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The ultimate project on Jewellery

  1. 1. 2013-2014 Guide to the Jewellery Market in India December 2013 Equity Communications Diamond Market Specialists
  2. 2. Methodology We use secondary data for our research. We mine raw data going back at least forty years in our analysis and this data and information is extremely useful in our work. These are some of the sources we mine: • International statistics data provided by the OECD, IMF, various departments of the United Nations • International statistics data provided by USA government departments such as the Bureau of Economic Analysis and Federal Reserve Banks • International statistics data provided by EuroStat • National statistics offices in China, Hong Kong, India, USA, Japan, Switzerland, Zimbabwe, Australia, UK • Proprietary research by leading global financial institutions such as Goldman Sachs, Amundi, Nomura, Credit Suisse and JP Morgan • Proprietary research by leading regional financial institutions and brokerage firms in China, Hong Kong, Japan and India • Industry promotion bodies such as the world Gold Council and the Silver Institute • Annual reports and investor presentations by a core group of 150 public companies countries from India, Hong Kong, China, Europe, USA, Australia, Canada, South Africa, South East Asia and Zimbabwe. Thescompanies operate in various industries including the diamond industry, luxury goods industry, precious jewellery retailing industry and general retailing • Earnings call transcripts which are extremely useful • Industry trade publications • International and regional financial news organisations Nevertheless, analysis of data and trends is an art. For the most part, our researchers at Equity Communications are our greatest asset. In the following pages, you will discover our views on the consumption of precious jewellery in India as well as discover our ideas on the likely direction of such consumption in the future. You will also get to find out why we selected India as the most promising market for precious jewellery for many years to come. For our purposes, we define precious jewellery as jewellery pieces made of gold, platinum or silver, in their pure form or combined with other lesser metals like copper. Such jewellery pieces can be in plain form or gemset precious jewellery. In the gemset category, this report provides extended study of polished diamonds consumption in India. T.diamondshades.com
  3. 3. Acknowledgements and Disclaimers Acknowledgements 2013. 2013-2014 Guide to the Jewellery Market in India is based on information available up to the end of October 2013 for the most part. 2014 Guide to the Jewellery Market in India is based on research by the Diamond Indus y Research Team at Equity Communications: Tinashe Takafurna, Gerald Manyengavana, Musafiri Chisaka and Fred Divine. Please Note The views expressed herein are solely those of Equity Communications as of the date of this report and are subject to change without notice. Data Tables, Survey Results and Financials provided in this report are not intended, nor implied, to be a substitute for the professional advice you would receive from a qualified accountant, attorney or financial advisor. Always seek the advice of an accountant, attorney or financial advisor with any questions you may have regarding the decisions you undertake as a result of reviewing the information contained herein. Nothing in this report should be construed as either investment advice or legal opinion. General Disclaimer This document is produced and circulated for general informational and educational purposes only. It is provided by Equity Communications. Equity Communications research utilizes data and information from public, private and internal sources. While we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, or suitability of this publication. The information and analysis contained in this publication has been compiled or arrived at from sources believed to be reliable but Equity Communications does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof. Furthermore, the material contained herewith has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient or organisation. It is not to be construed as a solicitation or an offer to buy or sell any commodities, securities or related financial instruments. For more information, please visit h t W / - . d i a m o n d s h a d e s . c o m / C Copyright 2013, Equity Communications Private Limited, ALL RIGHTS RESERVED. For more information please contact: Tinashe Talafuma Head of Research tinashe. takafumac:diamondshades. com N Iv.diamondshades.com
  4. 4. Table of Contents 2013-2014 Guide to the Jewellery Market in India by Tinashe Takafuma Summary Local Economy Demographics Market Profile Appendix page 5 page 7 page 9 page 1 2 page 30 Equity Communications Diamond Market Specialists T.diamondshades.com
  5. 5. India Nomilial GDP 1980-2018 IIldia Real GDP Grciwwth rate 19 liidia Real GDP and CPI Inflation 2000-2018 11idia's Total Wealth 20 GO-2013 80-2018 11idia GDP per Capita 1980-2018 1ndia' s Wealth Ir er Adult 2000-201 1iidia 3 ' Population Projections for liidia 2000-203G t)rbanilatic}ii Prospects for liidia 199G-2030 S Adult Wealth Pattern 2010-2013 Adult Population for IIldia 2000-2013 Crude Birth Rite fc:r India 19 Population Below 15 years (From 25 }ears ago to present) Total Fertility I ite for India 1980-2030 80-2030 Age at first Marriage for Females limlilciy`ment Grciwwth fc:r India 1990-2013 Labour Productivity Grci'r Retail Sales of Precious ,Jeweller th for India 1990-2013 Private C iiisumptioii Grciwth for India 2006-2013 Indian Rupee Cross-rates 2003-2013 v Gold and Diamond Demand by Region 2002-2012 Retail Sales of Gold ,Jewellery in India 2002-2012 Gold,Jewellery~ Demaiid'1'rends iii India 2003-2013 Gold Price in India Rupees and US$ 1993-2013 Retail Sales of Diamond ,Jew'eller in India 2002-2012 Diamond ,Jewellery- Demand by Region Diamond ,Jeweller - Market Share of Sales in India C(:insuiripticlii Bretikdc wn for Diamond ,Jeweller in India Market Share; Organized Retail versus Informal 2006-2016 Quarterly Gold Demand for,Je vellery in India 2010-2013 Quarterly Retail Sales of Gold ,Je vellery in India 2012-2013 2013 Retail Sales of Precious ,Je vellery- iii India (Rupees) 2013 Retail Sales of Precious ,Je vellery- iii India (US$) Titan Industries ,Je'vellerv Division 'Para Jewels 'friblicivandti_s RliiInji Zaveri ('I'BZ) Re enue Gr(mth (selected retailers) page 12 page 12 page 14 page 14 page 15 page 1( page 17 page 17 page 17 page 18 page 20 page 23 page 23 page 23 page 30 page 32 page 33 page T.diamondshades.com page 7 }age 7 page 7 page 7 page 8 page 8 page 8 page 9 page 9 page 9 page 10 page 10 page 10 page 10 page 11 page 11 page 11 page 11
  6. 6. India: Summary of Jewellery Market in 2013-2014 India is currently number t TO in gold jewellery consumption by p jewellery consumption by volume and number one in diamond jewellery consumption by volume. The lume, number four in platinum country will remain the most important market for precious jewellery in terms of potential for mmiy years to come, For one, demand for precious jewellery is already formidable because of strong cultural traditions and yet more than 90% of adults in India possess wealth valued below U S$10,000. With further economic growth, a large number of Indians will move to higher wealth e n d s and this will lead to an acceleration of precious jewellery consumption. However, that is a story for the future, In the present, consumption of precious jewellery in India gained momentum in the aftermath of the Global Financial Crisis as Indians rode the wave of gold price inflation, encouraged by stronger economic growth and lower inflation. Consumption of precious jewellery subsequently lost momentum when the situation reversed. Economic growth is now weaker and Indian consumers are currently battling higher inflation. Retail sales of gold jewellery are forecast to decrease by 4% to 1,763 billion rupees (US$31_732 billion) in calendar year 2013. Demand for gold jewellery was strongest in the first half of the year, corresponding with the initial burst of lower gold prices. Volume demand for gold jewellery is forecast to increase by 4.3% to 575.2 tonnes in 2013. Consumer demand for gold was robust from the last quarter of 2012 culminating in even stronger buying in the second quarter of 2013, following massive declines in the price of gold. When the price of gold first plunged to levels last seen in 2010, jewellery consumers quickly saw this as a buying opportunity and rushed to make purchases, Many reasoned that the dip in gold prices was an anomaly and expected gold prices to soon return to their long-term upward trajectory. However, this has not occurred. As a result, 'volume demm7d has hem quite weak in the second half of 2012. Retail sales of diamond jewellery are forecast to increase by 11% to 478 billion rupees (US$8.609 billion) in calendar year 2013. Demand for diamond jewellery grew at the slowest pace in recent years... ...continued on next page T.diamondshades.com
  7. 7. India: Summary continued... ...after consumer budgets were shifted from other jewellery products to augment gold jewellery purchases. Retail sales of precious jewellery are forecast to decrease by 1,2% to 2,241 billion rupees (U 40, 41 billion) in 2013 mainly because of higher purchases of gold jewellery at lower gold prices. In the short-term, demand for jewellery products has been stifled by higher inflation, less positive macro- economic environment, and moves by the Indian government to force a reduction in gold and polished diamonds imports. Current conditions in India have greater negative impact on diamond jewellery sales than on gold jewellery sales since consumer demand for diamonds is more discretionary, With persistent inflation, prices for goods in India are higher and this makes jewellery less competitive. Outlook Jewellery sues in India will experience slower growth in the period 2013-2016 than in the period 2009- '2012. The culprits will be ongoing weakness in consumer spending which has been hit by rising inflation, lower real wage growth and a poorer macro-economic environment. Demand for gold in jewellery manufacturing should oscillate in the 500-650 tonnes per year range, on the back of continued modernisation of sales channels in India and the expected gradual rise in the number of middle class consumers, T.diamondshades.com
  8. 8. Nu ty (It)Ihmurlic4liont }l India: GDP Snapshot % Share of Global Nominal GDP India Real GDP Growth Rate 1980 1981- 1966- 1991- 1996- 2001- 2006- 2011 2012 2013 2014-1985 1990 1995 200l 2005 2010 2018 U Unlikely that India will achieve average growth of +6% in next five years, as per IMF forecast India GDP Per Capita 1.414.11 2012E 2013F 2010F Gigantic population means middle-class is increasing in impactful numbers India Real GDP and CPI Inflation Year-o er-Year % change 15.0 Deteriorating inflation fundamentals 0.0 LPSs 2 , 0 . 0 ~,#DG.1) U5$ Eillicn5 1.06v,0 i 1,74% India Nominal GDP 1 45% 2r65' L 55A ,39% 1,572.15 N,141.77 1,]51.22 327.27 474.57 1994 2000 2010 2011 2012E 2013F 2010F India has reversed gains of the last few wars 314 1'-716 7] 1900 Ig 9a 9.0 8.4 7.0 6,4 #,7% 1,#% S.4 4.0 3,0. 2.4 1.0 0.4 6 R 1.6% 5.1% l 7 1.41111 + . 4 4 . 5 1.!IM.16 461. 11 2000 201D 110, 0 0.0
  9. 9. 2800 2010 L Real GDP g Source: J FWorld Economic Outlook Database, Equity Communications Data. Data as at October 2013 rowth Rani  India GPI Inflation I lv.diamondshades.com
  10. 10. N u i t y Coinmur,icatkint }I India: Wealth Snapshot India's Total Wealth USS Trllllons 5,0 1.02% 1.Z9% 4.0 3,0 2 0 0 0 - 2013 Year-over-Year Change = 8,82 2.0 2000 2005 Share of World Wealth 1.52% 1,47% 1.50% Total wealth position has deteriorated India's Wealth Per Adult U5$ &,4oo 2 0 0 0 2013 Year •ove f-Ye ar % Cha nges 2000 2005 20W 2011 = 6.6+ India's Adult Wealth Pattern Adult Population 000s 1010 1011 2411 1013 606,000 22% 22.4 22.4% 22.6% 9 3 9 E 9 2 . 9 9 5 _ 1 % 9 4 _ 4 % 700,000 600,000 500,00G 400,000-- 300,000- 100,000 .. 100,000 0 1.779 1 ni 2010 2011 2012 2013 Wealth per adult has lost momentum 20132012 5.000 4.000 •-3, 000 •- 2,064 •• L.0Q0 Under 110,000
  11. 11. •-•-•-•-•-•• But currently mowing in tI wrgrr~dir #ion 4.6% 4-6'% 1.31E LI% 6.616 6.6' 4,6% 5.M 0.1%0.8% 0.1% O, 7'% O, n, 0.6% 0.6% 0.4%0,4%0.3%0,3% 0 .n 0. 0 Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Data Book 2013, Equity Communications Research ' ' T.diamoridshades.corn Currently leads world's poor, increasing in number 767,6 million % of Global Adults • Excellent Qconamic performance can shirt India's adults to higher wealth groups, creating a massive consumer market for the world's slaods  2010 , 7011  2012 L 2013 Cantribull i • Global Adulti in Wealth Clrauplr~ Contribution - Indian Mulls rn Wealth 6rauprrtg Li 10,044 - 100,000 $ 00,000- l mllllon O r 1 mlllldn
  12. 12. India: Demographic Snapshot Tho~rsan& 900, 000 SIr DOG - 7oo 0o° - U00, 000'. Adult Population of India Share of World Adults 15,45% 15.85% 16.19% 16.27% 16,36% 16.45% coo, aoo. . 404, 000... 304.000 200, aoo 1W,000. I. i 2000 2 0 0 2010 2011 2012 2013 Source: Top - US Census Bureau, International Database, July 2012, Middle - United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision, Bottom - James Davies, Roddgo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Data Book 2013. Equity Communications Research Population Projections for India Billions Average Annual G!owth Rate 2021. 2030= 0.97% 7011. 7070= 1.73% 1 9 1 . 7044= 1.35% 7041-7014= 1,59% 2 0 0 0 2 0 1 0 2 4 2 0 2030 2.o 1.o 0.O-- 0 5 - 1 0 10-151990- 95 45- 00 00-05 Urbanization Prospects for India Average Annual Rate of Change of the Percentage Urbsirl 2011 Total Population = 1.241 billion - 5 years ago= 30.25% -10 years ago= 28.61% 2011 Percentage Urban 31.3% 76 years ago= 25,07% I.0 b Urban Population 2012=31.66% Lower population growth positive for improvement in standard of living Positive with improving urban infrastructure; negative with slums Massive opportunity with sustainable long- tenn economic growth
  13. 13. N l v . d i a m o n d s h a d e s . c o m
  14. 14. India: Demographic Snapshot continued... Crude Birth Rate for India Birth per 1,000 Population 201 2 - 29.43% Population below 15 years -5 years ago = 30.97% -10 years ago= 33.03% -25 years ago= 37.89% i l i 1980-B5 85-90 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 Total Fertility Rates for India Population regeneration is improving to a level that is conducive for faster economic growth. Age at first marriage is becoming more attractive and this is positive for consumption of precious jewellery for engagements and weddings. Source: United Nations, Department of Economic and Social Affairs, Population Division (2013). World Population Prospects: The 2012 Revision. Equity Communications N lv.diamondshades.com - 1 0 Children per Woman 1 9 8 0 - 8 5 B5-90 e a! First Marriage 2006= 20, 2 years 2000= 20.2 years 1990 19.3 years 1981= 18.7 years rn 90-95 95-00 00-05 05-10 10-15 15-20 20-25 25-30 .o . 4.0 3.0 .. 2.0- - 40 3°. 2O-, to 0
  15. 15. India: Employment, Consumption, Rupee cross-rates Employment Growth For India Year-over-Year change 3.0 c.0 1990 2000 2010 India Emerging Market and Developing Countries Labour Productivity Growth for India Y ~ - r-Y r % Ching# 7.0 6.e 50 3,4 2.0 0.0. . 1990 -1.o 2000 Inri• a Emerging Market and Developing Countries Private Consumption Growth for India Yrar•avtr • Year % Chayrrgt 10.0 9.0 8.0 7.0 '. a 5.0 4.0 1.o 2.0 'Q 201312,N 0 Indian R upe e Cross Rates 1606 2007 2008 2009 2010 Source: Top Two - The Conference Board Total Economy Database, January 2013, Consumption Data - OECD (2010) "Wain Economic Indicators - complete database" accessed Oct 2013. Bottom - Equity Communications Data 2010 2009 2010 2011 20122006 2007 20083005 2013 UK round Ciao L J h D o i I MF
  16. 16. I lv.diamotidshades.com
  17. 17. India: Jewellery Consumption Trends Gold and Diamond Jewellery Demand by Region Retail Sales of Precious Jewellery in India US5 millions 35176 I i i 8,707 Year-over-Year % change 20O2•2012 22.2O% 2009. 2012 = 39.96 2011 -2012= 16.05 2012 2011 2010 2009 1008 1007 100, 1005 2004 200 2002 0 10,000 20,0-00 30.000 a 0,000 5o. o00 13% N Source: Top - Equity Communications Data, Converted from local currency using 1 Rupee = 0.018 US dollars, Bottom - Care Report 2011 N lv.diamondshades.com - 1 2
  18. 18. India: Jewellery Consumption Trends continued... • Denimnd for gold jewellery is very strong because of cultural preferences, including adornment+investment factor - 81 to 86 percent of jewellery retail sales are gold jewellery products (22-24 karat pure gold preferred because easier to liquidate). There is a culture of buying gold during auspicious occasion of 1iwali,lkshaya Tritiya, Dussehra and also during weddings, In rural India, farmers typically buy gold jewellery after every successful harvesting season as it is the best form of investment for them. Gold is also a natural hedge against inflation. • Jewellery fashion changes seasonally leading to higher product obsolescence - slow moving jewellery at the tail end of seasons, therefore significant recycling may reduce new sales - possibly up to ten percent, • Sales of higher priced jewellery are supported by the introduction of schemes that enable consumers to make advance payments in monthly instalments, Consumers purchase often discounted jewellery at the completion of the instalment period, • Increasing number of consumers (20-30%) augmenting gold purchases with diamond jewellery purchases. Diamond jewellery has a stronger adornment factor - diamond jewellery set in lower 18 karat gold (diamond necklaces very popular). Platinum-setting gaining share of diamond jewellery sales - now at 20-25% of diamond jewellery sales. • Jewellery brands recent phenomenon but very popular with the youths in metropolitan cities - a globally connected youth market is revolutionising jewellery consumption in India. Demand for fashion jewellery on the rise.
  19. 19. A ] . India: Retail Sales of Gold Jewellery qu ty ColhmUnic4li4int US millions Retail Sales of Gold Jewellery in India 2012 2011 2010 2009 2000 2007 2006 2005 2004 2003 2002 0 10,000 20,000 30,000 40,000 Gold Jewellery Demand Trends in India Year-over-Year % Chop e L Volume Demand S Retail Sales S U55 fold p 'Ii rice Rupee fokd Price -20,0 ...- 2003 7004 20-05 2006 2007 2405 2049 2010 2011 2012 is 717 2 0 0 2 2U J c 10.91'. , 2009. 2012 = 37.2M 2011.2012 = 13.26% 100.x%... 70.0% 60.0% 50.0% - 40.0% 30.09 10.0° 0.0% . - • 1 0 - a -- Source: Top - Equity Communications Data, Converted from local currency using 1 Rupee = 0.018 US dollars, Bottom - World Gold Council, Gold Demand Trends, Equity Communications Database -14 N lv.diamondshades.com
  20. 20. India: Retail Sales of Gold Jewellery continued... Retail sales of gold jewellery in India have tracked increases in the price of gold because of the strong adornment+investment demand factor, Volumes change from year to year depending on consumer economic sentiment but significant gold price inflation in recent years had put massive pressure on consumer demand. As a result, gold grammages for jewellery pieces were trending downwards up until the significant plunge in gold prices in April 2013. Source: Chart -World Gold Council, Gold Demand Trends, Equity Communications Database N Iv.diamondshades.com - 1 5 Indian Rupe slTroy Ounce US Dollars/Troy Ounce 993 2000 2 0 1 0 Gold Price in Indian Rupees and US Dollars 2,000.0 yep 2013- IN R 86,135 sep 2013= US 1,348,80 1 OOU.U 100.000,0 90,000.0 80,000.0 70,000.0 60,000.0 50.000.0 44.000.0 34,000,0 20.000.0 10,000,0
  21. 21. India: Retail Sales of Diamond Jewellery Retail Sales of Diamond Jewellery in India 2005 M 2004 2003 2002 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,400 8,000 US$ millions Purchases of diamond jewellery are comparatively complex because they require at least passing knowledge of the 4Cs of diamond jewellery - colour, clarity, cut and carat. Without doubt, this has been a significant barrier to sales growth in India and other nascent diamond markets since diamond jewellery is traditionally expensive. Nevertheless, establishment of organized retail chains in India has given Indian jewellers the platform to educate consumers about diamond jewellery. Furthermore, the introduction of certified diamonds has increased trust and made diamond valuations more transparent. Indian diamond industry players are taking diamonds to the mainstream, allowing people of most economic levels to purchase diamond jewellery. Jewellery manufacturers are innovating and producing fashionable diamond jewellery which is cheap by traditional world standards but targeted at the middle class in lildia where demand for such products - diamond accented jewellery - is strong and growing in leaps and bounds. Source: Chart - Equity Communications Data, Converted from local currency using 1 Rupee - 0.018 US dollars N Iv diamondshades com - 1 6 2012 2011 2e to 24Q9 2008 2 c r i 2006 2, W4 1,9O 1,31a Year-over-Year % Change 2002-2012 = 30.29% 2009-2012 54.979 2011.2012 29,7M 4,36G
  22. 22. A 3 . quty CoinmUnic4ti4int India: Diamond Jewellery Consumption pattern Diamond Jewellery Demand by Region There is a shift in consumer preference to low-priced everyday diamond jewellery which is about 50 percent cheaper than event-driven diamond jewellery and also cheaper than pure gold jew jewellery cannot be ellery, Everyday e pefisive jewellery. Trendy li hmei ht designs, guaranteed buy-back schemes, transparent pricing, and availability of quality certification have all boosted sales. The quality of cheap diamond jewellery produced has also improved dramatically in the last three years and we believe it will soon debut on the world stage, India has a 32 percent urban population. As a result, diamond jewellery sales are very minimal in rural areas where gold jewellery is extremely dominant. Diamond jewellery sales are stronger in the larger and wealthier cities and decline rapidly as we move towards rural India. Source: Top - Gitanjali investor presentation, Bottom Two - Equity Communications Research N Iv diamondshades com Classic. w dire style jewellery with bigger Iook 5I JK Colour Modern, fine wphi . sticated signs WS-5I GH Colour Traditional, temple designs CH Colour TrAitignal, ethr+k desiI WS DG Colour Diamond Jewellery Market Share of Retail Sales in India M. r I#4tr . . . L t d Ciclis Small Cities Rural India Consumption Breakdown for Diamond Jewellery in India Overall M.arket Share
  23. 23. A 3 . India: Jewellery Retailing Landscape quty ColhmUnie4ti4int }i Market Share: Organized Retail vs Informal 741 6E 7014E t New sourcing regulations favour organized retailers Cheaper gold = more competitive mak°ni ( h a r t for organized retailers 2012 Numerous capital raising initiative by organi7eti retailers 2010 0% 10% 20% 30% IC% to 'a 70% 80% 90' a 100% L Informal/Neig India is modernizing its retail landscape. Traditionally, Indians go to the preferred and trusted }hbourhuod J1 wtllcr r . Organised Retail (Including r gional Stares retail chains) neighbourhood jeweller for their jewellery requirements. However, this is gradually changing with the emergence of numerous regional retail chains and a sprinkling of countrywide retail chains. Industry Profile • India continues to modernize and urbanize its retail model • New regulations, duties and tap business finance es that favour formal business operations - materials sourcing and • Input costs increasing more than 200% in five years • Competition for limited quality retail space • Consumer preference for hallmarked and certified jewellery is fast becoming standard - retail brands Source: Chard - Equity Communications research and projections. As at November 2013 N Iv.diamondshades.com - 1 8 Highly Segmented 2a 7 T
  24. 24. India: Jewellery Retailing Landscape continued... The dominant profile of business in India is low margins and high volumes. Margins continue to be under severe pressure owing to a steep rise in commodity prices and steep competition. For this reason, the jewellery in India will have to be more aggressive in its push for large-scale adoption of branded jewellery as this will create space for more sustainable margins in the sector. Fortunately, fashion - conscious youths have shown strong appetite for branded jewellery and this has provided a much needed pull-factor in the demand for branded jewellery and establishment of jewellery retail brands. Nevertheless, the Indian market remains very difficult for foreigners to penetrate because... • Weddings and Cultural Festivals are key consumption drivers - demand is very traditional with product preferences varying from region to region and season to season . Retail landscape underdeveloped - extremely limited quality real estate available to foreigners for the establishment of profitable store networks • Unusual sales methods - trade-ins, discounts and buy-back schemes popular because of adornment+ investment factor and seasonal consumption of jewellery . Restrictive tariff arrangements on imported jewellery and luxury - margins for jewellery are already comparatively lower
  25. 25. India: 2013 Interim Review of Jewellery Market Gold Stole headlines in 2013: 1.. The gold price plunged and released pent up demand for gold jewellery The Reserve Bank of India announced new restrictions on gold imports into India in order to improve the country's national accounts position 1. The gold price plunged and released pent up demand for gold jewellery When the price of gold first plunged to levels last seen in 2010, consumers of gold jewellery in key markets quickly saw this as a buying opportunity and rushed to make purchases. Many reasoned that the dip in gold prices was an anomaly and therefore expected gold prices to soon return to their long-term upward trajectory. However, this has not occurred and probably will not occur in the foreseeable future, As a result, we expect investment demand for gold jewellery to remain muted going forward. 1x 000,0100.0 0.o Quarterly Gold Demand for Jewellery in India U5{T O 2 000 0 Q4 Q1 Q2 Q3 Q4 91 92 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011. 2011 2011 2011 2012 2012 2012 2012 2017 2013 2013 2013E
  26. 26. India: 2013 Interim Review continued... 2. The Reserve Bank of India announced new restrictions on gold imports into India in order to improve the country's national accounts position • At least 20% of all gold imports into India must be for re-export • 20% of all gold imports to be retained in customs bonded warehouses • Fresh imports of gold allowed only after the exports have taken place to the extent of at least 75% of gold remaining in the customs bonded warehouse. 0 • Customs duty on gold imports hiked from 8% to 10% and on imported gold jewellery from 10% to 15% • Gold imports in any form for domestic use shall be made available only to entities engaged in jewellery business/bullion dealers supplying gold to jewellers • Gold for domestic use shall be made available only after full upfront cash payment • Ban on import of gold coins and bars for investment purposes Implications for Jewellery Industry • Retailers with significant export business to come out ahead since steady availability of gold is ensured, including better financing terms • Informal businesses to be further marginalized from official raw materials procurement channels • Export Jewellery businesses have become crucial again - management attention to likely shift from domestic expansions to foreign expansions (More exports required to grow domestic business) • New procurement rules that outlaw gold loans to increase pressure on finance costs, cash-flow management to require more scrutiny • Pressure on retailers to push more diamond jewellery which has better margins. Light weight gold and diamond jewellery pieces also an option Essentially, the government of India is trying to disrupt India's famous love-affair with gold because of its negative impact on the country's current account balance. Gold contributed nearly 30Q4 of India's trade deficit during 2009-10 to 2011-12_ Indian consumers put money into gold because they trust it much more than they do banking products offered by the country's financial institutions. Furthermore, as much as 42.4% of India's GDP is believed to be in the underground economy, up from 2L.49 in the pre-reforms period, Gold provides liquidity for the untaxed underground economy in India. 21
  27. 27. India: 2013 Interim Review continued... Put simply, the new rules state that gold imports for domestic purposes cannot be increased without a similar increase in gold imports for re-export purposes. As such, there are concerns that current gold jeweller exports are not enough to cover actual current domestic demand for gold jewellery. Nevertheless, a cursory analysis of gold import and export data provided by the Gems and Jewellery Promotion Council of India suggests that gold exports are adequate to cover domestic demand for gold jewellery. Therefore, we believe the new policy environment will ultimately lead to further realignment of the jewellery industry in India to the benefit of well positioned jewellery businesses - those with significant export operations plus appealing domestic jewellery retail brands.
  28. 28. Nutty [,olhmurliE4li4int }I India: 2013 Retail Sales of Jewellery Source: Equity Communications Data. Data as at November 2013. Converted from local currency using 1 Rupee = 0.018 US dollars. Gold Volume Data- World Gold Council, Gold Demand Trends, Equity Communications Data I lv.diamotidshades.com - 23 Retail Sales of Gold Jewellery in India 3,009 Ruprr g Illlms -4% 3 2 2 QI 02 Q3 Q4 CY2D12 Q I Q2 2012 2 6 1 2 2 c i 2 2 0 1 2 2013 2013 Ru + r Q u i d r l l t ; 6 i , b l b 1 . 1 0 4 1 , 1 4 D 93 . 4 1 P,07 Md.l94 F$.944 VdumrDewrund ITI: 136.3 124.& 136.1 15] 552 159.5 199 Q4 { Y 2 * 1 3 2 0 i 3 r  x6,34* E7,1Wi 113.; 5]S-9 2013 Retail Sales of Precious Jewellery in India R~par Bi Ilian~ Diamond Jewellery Gold Jewellery Total 2011L2012 2013 3, 04D Year-o+~er-Year i Char€ 298 X 431 ~ r . Z, 04D 1 , 0 0 0 Diamond Jewellery Gold Jewellery Total 2013 Retail Sales of Precious Jewellery in India 0,82? U55 Millians 0
  29. 29. India: 2013 Retail Sales of Jewellery continued... Summary Retail sales of gold jewellery are forecast to decrease by 4% to 1,763 billion rupees (U 1.7 2 billion) in calendar year 2013. Demand for gold jewellery was strongest in the first half of the year, corresponding with the initial burst of lower gold prices. Volume demand for gold jewellery is forecast to increase by 4.3% to 575,2 tonnes in 2013, Consumer demand for gold was robust from the last quarter of 2012 culminating in even stronger buying in the second quarter of 2013, following massive declines in the price of gold, When the price of gold first plunged to levels last seen in 2010, jewellery consumers quickly saw this as a buying opportunity and rushed to make purchases. Many reasoned that the dip in gold prices was an anomaly and expected gold prices to soon return to their long-term upward trajectory, However, this has not occurred, As a result, volume demand has been quite weak in the second half of 2012, Retail sales of diamond jewellery are forecast to increase by 11% to 478 billion rupees (US$8.609 billion) in calendar year 2013. Demand for diamond jewellery grew at the slowest pace in recent years after consumer budgets were shifted from other jewellery products to augment gold jewellery purchases, Retail sales of precious jewellery are forecast to decrease by 1,2% to 2,241 billion rupees (U 40, 41 billion) in 2013 mainly because of higher purchases of gold jewellery at lower gold prices.
  30. 30. India: 2013 Retail Sales of Jewellery continued... Jewellery products are discretionary goods whose demand fundamentals are at the mercy of consumer economic sentiment. If consumers believe the economy is healthy, they are more likely to absorb rising prices of discretionary goods. When economic sexntinient is w e , consumers purchase fewer discretionary goods. In the short-term, demand for jewellery products has been stifled by higher inflation, less positive macro- economic environment, and moves by the Indian government to force a reduction in gold and polished diamonds imports. Current conditions in India have greater negative impact on diamond jewellery sales than on gold jewellery sales since consumer demand for diamonds is more discretionary. With persistent inflation, prices for goods in India are higher and this makes jewellery less competitive. For 2013 at least, gold jewellery sales by volume are expected to be stronger than for 2012 despite a poorer third quarter performance compared to 2012. Earlier this year, consumers in India took advantage of the unprecedented slump in gold prices to massively increase gold jewellery purchases, especially for cultural gifting purposes. Furthermore, since jewellery purchases occur on budgets, budgets were shifted from other jewellery products to augment gold jewellery purchases. For the last quarter of 2013, consumers will likely shift to lighter gold jewellery products in light of the prevailing economic conditions that have kept gold prices higher in India. On the other hand, farmers in India appear to have had a good harvest and this always boosts gold jewellery sales in addition to strong seasonal demand for weddings and festivals. However, gold import curbs by the government as well as strong out of season purchases earlier this year could also result in lack-lustre sales for the season.
  31. 31. India: Outlook for Jewellery Market Jewellery Product Preferences Gold Jewellery versus Platinum Jewellery Vs Diamond Jewellery Demand for gold jewellery is steeped in tradition that goes back more than a thousand years....that is not about to change. Therefore, gold jewellery sues will still experience volume growth subject to a better macro-economic environment and stronger disposable incomes. On the whole, Indian society is modernizing and becoming less traditional. Consumers have shown a willingness to amplify traditional demand for gold jewellery with purchases of jewellery made from other precious materials like diamonds and platinum. At steady gold prices, demand for such products will grow faster than demand for gold jewellery products simply because it is still Behind this revolution in consumption patterns is the large population of young people in India using in the nascent stage. internet technology to stay in tune with the world. As a result, the Indian young adult population in the major cities is fast become sophisticated and increasingly becoming less satisfied with plain gold jewellery. Younger jewellery consumers in India care more about design, style and seasonal trends. For this reason, brmding, marketing and product placement have become important. Diamond jewellery is actually not a great financial investment as more consumers in India are starting to find out. We believe this will likely impact the pace of diamond jewellery adoption by Indian consumers going forward. For the most part, diamonds of the cheaper variety are becoming more prevalent within day-to-day jewellery pieces as they offer flexibility in terms of style and colour, often adding a more contemporary feel to a look or outfit. We fully expect movement of diamond jewellery consumption away from the adornment+investment category and towards the adornment only category. Retailers have been trying to grow share of diamond jewellery to at least 40% of sales as this would greatly improve profit margins. However, the goal has so far proved elusive because gold jewellery sales have also been growing at a remarkable pace, fuelled by significant gold price inflation. Let us see what happens with steadier and lower gold prices.
  32. 32. India: Outlook for Jewellery Market continued... 2013 -2016 Please refer to charts in first section for Macroeconomic and Demographic Scorecard. Jewellery sales in India will experience slower growth in the period 2013-2016 than in the period 2009- 2012. The culprits will be ongoing weakness in consumer spending which has been hit by rising inflation, lower real wage growth and a poorer macro-economic environment. At Equity Communications, we still feel India is a policy mess and will remain so for the foreseeable future. Our thinking is that India will stumble along for the remainder of this decade because of glaring structural deficiencies such as troublesome inflation and the current account deficit which remains vulnerable to poor policy decisions and business-culture problems. We believe Indian culture is greatly responsible for the country growing below its potential GDP. Nevertheless, the 5 to 7% annual GDP growth rate guarantees that India will become the next China in the 2020s because of its gigantic population. Demand for gold in jewellery manufacturing should oscillate in the 500-650 tonnes per year range, on the back of continued modernisation of sales channels in India and the expected rise in the number of middle class consumers. Indian jewellers are raising money on the local stock exchange and using proceeds for raw material procure.meiit and store expansions, including large format stores across the country. Recycling of gold jewellery is also expected to increase in the coming years because jewellery designs are becoming stale faster, Slow moving jewellery at the tail end of seasons is recreated into new designs. The product mix for jewellery retailers is a key determinant of profitability. Gold margins are standardized because of adornment+ investment factor. However, quest for greater margins is driving diversification from gold jewellery products. Demand for gold jewellery remains very strong because of cultural traditions, Gold jewellery sales - for weddings, in particular - will continue to generate volume growth for jewellery retailers. Platinum and diamond jewellery sales will generate margin growth. The shift to more profitable diamond jewellery has been smooth because India is the world's dominant processor of rough diamonds, with a monopoly position in the processing of small size and small value diamonds,
  33. 33. India: Outlook for Jewellery Market continued... Industrialization and improvements in the standard of living reduce long-term consumption of precious jewellery Industrialization and improvements in the standard of living reduce long-term consumption of precious jewellery since they also lower the potency of love traditions (marriage) that typically drive jewellery consumption. . With Industrialization and improved standards of living: • there is reduction in communal economic activity such as subsistence agriculture • there is urbanization and standardization of dwellings • there are increases in wages • there is increase in the status and education of women • there is introduction of superior methods of birth-control that have revolutionized the sexual habits of h = - b e i n g s Industrialization and improvements in the standards of living causes a drastic shift in values from collectivism/communism to individuality. Unlike collectivism which emphasizes doing things for family and community, individuality gives priority to personal freedom, self-determination and self-realization. To those operating in the Indian jewellery industry, you will be pleased to know that India is still a very long way from being fully industrialized, From the beginning of time until well into the 20th century, precious jewellery was extremely rare and costly to access in most regions of the world, making it extremely valuable as a status symbol. For much of that time, only the very wealthy could afford the luxury of precious jewellery since gold and silver were also used as circulating currency. It is no wonder then that consumption of precious jewellery receives a boost as societies become richer.. When more and more people around you are becoming wealthier, it is very important to prove that you are not being left behind. However, consumption of precious jewellery also loses much of its emotional appeal as wealth becomes more spread out. When everyone around you can afford a product, it becomes redundant to prove that you have it too.
  34. 34. India: Outlook for Jewellery Market continued... • Cultural tradition of precious jewellery consumption • Gigantic population • Gradually growing economy and improving standards of living • Leading global centre for precious jewellery manufacturing • Population regeneration supports sustainable consumption To those operating in the jewellery industry, you will be pleased to low that tWs is the stage at which we find India today. Despite the Indian's government's efforts to dent growth of the retail jewellery sector in India, demand for jewellery is naturally structured to grow significantly.
  35. 35. A 1'qLIi*y Cl}IMJrILI1' i c 4 t l 4 l d a }]' Appendix: Selected Indian Jewellery Company Data a Titan Industries Jewellery Division • Largest jewellery retailer in India • Three major brands - Tanishq, GoldPlus and Zoya • Sub-brand - Mia, for the working woman; fq for the teens Source: Company publications, Equity Communications research 200 100 Titan Industries Jewellery Stores PreITllurll LukurV Mass. Mat ket 300 FY12 L. FY33 # 2 F Y 1 4 146 157 32 13 2 2 m Zoya GOIdPIui B.Indti Titan Industries Jewellery Sales g1FY12 g 2FY 12 g3FYI2 q4FY12 gLF Y1 3 g2FYI3 g3FY13 g4 FY 13 gIFY14 42F Y1 4 Titan Industries - Jewellery Brands Sales Growth a0%"l 30~r 30* 10% 0"• •10%H -2Q°AF •30%' 44FYI2 g1FYl3 q2FY13 g3FYL3 TMIASlIq L GLFldplua g 4 F Y 3 g1FYl4 Year-over Year G r o w t h 504 3U9D• 3 0 %
  36. 36. NuGty ColhmurliE4ti4ont Appendix: Selected Indian Company Data continued... Titan Industries - Jewellery Brands Same Store Sales Year-over-Year % G r o h 4o% . . . - Titan Industries Jewellery Division Revenue Growth Vs Customer Growth Year-over-Year % Growth r0.0o , , , , g4FY12 g1FY13 g2FY13 g3FY13 g4FYl3 gIFY14 qZFY14 Titan Ind - Grammage Growth of Gold Jewellery Sales 3 glFY12 q2FY12 g3FY12 n4FY12 gIFYl3 92FY13 g3FY13 94FY13 g1FY14 g2FY14 Source: Company publications, Equity Communications research 25% g3FY13 q4FYI3 eIIFY14 q2FY14g2FY13 2,% -30% Lg4FYl2 g l F Y l 3 29% Tani'Shq Gold pIU# 5 4 01. -7% 4.U°k 31-0% 6.0% 50.0% 44.0% 30.0% 20.-- 10. 0% 0.0% -10.0 b . 57% 2,9892 , s1 ?3,80 2,8042,815 47% 7f t j 5% Gold Rate per gram Rupees 3,433 3,108 12' Year-over-Year % Growth 2,250 2,641 70% 50%. . 40%. . 30% 20% 0% -10%. - -20 -30%. . -a9 %
  37. 37. NuGty ColhmUnic4li4ont }l Appendix: Selected Indian Company Data continued... Tara Jewels Integrated player in the Indian jewellery industr, launched and expanding domestic retail network Target segment of market - aspirational l hury shoppers m India Average ticket size of Rs 50,000 Tara Jewels Retail Stores Fy is, FYL4E " 1 ' Fy12 F yl l 50 - Average size o( store = 1,000 square feet − 43% of stores to FY2013 in J aharashtra, wealthiest state in India − Expanding in the relatively wealthy West and S th  10 20 30 40 50 60 10 no 90 Tara Jewels Domestic Revenue INR Millions 3.ouo. u Year-over-Year % Growth = 04% 1 4 2 . 1 4 FY2010 1,000.0. 0.0 HI1V2013 HLF'Y2N14 9.94% 1,034.$* FY2J12 Y2013FVial 1 INR Minims Tara Jewels - Sales by Product Mix 3,000.0 Id moles provide volume growth Diamond sales provide margin growth Gross rgirtis 3 149 rvz ll FY2U12 F Y2013 H 1 1 T . 2 0 1 3 i11IYZ014 • Diamond Producti L Gold Pra duf t b 2,000,0 0.0 3 14% 45% 12%
  38. 38. N u t t y [,i)IMmUnic4li4ont Appendix: Selected Indian Company Data continued... Tribhovandas Zaveri (TBZ) • Specialty retailer with focus on both wedding and fashion segmeiYt of the li7dian jewellery market • 27 stores - -88,000 square feet - spread across 20 cities in 7 states. • Expansion plan to increase the number of stores to 57 and retail space to -150,000 square feet by 2015 spread over 43 cities in 14 states TBZ Retail Store Network Q3FY14 Q21Y14 26 FY13 21 FY12 1 14 14 FY11 Large format stores - 3, square feet plus, Average Sales Sq ft - 118275,000 Price Points - Up to INR2,W,004 Inventory • INR300 million, Gold 70 Diamonds 30% FY l4 14 Small format stores • 1,000. 1500 square feet Average Sales Sq ft - INR !50,O00 Price Points - Up to INR500,Q0O Inventory - INR104 million. Gold 709 Diamonds 30% Y09 10 2 0 30 aD TBZ Jewellery Revenue IMR Millirns Revenue per sglwe foot 30, D00 I yo9 Iy]U 20, 000 FY12 CF Y13 H1FY13 HLFY14
  39. 39. Appendix: Selected Indian Company Data continued... TBZ - Diamond Jewellery Sales Year-over-Year growth =1.62% 1 FY09 FYI0 FY11 Cdrdti Year-over-Year growth =L:27% 60,000-- 50,000 40,000 30,000 20,000 10,000... FY11 FY13FY10FYfl9 0 Kilogram, 5,000 4,000 3,000 11 2,000.... 1,000.... 1 FY1Z FY13 TBZ - Product Mix Contribution to Revenue 1 0 0 % 9O% 80%-70%- 60% 4O% 10WDO%o W O Jewellery Diamond Jewellery 50% wedding jewellery 40% wedding jewellery 50% fashion jewellery 60% fashion jewellery Stock turn 4x Stock turn 1,5x Gross margin 11% Gross margin =35% Wedding jewellery sales generate strong volumes; and fashion jewellery sales offer growth FY09 FY1O fY11 FY12 FY13 FV14Q1 H1FY13 HIFV14 Diamond Jewellery L. Gold Jewellery
  40. 40. Nutty ColhmUnic4ti4ont WI TBZ - Gold Jewellery Sales
  41. 41. Appendix: Selected Indian Company Data continued... Selected Indian Jewellery Retailers 96,72% 600.O% 553.41% Year-over-Year % Domestic Revenue Growth 10,66% 1 4 . 7 8 % 30,22% 39,74% 50,05% 44.76% Gitai1jali Sheriu TilAin Industries 46.49% 19.69% 57.15% 16.05% 9BF17% 51.64% 54,3% 3 4 , 9 2 % TBZ PC Jewellers 66_, 5% FV203 1 LJ FY2012 U FY 2013 500.0%--- 400.0% 300.0%. 200.0%.. 100.0% 0.0% L 26.01% Tara Jewels Source: Company publications, Equity Communications research - 35
  42. 42. About Diamond Shades and Equity Communications Diamonds Shades Diamond Shades is a diamond market research service owned and operated by Equity Communications Private Limited. Diamond Shades provides breaking news alerts, analysis and commentary on the diamond industry value chain, precious jewellery markets and the general luxury economy. The service is operated from Australia, South Africa and Zimbabwe. Equity Communications Established in 2004, Equity Communications is an investor communications company and premium business information provider traditionally specializing on Zimbabwean industies that have global significance such as tobacco, platinum and diamonds. For queries about Equity Communications, its products and services please do not hesitate to contact us. Diamond Shades Equity Co=unications Private Limited Address: 43 Lewisam Avenue, Harare Telephone: +26340)772-811317 E-mail: info diamondshades.cum Diamond Shades 605/2 New Quay Promenade Docklands Vic 3008 Australia E-mail: internation@diwnondshades.com
  43. 43. Research Reports Free Reports with download licks provided • Rio Tinto Diamonds 2013 - Published May 15, 2013 • De Beers Group 2013 - Published July 24, 2013 • Alrosa 2013 (excluding Catoca) - Published July 25, 2013 • Dominion Diamond Corporation - Published July 25, 2013 • Zimbabwe Diamond Mining - Published August 1, 2013 • World Diamond Production 2013-2018 - Published August 3,2013 End of year publication schedule • 2013-2014 Guide to the Jewelleiy Market in India • 2013-2014 Guide to the Jewelry Market in USA • 2013-2014 Guide to the Jewellery Market in China • 2013-2014 Guide to Global Consumption of Precious Jewellery • 2013-2014 Analysis of Key Materials Used in Precious Jewellery Production (FREE!) • Diamond Report 2013 -37
  44. 44. N u ty {;olhmurlic4Li4Mnt Equity Communications Diamond Market Specialists For more information, please visit http://-.diamondshades.com/ Copyright 2013, Equity Communications Private Limited, ALL RIGHTS RESERVED. T .diamoiidshades.core
  45. 45. Presentation On jewellery industry Submitted to : Prof. SHIKHA SHARMA Submitted by: NITISH KUMAR NAKUL PANDIT
  46. 46. People wants to showcasing a fine elegance and sheen, the range of fashion jewellery which reflect an amalgamation of many cultures, traditions and customs. Tradition
  47. 47. •Jewellery have been a part of most of the cultures of the world at some point of time or other. From its basic use as currency, it is now used as an instrument to store and display wealth. In the recent past(last 3-4 decades), this industry has shown an impressive growth world wide. The current global market for the sector is estimated at around $85bn USD and has shown a CAGR of 5-10% in the last decade. •India's 300,000 traditional jewellers – commonly referred to as the unorganized sector – dominate the country's jewellery retail landscape with a 96 per cent market-share. Keeping in mind that only 4% of the sector is in organized hands. INTRODUCTION
  48. 48. India has the largest country from RAMAYAN & MAHABHARAT times. Indians are the first to start jewelry making. India was the first country to mine diamonds. Formerly diamonds were cutting & polishing traditionally. Nowadays diamonds are cutting & polished by adopting new technology. Many institutes provides degree, diploma & certified courses for gem & jewelry education. For Ex. Indian Institute of Gemology etc. Gem and jewelry export promotional council worked to promote export of gems and jewelry. Government has also introduced many measures to promote gem and jewelry sector. History & Current Scenario
  49. 49. jewellery is a type of accessory It includes necklaces, rings, bracelets, watches, and earrings jewellery can be made from a variety of different materials including Silver, Gold, Metal, and Wood The name originates from the Latin word local a meaning plaything Began with materials made from bone, teeth, and shell Considered a symbol of wealth and artistic display Can incorporate beads, stones, gems, and diamonds jewellery
  50. 50. CONCLUSTIONThe retail jewellery industry is comprised of five main segments: Bridal jewellery (30%) Fashion jewellery (22%) Watches (18%) Precious stones (15%) Precious metals (15%) Industry Overview
  51. 51. The retail jewellery industry is highly fragmented. No retailer claims more than 6 percent market share. There are nearly 50,000 stores engaged in jewellery retail. The industry employs approximately 200,000 individuals. Annual jewellery store sales run about $27 billion; wholesalers and manufacturers account for an additional $27 billion in sales. Wal-Mart is the largest retailer Continue….
  52. 52. Wal-Mart Zale Corporation Sterling Jewellers Sears, Roebuck and Company Finlay's Fine jewellery J.C. Penney QVC Tiffany and Company Service Merchandise Kmart Ten Largest jewellery Retailers
  53. 53. The consumers were to rank the luxury jewellery designers based on 4 criteria: (1) superior quality (2) uniqueness and exclusivity (3) social status and (4) excellent customer service Criteria Royal earrings, Andhra Pradesh, 1st Century BC Byzantine wedding ring.
  54. 54. India is a leading player in the global gems and jewellery market The gems and jewellery industry occupies an important position in the Indian economy. The two major segments of the sector in India are gold jewellery and diamonds. The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and the availability of skilled labour INDIAN JEWELLERY INDUSTRY
  55. 55. Indian retail jewelry overview
  56. 56. Organized players such as Tata with its Tanishq brand and Gitanjali a pioneer in the branded jewelry segment. Leading Brands
  57. 57. Indian jewellery industry is a highly regarded industry and earns huge profits through the jewellery exports all over the world. The Indian jewellery sector is largely unorganized at present. There are over 15000 players across the country in the gold processing industry, of which only about 80 players have a turnover of over US$4.15 million (Rs. 200 million). There are about 450,000 goldsmiths spread throughout the country. INDIA SITUATION
  58. 58. Wal-Mart Stores was established in 1962 by Sam Walton. It was registered as a corporation on October 31, 1969. It became listed on New York Stock Exchange in 1972 WAL-MART The world’s largest jewellry retailer
  59. 59. Jewellery Stores had not been affected by global financial crisis. It is carrying on with its expansion activities in India as well as other world markets Impact of financial crisis
  60. 60. The Indian gems & jewelry sector is expected to cross US$ 26 billion by 2012. The consumption of the diamond jewelry is expected to touch US$ 6.41 billion in 2012. State Run National Mining Development Corporation (NMDC) planned to produced close to 100000 carats of diamonds from the panna diamond mines in Madhya Pradesh.(2010-11). FUTURE
  61. 61. 1.Strong risk management focus as part of strategy. 2.Investments in upgrading the technology and setting up new units in Kolkotta and Bangalore. 3.Manufacture handicraft jewellery along with branded jewellery to cater to diverse markets. 4.Long standing relationship with dealers in US, Antwerp, Dubai etc. STRENGTHS SWOT ANALYSIS
  62. 62. 1.A smaller player in size compared to the rest of the competitors such as Rajesh Exports and Gitanjali Gems and Jewellery, and therefore would not be able to enjoy the same benefits of returns to scale as the others. 2.No well established brand like other firms (e.g. Gili from Gitanjali Gems and Jewellery or Tanishq from Tata). 3.Lacked infrastructure to cater to the retail customers abroad. Company sells most of its product to the wholesalers in which case they have much of the bargaining power. WEAKNESS
  63. 63. 1.Gems and Jewellery to grow by 12% (as calculated by the demand forecasting).India’s share is projected to be around 1.5 to 2 percent of the global industry. 2.Tax regime to be structured to develop India as a global hub for gems and jewellery. 3.Increase in wealth leading to increase consumption is expected to boost demand for this sector. 4.Global Silver to Gold ratio is improved to 15:3 from 7:3 in 2000 in the world market; this is mainly because of a younger generation’s preference for a white metal than gold. 5.Increase demand in Middle East and North American countries, forming the largest segment and offering the highest growth in the previous financial year. OPPORTUNITIES
  64. 64. THREATS 1.Emergence of China as a competitor. 2.Unusual increase in the price of gold and rough diamonds. 3.Fluctuation in currency, especially appreciation of rupee against the dollar. 4.Change in fashion trends. 5.As per the CMIE data, only 4% of the gems and jewellery sector is in the organized hands, Tanisq, Gili (subsidiary of Gitanjali Gems), Oyster bay, being the major players from whom company faces a lot of competition. 6.Substitution of gold and other banking products as a better source of investment has lead to the decline in the consumption of silver. 7.The reduction of consumption of silver in the Indian market. Witnessed a decrease of 53.1% from 1996 to 2005 in consumption. 8.Low availability of skilled labor in processing of diamonds. 9.Infrastructure bottlenecks, absence of latest technology. 10.China, Sri Lanka and Thailand's entry in small diamond segment.
  65. 65. Large presence of unorganized sector. Increase in gold jewelry consumption. Increase in gold prizes. Cheating on carat age. Possible long term threat from China. [ Continued support from government crucial. LIMITATION
  66. 66. Jewelry has become a vital element in everyone’s life. Men, women and even kids love to wear jewelry articles all the time. Wearing jewelry is the demand of modern fashion. A few years back jewelry was used only on special occasions like weddings, engagements and other formal parties and it was associated with the brides and married girls only. But nowadays it is worn casually as well as formally and everyone likes to wear beautiful and elegant jewelry items. Trendy and stylish jewelry is in fashion these days. The gems and jewelry industry has been growing rapidly and has become one of the most profitable industries of the world. CONCLUSION:
  67. 67. Thank You Diamonds are a girl’s best friend!
  68. 68. Presented by- Chandan Srivastava Avinashi Soni Ashish Srivastava Ashutosh Pratap Singh Mahavir Kumar Gautam
  69. 69. TABLE OF CONTENTS S.no | Particulars | Page no.|  1. | Introduction | 3 |  2. | Objectives | 4 |  3. | Difference between branded & non-branded | 5 |  4. | Branded Jewellery| 6-11 |  5. | Non Branded Jewellery | 12-13 |  6. | Analysis | 14 |
  70. 70. INTRODUCTION As India makes rapid progress in the retail arena, the Indian Jewellery market is undergoing a gradual metamorphosis from unorganized to organized formats. Jewellery retailing is moving from a ‘Storehouse of value’ to a ‘Precious fashion accessory’. Consumers are more quality conscious than ever before. The jewellery market is one of the largest consumer sectors in the country- larger than telecom, automobiles, and apparel and perhaps second only to the foods sector.
  71. 71. OBJECTIVES To study and understand the buying behavior of consumers for branded and non branded jewellery To find the difference b/w perceptions, opinion and behavior of branded and non- branded jewellery buyers. To have an idea about parameters consumer consider while buying jewellery To know the knowledge level of customers regarding the jewellery brands available in the market
  72. 72. Difference between Branded and Non-Branded Jewellery  BRANDED | NON-BRANDED |  Name & reputation gives a confidence to the consumer | Customer can tailor make jewellery according to their preferences |  It comes with a written lifetime guarantee, considering the emotional quotient of the consumer | No written lifetime guarantee, trust is purely based on consumer |  Excellent quality, good selling policies and backup services for jewellery | Minimum efforts in packaging, finishing, sales & low advertising |  Has a more contemporary stylish and classic outlook, which easily segments itself among the traditional ones. | Is usually bulky & traditional |  Available at multiple outlets | Available only in traditional jewellery outlets |
  73. 73. BRANDED JEWELLERY Name & reputation gives a confidence to the consumer It comes with a written lifetime guarantee, considering the emotional quotient of the consumer Excellent quality, good selling policies and backup services for jewellery Has a more contemporary stylish and classic outlook, which easily segments itself among the traditional ones. Available at multiple outlets
  74. 74. BRANDED JEWELLERS  Nakshatra  Tiffany  Cartier’s  Gili  Tanishq  D’damas  Gitanjali Jewels
  75. 75. NON-BRANDED JEWELLERY Customer can tailor make jewellery according to their preferences No written lifetime guarantee, trust is purely based on consumer Minimum efforts in packaging, finishing, sales & low advertising Is usually bulky & traditional Available only in traditional jewellery outlets
  76. 76. Analysis  Gold Jewellery Market in India Before the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic market. In 1993, gold and diamond mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These measures led to the entry of foreign players like DeBeers, Tiffany and Cartier’s into the Indian market. In the 1990s, the number of retail jewellery outlets in India increased greatly due to the abolition of the Gold Control Act.
  77. 77. This led to a highly fragmented and unorganized jewellery market with an estimated 100,000 workshops supplying over 350,000 retailers, mostly family-owned, single shop operations. In 2001, India had the highest demand for gold in the world; 855 tons were consumed a year, 95% of which was used for jewellery. The bulk of the jewellery purchased in India was designed in the traditional Indian style. Jewellery was fabricated mainly in 18, 22 and 24-carat gold. As Hallmarking was not very common in India, under-carat age was prevalent. According to a survey done by the Bureau of Indian Standards (BIS), most gold jewellery advertised in India as 22-carat was of a lesser quality. Over 80% of the jewelers sold gold jewellery ranging from 13.5 carats to 18 carats as22-carat gold jewellery. The late 1990s saw a number of branded jewellery players entering the Indian market. Titan sold gold jewellery under the brand name Tanishq, while Gitanjali Jewels, a Mumbai-based jewellery exporter, sold 18-carat gold jewellery under the brand name Gili. Gitanjali Jewels also started selling 24-carat gold jewellery in association with a Thai company, Pranda. Su-Raj (India) Ltd. launched its collection of diamond and 22 -carat gold jewellery in 1997.The Mumbai-based group, Beautiful, which marketed the Tiffany range of products in India, launched its own range of studded 18-carat jewellery, Dagina. Cartiers entered India in 1997 in a franchise agreement with Ravissant. Other players who entered the Indian branded gold jewellery market during the 1990s and 2000-01 included Intergold Gem Ltd., Oyzterbay, Carbon and Tribhovandas Bhimji Zaveri (TBZ).
  78. 78.  Gold Jewellery Becomes Fashion Accessory Till the early 1990s, the average Indian bought jewellery for investment rather than for adornment. Jewellery made of 18-karat gold was not favored as it was considered a poor investment. Confidence in the local jeweler was the hallmark of the gold jewellery trade in India. A jeweler or goldsmith in a local area had a fixed and loyal clientele. The buyer had implicit faith in his jeweler. Additionally, the local jeweler catered to the local taste for traditional jewellery. However, since the late 1990s, there was a shift in consumer tastes: women were increasingly opting for fashionable and lightweight jewellery instead of traditional chunky jewellery. There was a rise in demand for lightweight jewellery, especially from consumers in the 16 to25 age group, who regarded jewellery as an accessory and not an investment. The new millennium witnessed a definite change in consumer preferences. According to Samrat Zaveri, CEO of Trend Smith, "Research shows that the Indian jewellery sector is in the transition phase with consumers' desire for possession of jewellery for its aesthetic appeal and not as a form of investment."
  79. 79.  In October 2002, Trendsmith conducted a survey to understand the shifting need, motivations and aspirations of consumers in the jewellery market, and to identify new trends and opportunities. The research study arrived at the following conclusions: • The Indian market was witnessing an accelerated shift from viewing jewellery as an investment to regarding it as aesthetically appealing ornaments. The focus had shifted from content to design. • The younger generation was looking at trendy, contemporary jewellery and clearly avoiding heavy, traditional gold jewellery. • The consumer wanted a wider selection at a single convenient location and expected an international shopping experience. • The Indian consumer was willing to experiment with new designs.
  80. 80.  Brand appeal Branded jewellery has found a niche for itself in the tough Indian market, and its increasing growth rates show that before long it will corner a significant share of the jewellery market. With the retail industry in India burgeoning, several companies have made inroads into the traditional jewellery industry, selling the product that was never really "marketed" in "brand" new ways. So much so that branded jewellery is the new mantra in the market, having rapidly acquired a niche over the past few years. Some of the companies have even cleverly played on Indian customs and tradition to advertise and establish their brands. Jewellery is now marketed for every occasion; even Valentine's Day calls for "a special something [diamond] for a special someone". In spite of pessimism about the marketability of branded jewellery in a country rooted in buying ornaments from the traditional goldsmith, 30 brands were launched in 2004.
  81. 81. Factors Which Influence The Consumer Buying Behavior Towards Non Branded Jewellary  Price  Believe Towards Traditional Shops  Customization In Design  Purity
  82. 82. Factors Which Influence The Consumer Buying Behavior Towards Branded Jewellary  Price  Purity  Design  Variety  Brand Image  Influence of family and friends  Service and Display
  83. 83. Factors that guide consumer while purchasing jewellery Factors (%)  Design (85)  Price (92)  Purity (87)  Image (65)  Variety (67)  Display (5)  Promotion and Offers (10)  Service (2)  Family and Friends (12) 0 10 20 30 40 50 60 70 80 90 100 2 5 10 12 65 67 85 87 92
  84. 84. Conclusion The jewellery market in India is changing rapidly and the buying behavior of people is changing accordingly. The respondents under the study were highly co-operative and we came out with wonderful results about their perception and the behavior. The results show that the price of gold plays an important role in the purchasing procedure. The rising prices of gold are one of the main factors that affect the purchase for a middle class family. On the contrary, it is not a problem for the business class; they are indifferent in buying jewellery irrespective of the prices, designs and the brand. The consumers buying behavior shows a shift from content to design in jewellery i.e. fashionable jewellery is the rage nowadays and acquires a status symbol in their minds. Branded jewellery players will continue to face lot of competition from local jewelers. People also look for the convenience while visiting the store and this is the reason why some people today also visit non-branded jewellery shops for making purchases as they easily approachable, reliable, prices are negotiable and also they have a long term relationship with them.
  85. 85. Result  Branded jewellery is bought by more than 3/4th of the population in India. Hence it can be said that the population is aware and has also tried these brands.  ‘there was a shift in consumer tastes: women were increasingly opting for fashionable and lightweight jewellery instead of traditional chunky jewellery.’  The level of satisfaction that the population has for branded jewellery is higher then that for non branded jewellery making branded jewellery more popular.  The consumers prefer buying branded jewellery over non branded jewellery  When jewellery is bought for gifting purpose the population still wants to buy it from their family jewelers (non branded).
  86. 86. 70% 30% 0% Branded jewellery preferred over Non Branded jewellery Non Branded Branded 0% 20% 40% 60% 80% Readymade Jewellery Customized jewellery From The Analysis We Observed That 70 % Consumer Preference For Branded And 30 % For Non Branded Jewellery
  87. 87. 1 A PROJECT REPORT ON “A COMPARATIVE STUDY ON THE CONSUMER’S PREFERENCE TOWARDS BRANDED JEWELLERY OVER NON BRANDED JEWELLERY IN MUMBAI.” SUBMITTED BY CHETAN N NAKTE (MARKETING) ROLL NO – B-07 Batch 2011 - 2013 UNDER THE GUIDANCE OF DR. AMIT AGGRAWAL CORE FACULTY - MARKETING UNIVERSITY OF MUMBAI KOHINOOR BUSINESS SCHOOL, KURLA, MUMBAI.
  88. 88. 2 DECLARATION I hereby declare that the project report entitled “A COMPARATIVE STUDY ON THE CONSUMER’S PREFERENCE TOWARDS BRANDED JEWELLERY OVER NON BRANDED JEWELLERY IN MUMBAI” carried out at S.P.JEWELLERS is my work submitted in partial fulfillment of the requirement for Degree of MASTER OF MANAGEMENT STUDIES (MMS), UNIVERSITY OF MUMBAI from KOHINOOR BUSINESS SCHOOL, KURLA, MUMBAI and not submitted for the award of any degree, diploma, fellowship or any similar titles or prizes. Date: Signature: _______________ Place: Mumbai Student Name: ___________
  89. 89. 3 CERTIFICATE This is to certify that the project entitled “A COMPARATIVE STUDY ON THE CONSUMER’S PREFERENCE TOWARDS BRANDED JEWELLERY OVER NON BRANDED JEWELLERY IN MUMBAI” is successfully completed by “Chetan N Nakte” during the second year of her course, in partial fulfillment of the Masters Degree in Management Studies, under the University of Mumbai, through KOHINOOR BUSINESS SCHOOL, Kurla, Mumbai-400070. Date: Place: Mumbai “Dr.Amit Aggrawal”
  90. 90. 4 ACKNOWLEDGEMENT It is my privilege to express my gratitude and respect to those who guided and inspired me in the completion of this project. I am deeply indebted to my project guide of the Kohinoor Business School Dr.Amit Aggrawal for giving me this opportunity to undergo my project in his esteemed organization and for his timely suggestions and valuable guidance. I also want to give thanks to Mr. Namdev G Nakte He constantly encouraged me and showed me the right path from day one till the completion of my project. I am also thankful to Mr. Dattaram Pujari for helping me to proceed in conducting the survey and complete it on time. I am grateful to the Director, Faculties, administrative staff and the librarian of Kohinoor Business School for providing me all the support required for successful completion of my project. Chetan N Nakte
  91. 91. 5 INDEX CHAPTER NO CHAPTER NAME PAGE NO 1 INTRODUCTION EXECUTIVE SUMMERY 1 RESEARCH OBJECTIVES 3 RESEARCH DESIGN AND METHODOLOGY 4 SIGNIFICANCE OF THE STUDY 6 JUSTIFICATION OF THE STUDY 7 2 BACKGROUND OF TOPIC INDUSTRY INTRODUCTION 8 THE EMERGENCE OF BRANDED GOLD JEWELLERY 9 GOLD JEWELLERY MARKET IN INDIA 10 GOLD JEWELLERY BECOMES FASHION ACCESSORY 13 STRATEGIES FOR WOOING CUSTOMERS 14 BRAND APPEAL 15 INDIAN CUSTOMERS SHOWING INTEREST IN BRANDED JEWELLERY 17 TRADITIONAL V/S BRANDED JEWELERS 18 ORGANIZED V/S TRADITIONAL RETAIL 19 CHANGES IN GEMS & JEWELLERY RETAIL 20 3 PROFILE OF THE ORGANISATION S.P.JEWELLERS 22 4 ANALYSIS OF DATA ANALYSIS AND FINDINGS 23
  92. 92. 6 5 CONCLUSION CONCLUSION 34 6 APPENDICES QUESTIONNAIRE 36 BIBLIOGRAPHY 38
  93. 93. 7 Executive Summery Society is a diversified in all aspects. We see this among consumers, marketers, producers and even among consumer behavior from theoretical aspects. The study of consumer behavior enables marketer to predict a consumer behavior in the market; it also produces under standing of the role that consumption has in the lives of individuals. Consumer behavior is defined as a behavior that consumers display while searching for purchase, using, evaluation and disposal of products, services and ideas that they to satisfy their needs. The study o f consumer behavior is concerned not only with what consumers buy, but also with what they buy it, when, from where and how they buy it and how often they buy it. It is concerned with learning the specific meanings that products hold for consumers. Consumer research takes place at every phase of the consumption process; before the purchase, during the purchase and after purchases. Consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It attempts to understand the buyer decision processes/buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. What we buy, how we buy, where and when we buy, in how much quantity we buy depends on our perception, self concept, social and cultural background and our age and family cycle, our attitudes, beliefs, values motivation, personality, social class and many other factors that are both internal and external to us. Consumer behavior is interdisciplinary; i.e. it is based on concepts and theories about people that have been developed by scientist in such diverse disciplines as psychology, sociology, social psychology, cultural anthropology and economics. Consumer research is the methodology used to study consumer behavior.
  94. 94. 8 The study of consumer behavior is the study of ho individuals make decision to spend their available resources on consumption elated items. It includes the study of what, why, when and form where they buy etc. Consumer behavior is a relatively new field of study emerged in late 1960s with no history or body of research of its own unlike branches of economics. Many early theories concerning consumer behavior were based on economic theory on the notion that individuals act to maximize their benefits in the purchase of goods and services. There are number of reasons why the study of consumer behavior developed as a separate marketing discipline. As sum as the marketing researchers began to study the buying behavior of customers, they realized that, despite a something “me too” approach to fashions, many consumer rebelled at using the identical products everyone else used. The primary purpose or studying as part of a marketing curriculum is to understand why and how consumers make their purchase decisions. These insights enable marketer to design more effective marketing strategies. Consumer behavior has become an integral part of strategic market planning. The belief that ethics and responsibility should also be integral components of every marketing concept, which calls on marketer to fulfill the needs of their target market in ways that improve society as a whole.
  95. 95. 9 Objective of study The objective to study the “A comparative study on the consumer’s preference towards branded jewellery over non branded jewellery in Mumbai.” is to find out 1) The consumer’s buying preferences 2) The reach of branded jeweler’s 3) Brand awareness of various brands in the jeweler’s market
  96. 96. 10 Research Methodology Research is initiated by examining the secondary data to gain insight into the problem. The primary data is evaluated on the basis of the analysis of the secondary data. DEVELOPING THE RESEARCH PLAN The data for this research project would be collected through questionnaire. A structured questionnaire would be framed as it is less time consuming, generates specific and to the point information, easier to tabulate and interpret. Moreover respondents prefer to give direct answers. Both type of questions i.e. Open ended and closed ended, would be used. COLLECTION OF DATA a) Secondary Data: It was collected from internal sources. The secondary data was collected from the articles, news papers, management books, and the internet. b) Primary data: They were the main source of Primary data. The method of collection of primary data would be direct personal interview through a structured questionnaire. SAMPLING PLAN Since it is not possible to study whole population, it is necessary to obtain representative samples from the population to understand its characteristics. 1) Sampling Units: would comprise of men and women. 2) Research Instrument SAMPLE SIZE : Structured Questionnaire  100 respondent
  97. 97. 11 The primary data would be collected from 1) The population of MUMBAI city The secondary data would be collected from: 1) Books 2) Magazines/ Project report 3) Internet 4) Articles The questionnaire’s response format for the population would be close ended questions. With a mix of question types varying from ranking, multiple choice to checklist questions. The attitude of the respondents would be measured by itemized category scales, pictorial scale. Hypothesis The null hypothesis would be: “50% of the consumer prefers buying branded jewellery.” – The alternative hypothesis would be: “More than 50% of the consumer prefers buying non branded jewellery.”
  98. 98. 12 Significance of the study The gems and jewellery industry occupies an important position in the Indian economy and is one of the fastest growing industries in the country. Hence the research conducted would help me 1) Understand the consumers preference while purchasing jewellery 2) How much impact does a brand have on their purchase decision 3) Does price play an important role in guiding their purchase decision
  99. 99. 13 Justification of the study The previous research done on branded and non branded jewellery markets are 1) Indian Gems and Jewellery Market - Future Prospects to 2011 2) The impact of recession on the jewellery industry 3) The growth of the Branded jewellery market in India No study has been done to find out the preference of consumer’s between branded and non branded jewelers. The study would also help to find out the consumer preference and their buying behavior towards branded and non branded jeweler’s, this would help both the retailers to know what are the consumer preference and what strategies should they adapt to grab the market.
  100. 100. 14 Introduction Till the early 1990s, the average Indian bought jewellery for investment rather than for adornment. Jewellery made of 18-karat gold was not favored as it was considered a poor investment. Confidence in the local jeweler was the hallmark of the gold jewellery trade in India. A jeweler or goldsmith in a local area had a fixed and loyal clientele. The buyer had implicit faith in his jeweler. Additionally, the local jeweler catered to the local taste for traditional jewellery. However, since the late 1990s, there was a shift in consumer tastes: women were increasingly opting for fashionable and lightweight jewellery instead of traditional chunky jewellery. There was a rise in demand for lightweight jewellery, especially from consumers in the 16 to 25 age group, who regarded jewellery as an accessory and not an investment. The new millennium witnessed a definite change in consumer preferences. Branded jewellery also gained acceptance forcing traditional jewelers to go in for branding. Given the opportunities the branded jewellery market offered; the number of gold retailers in the country increased sharply. Branded players such as Tanishq, Oyzterbay, Kisna and Carbon opened outlets in various parts of the country. Traditional jewelers also began to bring out lightweight jewellery, and some of them even launched their in-house brands. However, the share of branded jewellery in the total jewellery market was still small (about Rs. 10 billion of the Rs. 400 billion per annum jewellery market in 2002), though growing at a pace of 20 to 30 percent annually. The branded jewellery segment occupied only a small share of the total jewellery market because of the mindset of the average Indian buyer who still regarded jewellery as an investment. Moreover, consumers trusted only their family jewelers when buying jewellery. Consequently, the branded jewellery players tried to change the mindset of the people and woo customers with attractive designs at affordable prices. However branded jewellery players will continue to face lot of competition from local jewelers. In order to gain market share, they will have to come up with designs that customers want and
  101. 101. 15 win the trust and confidence of consumers by hallmarking and demonstrating the purity of the gold used by them. To compete with traditional players, branded players must also find some way to differentiate themselves. While the success of a particular brand will depend on differentiation, affordability and quality will be a key element in sustaining a brand. In addition, branded players require focused advertising and astute salesmanship to compete with traditional jewelers. Besides the major brands- Tanishq, Carbon, Oyzterbay, Kisna and Trendsmith - several regional players have opened branches to leverage the trust and reputation that they have built up over the years. The emergence of branded gold jewellery In the late 1990s, the Indian jewellery market witnessed a shift in consumer perceptions of jewellery. Instead of being regarded as only an investment option, jewellery was being prized for its aesthetic appeal. In other words, the focus seemed to have shifted from content to design. Trendy, affordable and lightweight jewellery soon gained familiarity. Branded jewellery also gained acceptance forcing traditional jewelers to go in for branding. Given the opportunities the branded jewellery market offered; the number of gold retailers in the country increased sharply. Branded players such as Tanishq, Oyzterbay, Kisna and Carbon opened outlets in various parts of the country. Traditional jewelers also began to bring out lightweight jewellery, and some of them even launched their in-house brands. However, the share of branded jewellery in the total jewellery market was still small (about Rs. 10 billion of the Rs. 400 billion per annum jewellery market in 2002), though growing at a pace of 20 to 30 percent annually The branded jewellery segment occupied only a small share of the total jewellery market because of the mindset of the average Indian buyer who still regarded jewellery as an investment. Moreover, consumers trusted only their family jewelers when buying jewellery. Consequently, the branded jewellery players tried to change the mindset of the people and woo customers with attractive designs at affordable prices.
  102. 102. 16 Gold Jewellery Market in India Before the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic market. In 1993, gold and Gold ornaments mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These measures led to the entry of foreign players like DeBeers, Tiffany and Cartiers into the Indian market. In the 1990s, the number of retail jewellery outlets in India increased greatly due to the abolition of the Gold Control Act. This led to a highly fragmented and unorganized jewellery market with an estimated 100,000 workshops supplying over 350,000 retailers, mostly family-owned, single shop operations. In 2001, India had the highest demand for gold in the world; 855 tons were consumed a year, 95% of which was used for jewellery. The bulk of the jewellery purchased in India was designed in the traditional Indian style. Jewellery was fabricated mainly in 18, 22 and 24-carat gold. As Hallmarking was not very common in India, under-carat age was prevalent. According to a survey done by the Bureau of Indian Standards (BIS), most gold jewellery advertised in India as 22-carat was of a lesser quality. Over 80% of the jewelers sold gold jewellery ranging from 13.5 carats to 18 carats as 22-carat gold jewellery. The late 1990s saw a number of branded jewellery players entering the Indian market. Titan sold gold jewellery under the brand name Tanishq, while S.P.Jewellers Jewels, a Mumbai-based jewellery exporter, sold 18-carat gold jewellery under the brand name Kisna. S.P.Jewellers Jewels also started selling 24-carat gold jewellery in association with a Thai company, Pranda. Su-Raj (India) Ltd. launched its collection of Gold ornaments and 22 -carat gold jewellery in 1997. The Mumbai-based group, Beautiful, which marketed the Tiffany range of products in India, launched its own range of studded 18-carat jewellery, Dagina. Cartiers entered India in 1997 in a franchise agreement with Ravissant. Other players who entered the Indian branded gold
  103. 103. 17 jewellery market during the 1990s and 2000-01 included Intergold Gem Ltd., Oyzterbay, Carbon and Tribhovandas Bhimji Zaveri (TBZ). Kisna: In 1994, Kisna Jewellery was established as a distinct brand by S.P.Jewellers Jewels, soon after the abolition of the Gold Control Act by the Indian government. Kisna offered a wide range of 18-carat plain gold and Gold ornaments-studded jewellery, designed for the contemporary Indian woman. The designs combined both the Indian and western styles and motifs. With sales of Rs.0.14 billion for the year 2000-01, Kisna had a 0.03 percent share of the 400 billion jewellery market in India and a 1.4 percent share of the branded jewellery market. Tanishq: In 1984, Questar Investments Limited (a Tata group company) and the Tamil Nadu Industrial Development Corporation Limited (TIDCO) jointly promoted Titan Watches Limited (Titan). Initially involved in the watches and clocks business, Titan later ventured into the jewellery businesses. In 1995, Titan changed its name from 'Titan Watches Ltd.' to 'Titan Industries Ltd.' in order to change its image from that of a watch manufacturer to that of a fashion accessories manufacturer. In the same year, it also started its jewellery division under the Tanishq brand. Among the branded jewellery players in the Indian market, Tanishq is considered to be a trendsetter. When it was launched in 1995, Tanishq began with 18-carat jewellery. Realizing that such jewellery did not sell well in the domestic market, the 18-carat jewellery range was expanded to include 22 and 24-carat ornaments as well. When Tanishq was launched, it sold most of its products through multibrand stores. In 1998, Tanishq decided to set up its own chain of retail showrooms to create a distinctive brand image. By 2002, Tanishq retailed its jewellery through 53 exclusive stores across 41 cities. To meet increasing demand, Tanishq planned to open 70 stores by the end of 2003 and offer a range of 'wearable' products with prices starting at Rs. 400. With sales of Rs. 2.66 billion in 2000-01, Tanishq had a 0.66 percent share of the total jewellery market and a 27 percent share of the branded jewellery market. Carbon: In early 1991, the Bangalore based Peakok Jewellery Pvt. Ltd., (Peakok) was incorporated and Mahesh Rao (Rao) was appointed director. Peakok realized that the Indian consumer's relationship with gold jewellery would grow beyond an investment need towards a lifestyle and personality statement. In 1996, within the Peakok fold a new brand of 18-carat gold- based jewellery called Carbon was launched.
  104. 104. 18 In 2000-01, with sales of Rs. 0.14 billion, carbon had a 0.03 percent share of the jewellery market and a 1.4 percent share of the branded jewellery market. The company expected Carbon sales to touch Rs. 1.5 billion by 2005-06 and exports to start by 2008. The brand was available at 40 outlets in 16 cities in 2002 and would be made available in 23 cities by 2005. Oyzterbay: Oyzterbay was founded by Vasant Nangia and his team in July 2000. It began operations in March 2001. By November 2002, the company had 41 outlets across the country. Oyzterbay seeks to build a national brand in the jewellery industry in India and aspires to be the largest branded jewellery company in the country with a chain of 100 stores and several hundred-distribution points by 2004. With sales of Rs. 0.17 billion in 2000-01, Oyzterbay had a 0.04 percent share of the Rs.400 billion jewellery market and a 1.7 percent share of the branded jewellery market Trendsmith: Mumbai-based Tribhovandas Bhimji Zaveri (TBZ), which had been in the jewellery business since 1864, saw tremendous scope in the branded segment and opened its new concept store 'Trendsmith' in Mumbai in December 2001. Encouraged by the response towards its first store, the Zaveris planned to take Trendsmith (India) Pvt. Ltd. all over the nation by opening as many as 50 stores by 2006. Trendsmith offered eight lines of exclusive designer jewellery from well-known export jewellery manufacturers and designers from Mumbai and Delhi. BRANDED GOLD JEWELLERY MARKET (MAJOR PLAYERS) Brand Market share (2000-01) in %) Tanishq 27.0 Oyzterbay 1.7 Kisna 1.4 Carbon 1.4 Source: ICFAI Centre for Management Research.
  105. 105. 19 Gold Jewellery Becomes Fashion Accessory Till the early 1990s, the average Indian bought jewellery for investment rather than for adornment. Jewellery made of 18-karat gold was not favored as it was considered a poor investment. Confidence in the local jeweler was the hallmark of the gold jewellery trade in India. A jeweler or goldsmith in a local area had a fixed and loyal clientele. The buyer had implicit faith in his jeweler. Additionally, the local jeweler catered to the local taste for traditional jewellery. However, since the late 1990s, there was a shift in consumer tastes: women were increasingly opting for fashionable and lightweight jewellery instead of traditional chunky jewellery. There was a rise in demand for lightweight jewellery, especially from consumers in the 16 to 25 age group, who regarded jewellery as an accessory and not an investment. The new millennium witnessed a definite change in consumer preferences. According to Samrat Zaveri, CEO of Trendsmith, "Research shows that the Indian jewellery sector is in the transition phase with consumers' desire for possession of jewellery for its aesthetic appeal and not as a form of investment." In October 2002, Trendsmith conducted a survey to understand the shifting needs, motivations and aspirations of consumers in the jewellery market, and to identify new trends and opportunities. The research study arrived at the following conclusions: • The Indian market was witnessing an accelerated shift from viewing jewellery as an investment to regarding it as aesthetically appealing ornaments. The focus had shifted from content to design. • The younger generation was looking at trendy, contemporary jewellery and clearly avoiding heavy, traditional gold jewellery. • The consumer wanted a wider selection at a single convenient location and expected an international shopping experience. • The Indian consumer was willing to experiment with new designs. The late 1990s and early 2000s, with the increase in the number of designers from design schools such as the National Institute of Fashion Technology (NIFT), a wide range of new designs.
  106. 106. 20 Strategies for Wooing Customers Tanishq In the late 1990s, players in the branded gold jewellery market formulated strategies for wooing customers. According to Jacob Kurian (Kurian), Chief Operating Officer of Tanishq, the challenges were many. As the jewellery market was highly fragmented, lacked branding, and allowed many unethical practices to flourish, Tanishq worked hard on a two-pronged brand- building strategy: cultivate trust by educating customers about the unethical practices in the business and change the perception of jewellery as a high-priced purchase. Said Kurian, "We are changing the attitudes of customers from blind trust to informed trust." To increase its market share, Tanishq formulated a strategy for luring people away from traditional neighborhood jewelers. Tanishq's strategy was to create differentiation and build trust. According to Kurian, the first part of the strategy was "to provide a point of differentiation in a highly commoditized category - which is the whole point of branding." The second part of the strategy was to project Tanishq as an unimpeachable mark of trust. According to Kurian, "If differentiation plays the role of primary attraction, trust takes care of lifelong loyalty.” One way to create differentiation was through design. The emphasis had to be on design because local jewelers could offer to design any pattern according to the customer's specifications. For a national brand a generic design concept with regional variations had to be evolved. For this, Tanishq set up a seven member in-house design team and also outsourced designs from freelance designers. The designers travelled the length and breadth of the country to get feedback on Tanishq's designs and learn about customer preferences. On the basis of this feedback, each showroom could select the designs it would carry. Source:http://www.icmrindia.org/free%20resources/casestudies/branded-gold-jewellery1.htm
  107. 107. 21 Brand appeal Branded jewellery has found a niche for itself in the tough Indian market, and its increasing growth rates show that before long it will corner a significant share of the jewellery market. WITH the retail industry in India burgeoning, several companies have made inroads into the traditional jewellery industry, selling the product that was never really "marketed" in "brand" new ways. So much so that branded jewellery is the new mantra in the market, having rapidly acquired a niche over the past few years. Some of the companies have even cleverly played on Indian customs and tradition to advertise and establish their brands. Jewellery is now marketed for every occasion; even Valentine's Day calls for "a special something [Gold ornaments] for a special someone". In spite of pessimism about the marketability of branded jewellery in a country rooted in buying ornaments from the traditional goldsmith, 30 brands were launched in 2004. However, this does not take away from the fact that India is a tough market. According to Mehul Choksi of the D'Damas and S.P.Jewellers Group, branded jewellery has witnessed more than 50 per cent growth in the last three years. The Gold ornaments branded jewellery, he says, is especially impressive with the segment witnessing a 20 per cent rise annually as against 10 per cent a decade ago. Although branded jewellery accounts for less than 10 per cent of the Rs.40,000-crore jewellery market, a study has concluded that it is growing in popularity at a tremendous pace of 20-30 per cent annually. Such is the potential of this industry that the consulting firm McKinsey estimates the branded jewellery market in India to grow at the rate of 40 per cent per annum to touch Rs.10,000 crores by 2010. Big drivers of this kind of jewellery are the numerous malls opening across the country with the emergence of an affluent class following the successful growth of the new economy companies. In the past decade, the country has seen a section of the population gaining exposure to designer wear, fashion accessories and globally branded products. "Why not have accesses to them?" asks Rima Khan, a brand executive. "Of course jewellery is harder to brand but it has done well given the tough competition," she says. One of the reasons branded jewellery is doing well is that now anyone can walk into a mall, window shop and decides at their own what they would like to buy. The entire culture of
  108. 108. 22 shopping has changed with attentive and helpful attendants and well-displayed products. "You no longer have the sales staff who look at you and decide whether you are worth serving or not. Everyone is a potential customer in the new market," says Rima Khan. Yet the most important part of branded jewellery is that you can get a piece of jewellery with a Gold ornaments for as little as Rs.1,500. And as branded is equated with quality, you are assured of a good product. "Suddenly jewellery has become accessible and affordable for all income brackets." The shift was visible in 2004 when more than 30 players entered the market. Today there are more than 50 brands, endorsed by models, film actors, sports celebrities and other well-known faces. Some designs of these brands are so popular that local jewelers have begun to copy them. "While it is a compliment to the industry that people like the product, it could also affect the company because the cost may be lower," says Rima Khan. The biggest challenge perhaps is in educating the consumer. Consumers need to understand the four Cs - Cut, Carat, Color and Clarity. Companies that brand their products place a lot of emphasis on educating and therefore helping the customer make his purchase. "Buying jewellery is a very personal thing and we need to understand what we are buying," says Seema Thakur, an attendant in a jewellery store at a mall in Mumbai. "We have an average of 50 people on a week day and at least 100 on a weekend who walk in and look around the shop. If you make the product look special, for instance, appeal to a young gentleman to buy it for a loved one, he is often interested." And the big selling point is: "If you can spend Rs.1,000 on two music CDs, why not spend for that special person in your life." The branded jewellery industry is still in its infancy, but increasing growth rates show that in a short time it will corner a significant chunk of the market. Perhaps the best compliment to the branded segment is that old jewellery showrooms have also begun to design jewellery lines under a brand name.

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