Ways out of the slump: answers from the frontrunners
Can the jewellery industry develop its own path out of the prolonged market slump? At the SGL Retail Jeweller India Forum 2019, a panel discussion was dedicated to this important question.
Moderated by Devang Shah of KPMG, the panel featured the industry luminaries Salish Mathew of Malabar Gold and Diamonds, Rajesh Kalyanaraman of KalyanJewellers, Ramesh Narang of Hazoorilal Legacy Jewellers, Vijay Jain of Orra and Saurabh Gadgil of PN GadgilJewellers, as well as N AnanthaPadmanaban, chairman of the newly established All India Gem and Jewellery Domestic Council (GJC).
A member of the audience asked whether jewellers should rethink their business processes. This prompted Kalyanaraman to say that a company would be wise to focus on its permanent assets such as manpower and operations, instead of trying desperately to keep up with technological trends.
“The future calls for transparency and high-level checking,” he said. “Rules are going to be harsher and designed to promote equality of opportunity. They will impact every player. Also, technology changes faster than one may realise. The way to cope is never to overlook the human resources and operations that absorb and respond to changes in law and technology.”
In response to the same question, AnanthaPadmanaban urged jewellers to go back to creating wonder around their products by advertising consistently. He gave the example of De Beers, which enraptured women for decades with its immortal tagline, “A diamond is forever.”
“To me,” he said, “social media is only for millennials. If you want to do volumes in trade, you need to reach out to the masses. As an industry, we need to change our strategies. One good thing is that the organised sector is expanding by leaps and bounds. We need to take charge of this momentum and initiate change in our ideology and business processes to succeed.”
One change of strategy would involve better data collection and analysis. Falling demand for diamond was a “myth”, said Vijay Jain, CEO, ORRA, describing some of his company’s exhaustive in-house research work.
“In December 2018,” he said, “we chose two stores and ran a pilot project therein, aimed at 50 per cent same-store growth of sale.” ORRA began by sorting customers into two target groups for the purposes of marketing: mothers of the bride, and millennials. Monitoring data week-on-week thereafter, Orra saw same-stock growth to rise to 62 per cent, Jain said, while diamond jewellery sales doubled.
“The numbers of occasions and weddings have multiplied,” said Jain. “So I remain positive. From an industry perspective, we are doing pretty well in comparison to FMCG [fast-moving consumer goods] companies. What’s more, ORRA has not reduced its gross margins despite 70 per cent of its business coming from sales of diamond jewellery.”
Having tasted success, he went on, “We developed a plan to take the project pan-India. We calculated how much footfall we need. We grouped customers into three lots — old, active, dormant — and identified a required conversion rate for each. Regarding this conversion rate, we figured out how much of sales conversion is accountable to development in training modules and stock quality individually. We planned the kind of stock we need.”
Does a regional retailer have to expand as a national player in India? To this question Gadgil responded, it’s all about scale. “There are South Indian brands that are touted as national and there are powerful regional brands such as Senco,” he said. “Anyone can expand their business, because it’s all about utilising capital to catch a new customer base, even internationally.”
Cultural diversity in India, he added, enables retailers to bring an equal variety to their product range. “Millennials’ preferences tend to homogenise the inventory base everywhere,” he said, “because of their global perspective. Thus no jeweller can say he manufactures for a particular customer. There has to be something for everyone.”
Narang agreed with Gadgil. “We create design-rich, bespoke jewellery and are happy with our current business scale,” he said. “We don’t want to open stores everywhere else.”
“We cater not only to millennials but also centennials, who are born after 2000 and are going to have their first income this year,” said Mathew. Retailers must be aggressive, he said, in providing these consumers the kind of shopping experience that allows them to buy jewellery while being on the phone.
“We need to talk their language and focus on marketing that attracts them now,” Mathew said. “Legacy brands tend to focus on the same old touchstones of business, trust, value. Whereas, if you’re a young consumer, what matters is more personal, more immediate. Perhaps you no longer use the very first mobile phone your father gave you, but the ring he gave you is still on your finger — we must spread this message of sentiment to millennials as well as Gen Z, the centennials.”
Beyond the consumer, Mathew had a message for his industry peers. Jewellers can sort themselves by category for the purposes of B2B trade, he urged, but they must come together and speak as one when facing the government or communicating with consumers. As an example, he said: “Handmade Indian jewellery is perhaps the only product across the world for which consumers do not pay a premium. They are happy to do so for handmade cars, watches, and so on. The industry must unite and speak in common cause,” in cases such as this.
Kalyanaraman differed from Mathew, saying that there is no need to generalise one’s approach to consumers based on which generation they may belong to. Kalyan Jewellers, he said, brings regional design elements into its showrooms from time to time, so that it can nurture its appeal to audiences from different parts of India. “At any given time we have campaigns running that target regions rather than consumers. This means that we are telling, let us say, a Bengali consumer residing in South India that we have jewellery that reflects the tastes of your region too. This is how we differentiate our marketing.”
On the subject of optimising a business by cutting costs, Jain extolled the virtues of linking a company’s enterprise resource planning (ERP) system to its website. “Manpower is becoming more expensive day by day,” he said, “so technology should replace certain routine jobs.”
Mathew led the panel to a consensus on technology being used to enable business, with the following statement: “Malabar has worked on mastering its back-end operations. Now we need to capture the response of customers and then make jewellery. Devices using Alexa and Siri, for instance, respond to a listener’s request instantly. We can actually install these devices in our showrooms and ask them to track the customers’ most commonly spoken words. If we find that customers are most concerned about the making charge, we work on that. If it is design that preoccupies them, we work on it. We use technology to follow and respond to customers’ actual needs.”
A member of the audience asked whether cost overruns could be avoided while assuring customers of luxury. Narang took this opportunity to raise his concerns about the idea of reducing the making charge. “In the next five years,” he said, “the middle class in India will double in number. People will be buying jewellery for their spouses for the first time. To attract them, we need to increase the aspirational value of jewellery.”
He made the important point that “Jewellery’s competitors, such as tourism, gadgets and so on, are not considered investments. We will be left 50 years in the past if we continue to promote jewellery as a mode of investment.