio Word of Mouth Banners &Posters Websites (Newspaper/Magazine) Sources: Browne & Mohan Women in the age group of 18-35 are used to promote 95% of the jewelry ads in Print, electronic media, banners and websites. Male actors help in strong brand association. Combination of couples used during specific occasions like Diwali, Valentine’s day have an higher appeal. Akshaya Tritiya, Dhanteras, Karva chauth creates hedonic demand. © Browne & Mohan, 2013
  • 14. Economics of Indian Jewelry storesStore size Investment ROIStand alone 150 Sq 20 lakhs 19%MtMedium store format 400 – 500 lakhs 21%(Gold + Silver), 4000Sq ftLarge, high street, 800-1250 lakhs 20%multi strore (12,000+++ sq ft) Sources: Browne & Mohan © Browne & Mohan, 2013
  • 15. Reasons why people prefer a particular brand store100% 90% 80% 89% 70% 82% 60% 71% 70% 69% 67% 50% 56% 40% 30% 20% 10% 0% Purity of Gold Certified Brand Name Different Exchange location Facilities designs Sources: Browne & MohanLocation, Brand name and perceived purity of gold are three major reasons forcustomers choosing a particular store brand. © Browne & Mohan, 2013
  • 16. Reasons why people prefer un-branded store 80% 70% 60% 69% 50% 56% 54% 40% 30% 38% 40% 20% 10% 0% Lack of awareness of Trust/Familiarity Less tax and making Customizable Repair/replace existing brands charges (design & Size) Sources: Browne & MohanFamilies prefer to go to a particular jeweler in their city because of familiarity andtrust built over a period and also the price discounts they get. Repair/modificationof the old jewelry is another reason customers prefer unbranded stores © Browne & Mohan, 2013
  • 17. How to improve same store sales? Brand the Occasions/create gold buying events : identify local and national cultural and religious events. Recreate the ambience. Life-stage events: Occasions that can be branded are the weddings, anniversaries, engagements, identify an uniqueness about a festival and brand it. Each state will have its own festivals. Such festivals can be identified and branded. Commune day: Target a particular ethnic population and create community events. Create a platform where donations and offerings of gold and silver can be made through the store. Reinforce the relationships – Spouses, siblings, parents, and friends are the best pool to target. Create offerings to gift each other, plan low investment accessories. Engage, Engage …: use every opportunity like founder’s day, store anniversary (25 years, 50 years), antique day, new fashion day to reach out to them. © Browne & Mohan, 2013
  • 18. Expansion StrategiesWe classify the expansion strategies into four broad categories. Category 1: Local geographic expansion, Jewelry only: most single-stores or cult stores expand into multiple stores in the same region. VBJ of Chennai. Category 2: Pan-state or Pan-India expansion, Jewelry only: from single stores in a city, many chain expand to closer geographic markets or markets with home client preferences. For example, Bhima Jewelers expansion into Bangalore and later parts of Kerala or Khazana Jewelry expansion into Pondichery or SRS Jewells expansions into Mumbai and Delhi markets. Strategy of Shubh and other brands can also be adopted to bring together single store brands to give economies of scale. Category 3: Expansion into Garments, lifestyle and accessories: Kalyan, Saravana Stores and The Chennai Silks (TCS) have successfully managed the complementarity between gold and high end Silk and other garments. Category 5: Expansion into unrelated business (: GRT, TBZ, Sri Lakshmi Jewelers, etc © Browne & Mohan, 2013
  • 19. Growth Strategies Existing products, New Markets New Products, New Markets Navrathan, PCJ, Bhima ( expansion Tanishq, GRT, Joy Alukkas, TBZM New primarily in metros and tier-2 cities) (Diversified into Hospitality, Education, Real estate, Malls, Lifestyle, Money MarketsA exchange) Expanded locally and internationally.R Unexplored areas: Jewelers getting into Safety Locker business.K Existing Products, Existing New Products, Existing MarketsE Markets Existing Titan (Fasttrak) Sharadha Jewelers (Presence only inT Markets Mysore) Khadim’s (traditionally into footwear industry, later moved into JewelryS business) Existing products New Products PRODUCTS OR SERVICES © Browne & Mohan, 2013
  • 20. Growth StrategiesHigh Pawn & Banking services Safe deposit AA Class lockers (with HVAC, CCTV) Innovation Men’s accessories Wedding Garments, Gifts & Hospitality, Education, Real Accessories, EstateLow Related Unrelated Diversification © Browne & Mohan, 2013
  • 21. Growth options Safety deposit lockers seem to meet the security concerns of customers in major cities. Customers prefer gold jewelers with good reputation and with backward linkages into semi-banking areas. Wedding related garments and accessories are major opportunity for traditional and single store jewelers to expand. Multi-ethnic silk sarees is the most preferred choice of customers. Men fashions, currently underserved, has huge potential to grow. Men only, store- in-store, is a novelty that is waiting to happen. © Browne & Mohan, 2013
  • 22. Thank YouFor any queries, please contact :Srinivas Sawkar157/A, II floor, 10th A MainJayanagar, 1st BlockBangalore. 560011PH: 91-80-2656 5164, 40951170ssawkar@browneandmohan.com 22