Branded Gold Jewellery Market in India
"There is definitely a market for branded Jewellery especially if something is aimed at
the younger generation, which wants to buy fashionable real Jewellery. This is the right
time to get into the market, as it has just started to take off."1
- Devika Gidwani, Director of Diamond Information Centre, India
The Gold Rush
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, Gili 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.
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(2), 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,3 Tiffany4 and
Cartiers5 insto 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.6 Jewellery was fabricated mainly in 18, 22 and 24-carat gold. (Refer Table I for
carat calculation) As Hallmarking7 was not very common in India, under-caratage was
prevalent.
According to a survey done by the Bureau of Indian Standards (BIS),8 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 22carat 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.9 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).
Gili: In 1994, Gili Jewellery was established as a distinct brand by Gitanjali Jewels, soon
after the abolition of the Gold Control Act by the Indian government. Gili offered a wide
range of 18-carat plain gold and diamond-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, Gili 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 (Refer Table
II).
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. 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.
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."10
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.
In 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 became available. In addition, the growing number of manufacturers
needed a retailing platform with global and national reach. All these led to the
proliferation of branded Jewellery players.
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."11 To increase its marketshare, 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."12 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."13 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. (Refer Exhibit I for Tanishq's design).
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. To stay ahead of competition
from local jewelers, Tanishq decided to focus on quality control. In 1999, it introduced
caratmeters which showed the purity of gold.
In fact, Tanishq's USP was the purity of its gold. Accordingly, the company's ad
campaigns emphasized the purity aspect of all Tanishq ornaments. (Refer Exhibit II for
Tanishq's Ad Campaign) In November 2002, Tanishq introduced a new collection of
Jewellery called 'Lightweights.'
The collection featured neckwear, earrings, bangles, rings and chains in 22 karat gold
with prices starting at Rs 1,100. It also launched Lightweight Diamonds, with prices
starting at Rs 3,000. Tanishq focused not only on urban markets, but small town markets
as well. Real estate was less expensive in the small towns than in large urban centers.
Besides, competition from stores in small towns was less stiff than competition from the
large Jewellery stores in the metropolitan cities. According to Kurian, the best returns on
investment came from small towns.
Carbon
Carbon's focus had always been to move Jewellery from the vault to the dressing table
and bring the selling of Jewellery out of heavily guarded Jewellery stores. This was
achieved by persuading a few lifestyle stores to add branded Jewellery to their vast array
of products. Besides selling from lifestyle stores, Carbon also sold its products as gift
items over the internet. Like Tanishq, Carbon laid emphasis on design.
Most of its designs were contributed by students at the National Institute of Fashion
Technology (NIFT) through the diploma programme which the company sponsored. In
addition, Peakok's team of six designers, (headed by Rajeswari Iyer, an alumnus of a
German design school who had worked in the U.K., Germany and India) turned out
around 180 to 200 styles in a year, with 75 designs per style.
At any point in time, there were around 600 designs of Carbon on sale, and on an
average, 300 to 400 pieces per design were sold. In 2002, Carbon launched its 'Sun Sign'
collection, which was based on the symbols of the Zodiac. This collection was a set of 12
pendants designed in a blend of 18 carat white and yellow gold (Refer Exhibit III).
While 18 carat gold was commonly used in Carbon products, some of the designs also
used white gold, titanium and steel. Diamond was the preferred precious stone, but other
colored stones were also used. Comprising items of everyday use, (rings, chains,
bracelets, ear studs, tie-pins and cuff links) Carbon items were an impulse purchases.
(Refer Exhibit IV) The brand had no offtake cycles in the year, like the marriage season,
unlike traditional Jewellery.
The creation, manufacture and marketing of Carbon was different from the making and
selling of traditional Jewellery. Said Rao, "We are attempting here to eliminate the low
productivity, quality inconsistencies and high precious metal loss associated with
traditional Jewellery making.
We have instituted modern manufacturing practices such as self- contained small groups
in the assembly area, self-inspection by the operators, the Japanese Kaizen approach to
improvements in operational practices and the like. We have brought down our
manufacturing loss of gold to 6.8 per cent. The average in the traditional Indian Jewellery
shop is as high as 22 per cent, while the world average is only 2 per cent."14
As the profile of the average customer likely to purchase a Carbon item was a well-paid
urban professional, 24 to 38 years old, having a credit card, it was decided that Carbon
should not be placed in the usual Jewellery shops but made available at `shop-in-shop'
outlets in large lifestyle stores (such as Shoppers Stop, Ebony, Globus, The Bombay
Store, Lifestyle and Taj Khazana) and some premium boutiques (such as the Helvetica in
Chennai).
Said Rao, "We are looking at cross-promoting Carbon Jewellery with other branded
lifestyle products such as perfumes, clothing and cosmetics."15 Carbon products were
priced between Rs. 2,750 and Rs. 20,000 per piece. While the cost of traditional
Jewellery was negotiable, the cost of Carbon items was fixed and nationally uniform.
Oyzterbay
Oyzterbay, with its tag line "Jewellery for the Living", had become synonymous with the
entire gamut of occasions where modern young women would like to wear stylish and
affordable Jewellery. Oyzterbay's collection comprised over 1200 designs in 18, 22 and
24 carat gold and sterling silver, with natural colored gemstones.
The price of the Jewellery ranged between Rs. 500 and Rs.30000. The initial focus of
Oyzterbay was to give a lifestyle value to Jewellery instead of the traditional investment
value.
In the second year of its launch, Oyzterbay emphasized on marketing and advertising
strategies to give the necessary thrust for growth. In order to transform itself from a youth
brand to a brand for all occasions, Oyzterbay launched media campaigns in August 2002
highlighting the new look. The new communication strategy focused on addressing the
18 to 34 age group instead of the earlier 18 to 24 age group. The new campaign focused
on positioning Oyzterbay as Jewellery for office wear, evening wear or even a fitness
session. (Refer Exhibit V) The broadening of focus to include an older segment was the
result of market research which showed that the brand appealed to middle-aged working
women and affluent housewives.
The investment in the new campaign was Rs 50 million. Where Oyzterbay scored over
others was its simple and refreshing designs and affordability, making it distinct from the
usual gold Jewellery stocked in standard Jewellery showrooms and contemporary
Jewellery offered by traditional Jewellery houses trying to cater to the trend.
Priyadarshi Mohapatra, Marketing Manager, Oyzterbay, said "We began by selecting a
completely different reach - everyday Jewellery for the working woman and Jewellery for
the youth. We felt that Jewellery should be brought out of the locker. So we positioned
(it) to accessorize the dress of the young, college-going crowd, which otherwise sported
junk Jewellery.
The second segment was the working woman for whom we sought to build a wardrobe of
Jewellery by making it affordable, so that she could pick up pieces regularly."16
Oyzterbay later extended the same brand values to diamonds too, the idea being to target
a niche market. Oyzterbay refurbished its collection every few months, keeping in mind
international trends. By so doing, they were able to offer exclusive products to clients.
As part of the Oyzterbay Summer 2002 collection, it offered pendants, earrings, finger
rings, bracelets, neckwear, and chains with natural gemstones set in white gold, as white
gold was evolving as a fashion statement across the world.
Although Ozyterbay was known for its Jewellery in gold and sterling silver embellished
with natural gemstones, it decided to launch 'Your First Diamond', a complete range of
diamond Jewellery set in white, pink, and yellow gold. The price of the collection started
from Rs. 500 with the most expensive piece not exceeding Rs. 12,000.
Gili
Gili distributed its Jewellery priced between Rs. 500 and Rs. 40,000 through lifestyle and
department stores across the country to increase accessibility among its target segment,
the 15 to 30 age group.
The company's products were also made available through a mail-order catalogue. In
1997, Gili launched a collection of traditional Indian ornaments made of 18-carat gold. In
1999, the Gili Gold range was introduced.
This range included rings, pendants, earrings, necklaces and bangles made of 24-carat
gold. All Gili products came with a guarantee of diamond and gold quality.
When research conducted in February 2000 showed that there was a big gap between the
Rs. 1000 and Rs. 10000 price segment and keeping in view the teenage population, and
the kind of pocket money they had, Gili brought out a collection targeting teens. In 2000,
Gili launched its 'diamond heart collection' targeted at teenagers and priced between Rs
500 and Rs.2500.17
The collection was promoted at college campuses with banners, pamphlets and a few
advertisements targeted at teens. Gili soon realized that just pushing its product was not
enough; it also had to customize its products for special occasions. Following this, it
launched a Diamond Heart Collection specially designed for Valentine's Day. This
collection consisting of tiny, heart-shaped diamond Jewellery was well received by teens
Special packaging, catchy advertising and extensive press coverage contributed to the
success of the collection. Gili also made special promotional offers during festive seasons
like Christmas and Diwali. Having captured the low price point market of Rs.2000 to
Rs.10,000, in 2000, the company focused on penetrating the premium market of
customized Jewellery. For this, Gitanjali jewels opened a Jewellery salon, Gianti, to
provide customized Jewellery to clients in India.
Trendsmith
Trendsmith specialized in premium, exclusive and modern looking Jewellery distinct
from TBZ's traditional designs. The brand's USP was that every piece of Jewellery was
exclusive and unique. There were different collections for babies, teenagers and
weddings. Trendsmith stores had a comfortable ambience and a clutter free display of
products.
According to Samrat Zaveri, Managing Director, Trendsmith "is a store for those with
little time and big pockets." The stores also provided space for other premium Jewellery
and accessory brands such as Aashi,18 Blue Fire, Solange,19 Nakshatra, Aura 22,
Mimansa,20 Brilliant and Moksh.21 The prices for these pieces of Jewellery started from
Rs. 10,000.
The range comprised finger rings, pendants, bangles, bracelets and neckpieces.
Trendsmith laid emphasis on affordable, fashionable Jewellery. It changed its collection
every season. Trendsmith also had a design studio where customers could design their
own Jewellery. The company advertised in women's fashion and lifestyle magazines
since the readers of such magazines formed 80 percent of its clientele.
To remain in the public eye, Trendsmith planned to host events whenever it launched a
new collection. The company intended to spend Rs 30 - 40 million annually, on such
events.
All That Glitters is Not Gold
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 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, Gili and Trendsmith- several
regional players have opened branches to leverage the trust and reputation that they have
built up over the years. This is going to add to the competition in the branded Jewellery
market. Most of the branded Jewellery players in India focused on yellow gold; only a
few of them experimented with the pink and white forms of gold. Some of the players
also used diamonds and platinum, which appear to have a good future in the Indian
Jewellery market.
Questions
1. In the late 1990s, there was a shift in demand for jewellery from traditional 22karat jewellery to branded lightweight jewellery. This trend forced jewellers to go
in for branding. Discuss why lightweight branded jewellery became popular with
Indian consumers.
2. Though the branded jewellery segment is estimated to be growing at an annual
rate of 20 to 30 percent, it is still a miniscule part of the total jewellery market.
Analyze the structure of the gold jewellery market in India. Why do you think no
single player has been able to corner a significant share of the market?
3. Evaluate the effectiveness of the strategies adopted by the branded players for
increasing their share of the market. Suggest some strategies that would help
branded players increase their share in the jewellery market.
4. The branded jewellery market is dominated by a few players with each trying to
differentiate its products from those of others. Tanishq has achieved a substantial
lead in this market. Discuss the strategies adopted by Tanishq to lure customers
away from traditional family jewelers to its stores.
5. Competition in the branded jewellery market is likely to intensify in the future.
What are the key success factors for growth in the industry? Which of the existing
players is best positioned to grow fast and exploit market opportunities? Identify
the branded jewellery player who is likely to lead the industry.
References
1] Business India, February 17, 2002.
2] The Gold Control Act of 1962 banned the holding of "primary" or bar gold, except by
authorized dealers and goldsmiths, and sought to limit the Jewellery holdings of families.
3] For more than a century, the name DeBeers was synonymous with diamonds. The
company led the world in exploration, mining, and marketing of diamonds. As part of a
venture agreement, De Beers SA transferred to De Beers LV (an independently managed
company established in 2001 by DeBeers SA and LVMH Moet Hennessy - Louis
Vuitton, the world's leading luxury goods company) the worldwide rights to use the
DeBeers brand name for luxury goods in consumer markets.
4] Tiffany & Co (Tiffany) is an internationally renowned retailer, designer, manufacturer
and distributor of Jewellery, timepieces, sterling silverware, crystal, stationery,
fragrances and accessories. In 2002, Tiffany had more than 100 stores and boutiques in
US and international markets.
5] The Paris-based Cartiers is the maker and seller of watches, wedding and engagement
rings, diamond Jewellery and other luxury goods.
6] In South India, the designs are inspired by nature with motifs of the mango, rice
grains, melon, cucumber seeds, etc. In Western and Northern India the designs are
influenced by the Meenakari (enamelling) and Kundan (setting of precious and semiprecious stones in gold) styles.
7] Hallmarking is an inscription on any piece of Jewellery that shows the caratage of the
gold used. This prevents consumers from being duped into buying low caratage
Jewellery.
8] The Bureau of Indian Standards (BIS) was set up after the enactment of the Bureau of
Indian Standards Act, 1986. It operates a product certification scheme, and grants
licenses to manufacturers in industries ranging from agriculture to textiles to electronics.
The certification entitles licensees to use the ISI mark, which is considered the symbol of
quality in India.
9] Ravissant is India's leading luxury and lifestyle store. It has strategic tie-ups with some
of the world's best-known luxury brands. Ravissant has exclusive retail distribution
arrangement for Cartiers' products in India. Cartiers' first showroom in India was opened
at a Ravissant store in Delhi in 1997. This Ravissant boutique houses the latest collection
of Cartiers' products.
10] Business India, November 26, 2001.
11] Tata.com/ tanishq.
12] A&M, January 15, 2001.
13] A&M, January 15, 2001.
14] The Hindu, October 4, 2001.
15] The Hindu, October 4, 2001.
16] The Hindu, June 3, 2002.
17] In 2003, Tribhovandas Bhimji Zaveri (TBZ) jewelers launched its 'Cupid Collection'
of pendants, chains, bracelets and rings for Valentine's Day. This range started at Rs.775.
18] The Aashi range consists of multi-functional Jewellery.
19] Solange is a range of diamond-studded gold and platinum designer wear, with prices
starting at Rs. 20,000.
20] Mimansa is a collection of bracelets and earrings in 18k gold, priced at Rs. 20,000.
21] Moksh is a range of designer and bridal Jewellery, priced Rs 15,000 onwards.