Help millennials associate with jewellery to check spending in other verticals
Do not overlook millennials.” This was Devang Shah’s message, in his presentation titled “Crystal-gazing to discover India’s retail potential in jewellery”. His reasoning was simple, and solid: “In a few years, these millennials will be somebody’s parent or relative. Losing out on an entire generation will cause tremendous harm to jewellery retail.”
Shah is co-founder, strategy & operations, consumer markets, KPMG. His common-sense, hard-hitting statement about millennials helped fasten his audience’s attention on one particular shift in today’s market, together with one widely noted consequence of that shift. “The tapering growth [rate] of the jewellery industry,” he said, “is due to the changing nature of consumer confidence.”
It is a profound statement, valid in several ways. Culturally and historically, Indians have bought gold jewellery for its asset value as well as for adornment. Today, however, other avenues for investment are becoming more readily available, thanks to the expansion of banking and access to mutual funds. Nonetheless, rather than diverting savings elsewhere, Shah described this moment as an opportunity for the gems and jewellery sector to grow its share of India’s GDP from the current 11–12 per cent. This can rise handsomely, he said, if consumers start investing in gold.
The situation at present is that millennials willingly buy into other luxury categories, at a proportionately lower scale of marketing. Younger consumers feel disassociated from precious jewellery. Shah urged jewellers to study how “fast fashion” brands such as Zara and H&M keep millennials, with their short attention span, engaged, to achieve growth rates of as much as 100 per cent.
However, “These brands change their products every 15 days,” he said. “With an entry barrier (making charge) of 15 per cent, how can jewellers appeal to these customers while retaining the investor class? The first step is by drastically reducing making charges.” Although a strong and apparently counterproductive suggestion, Shah said it is required that jewellers get into the same level-playing field as that of other luxury brands to even get millennials interested as the target audience ‘consumes’ services instead of ‘treasuring’ products. For a luxury sector that is trying to pitch its product as more of an adornment and less of investment, Shah implied it is time that the players start reorganizing their business strategies to truly be competitive and not ‘inaccessible’ in the luxury space.
Talking about the untapped potential of the Internet, Shah praised the approach and colossal reach of the Reliance Industries-owned Jio mobile data network. He went so far as to separate India’s Internet era into two parts: pre-Jio and post-Jio.
“Before Jio, the average monthly data consumption of an Internet-using Indian was 20GB [gigabytes]. This shot up to 100GB after Jio was launched,” he said. As many as 70 per cent of Indians are on the Internet, Shah said, and 80 per cent of Indians watch television, at a time when jewellers still feel it worthwhile to advertise in the print media, where such advertising achieves negligible visibility.
For a sector that is confined to traditional advertising and thus, is getting alienated from the younger ones purely because of a lack of digital outlook, Shah said if the retailers want to spread business over to the generations having an income today, they must think of advertising beyond social media and use the Internet across businesses. He added that doing so will help check unorganised trade that stays confined to social media promotion because of lack of bandwidth to invest or tie-up with content-rich websites that also have advertisements of other luxury products. A lot of conversions happen from these websites too which promote the need for a product in a much stable and efficient manner to the consumer targeted. Easier sales will come from retention and not acquisition, said Shah. He urged his audience to focus their business processes, such as procurement, loyalty programmes, and so on, on customer delight. One example he offered was a cost-reduction project implemented by KPMG in which the consultancy decided, in each case, to focus on its customers’ most basic needs.
The inference Shah drew from the KPMG experience was this: avoid unnecessary cost escalations while packaging a luxury product. Every time an unmerited cost escalation was detected and removed, he said, the product became more competitive and sales grew.
Another model he highlighted was that of Tanishq, which sells jewellery at a premium to the market. Shah’s takeaway was that the key to growth is pitching every product based on the customer’s needs. The way Tanishq has included a consumer’s desire, aspiration and emotions to be valued through their advertisements through decades, it is time, Shah said, other players in the industry also start making and promoting jewellery based on current customer behavior instead of thinking of their margins only. It is indeed a long and arduous race for jewellers but the catch too is huge, once a millennial starts seeing more value in jewellery than tourism. So the need of the hour is a fiercely competitive and digital positioning of the jewellery industry.