India is a large consumer of Gold. With soaring prices sales have been under pressure for organized Gems and Jewellery Retailer like Tanishq. Here is the Reality Check of the Industry and the management’s views on the same.
Tanishq gold jewelry volumes have come down. Margins are now partly linked to gold price and hence profitability is less impacted than sales. Also, higher margin diamond jewelry has been growing at a faster rate than plain gold jewelry resulting in mix gains. Management believes current high gold prices are not sustainable as Indian demand has dried up. The company aims to introduce larger format stores in Tier-I cities with wider product portfolio to beat the local jeweler.
Titan has 30 Gold Plus stores to date and plans to open 5-6 stores next year. While sales in Tier-II/III towns have been encouraging, the company has found it difficult to find an appropriate trust worthy franchisee and hence slower than expected ramp up
Titan Watches has not remained immune from consumer slowdown. However, the impact is not uniform across geographies and consumer segments. Tier-II / III cities have not witnessed any slowdown as yet and have outpaced the large cities in growth rates over last few months. Even among the metros / large cities there is a wide variance – Mumbai has definitely been impacted, so have been IT hubs Bangalore and Hyderabad. Youth and women seem to have been least impacted segments.
Management believes that the key to achieving growth in watches is launching frequent new collections backed up by advertising spend. The company has opened 4-5 exclusive Fastrack stores on pilot basis focusing on youth accessories like leather bags, belts, wallets etc. besides sunglasses and watches where they were already present. These stores would be small in size – 400-500 sq ft, located in malls or near university campuses.