CASE STUDY DIAMONDS ARE FOREVER THE BEGINNING Gitanjali Gems (a) Started buying rough diamonds,- Turnover : Rs. 4000 Crores cut and polish them- Well known in India and USA- Indian Brands : (b) Export them thru brokers and Nakshatra - Gili - Asmi sales offices in different countries- Doing Promising Business
DURING NINETIESIT STARTED MAKING JEWELLERY GITANJALI ‘S BUSINESS STRATEGYFOR THE LIKES OF TIFFANY,WAL-MART, TESCO AND SC PENNY (a) Relates to designing and manufacturing diamond jewellery inDuring 2006 : India, where the cost of doing so areIt bought Texas based Samuels lowJewellers – the 8th largest jewellerychain in USA with 100 stores across (b) Sell the finished goods in USA where the purchasing power & profit18 states margins are highDuring 2007 :Gitanjali bought Rogers Inc. with 44Stores across 11 states in USA
POINTS OF DIFFERENTIATION AND CUSTOMER ORIENTATIONS(a)2 decades long involvement (a) There is high level of with USA Jewellery market customer orientation in the which is unique in different USA, be it knowledge, ways technology, marketing or(b)It has been only a little over selling four years since Gitanjali (b) It does not exist for threw its hat in the USA diamond jewellery in India retail ring
MR. MEHUL CHOKSHI – MD OF GITANJALI GEMS WHO DEVELOPED DIRECT RETAILING IN USA CONSIDERS IT A MATURE MARKET Materials Management – Sourcing – Logistics & SCM – Inventory Management- Buying / Sourcing Rough Diamonds from De Beers / DTC ( 85% ) Monopoly earlier and Balance from others. However in recent years USSR’ s production has gone up and De Beers share of rough diamonds are now reducing in the global market. Hence sourcing has become now easy with cost of basic raw material going down increasing the profits.- Auction based buying – the basic raw material- Value being very high – Needs larger financial investments for rough diamonds and finished diamonds and also gold and jewellery alongwith insurance requirements- Plant and Machinery and its location to suit the costing and pricing (ie) feasibility and viablility - Either own land and building or on lease as per financial capacity and if 100 % Export Oriented then select a country and location for SEZ operations
Contd………………………. STRATEGY- If the sales dip it reduces working capital available with a jeweller to buy inventory- At the same time holding too much inventory for too long is also a drag- If a piece does not sell for long management decides to melt it and catches with trendy designs- In India, basic understanding of jewellery is good. Designers can forecast and understand different requirements of the market. Gitanjali Gems takes full advantage of it- In India Gold dominates jewellery sales that too much mostly for investment purposes. In USA Jewellery is mostly boght for fashion and diamonds account for 70% of Jewellery sales with the balance coming from Gold
Contd………………………..- Americans are matured customers as they have higher disposable incomes- A bridal ring is the largest selling jewellery item in the USA followed by fashion jewellery, solitaire and studs- Gitanjali Gems uses software to map customer behaviour, trends and manage customer relationship programmes.
MARKETING AND SELLING STRATEGY OF GITANJALI IN USA- Jewellery sellers in USA are big on direct marketing even online marketing- They send out catalogues and mailers to actual and potential buyers- An online catalogue is made available which, repeat customers can log on to using a password- Jewellery makers in India rely on a combination of print and TV Ads- About 35% of jewellery sales in USA takes place between thanks giving day- The 4th Thursday in November and christmas and 15% of on valentines day- Hence it is important for retailers to be on their toes during this period both in terms of designs and supplies
VARIOUS SCHEMES – PUSH AND PULL STRATEGIES- Gitanjali Gems used contests and freebies as an integral part of marketing programmes to lure customers- It used its marketing mechanism towards making the sale happen- It made available, easy finance and americans are only too happy availing it- A USA customer avails of a long credit period while purchasing jewellery- The street stores mostly see planned purchases but malls and department stores typically see impulse buying- In USA, retail stores like Tiffany are brands by themselves.- Gitanjali Gems has retail outlets at Tiffany and earns the goodwill of the store- It has to struggle less to win over the customers
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