Titan’s jewellery brand is scaling up fast to maintain its leadership in the organised segment.
The Pune store is the company’s third large-format store after Chennai and Mumbai, and is a part of its efforts to provide a one-stop destination for all price points. Tanishq plans to open 15-20 new stores, including five large ones, taking the total count to 140 across 76 cities by this financial year.
That will make Tanishq the largest organised sector player in the over Rs 80,000 crore jewellery market.
There are enough reasons why Titan Industries, the parent of Tanishq, is expanding fast. The brand now faces competitors with very deep pockets. And it is not Reliance Retail alone, which has opened jewellery stores across major malls. Several local ones have also come up fast with super-large stores that deliver better returns. So the need is to scale up quickly.
For Titan, there is a lot at stake. Tanishq brought in 75 per cent of Titan’s over Rs 5,000 crore revenue in the last financial year. Operating profit from the vertical was Rs 429 crore, which is around 78 per cent of Titan’s total operating profit. The diamond jewellery business alone grew 45 per cent in value terms last year.
That’s a long distance from a time when the Tatas were even contemplating closing down Tanishq, as it was losing money heavily.
Also Read
Titan’s new focus is the diamond jewellery segment, which accounts for nearly a third of the total jewellery business. The balance comes from gold products. “We want to improve this ratio to 40 per cent in the next three to four years,” C K Venkataraman, chief operating officer, Jewellery, Titan Industries, says, adding the operating profit margin from diamond jewellery is much higher than from gold ones.
The first step to achieve this was taken in April this year when Tanishq roped in Bollywood’s leading couple Amitabh and Jaya Bachchan to endorse its diamond range. The campaign mainly aimed at educating and spreading awareness among consumers about how to assess the purity of diamonds. The focus was on the 4c’s — cut, clarity, colour and carat of diamond.
Tanishq says the competition is coming more from domestic players than international jewelers, which are very expensive and cater only to a certain profile of customers.
This doesn’t mean that the gold segment will be ignored. “Gold continues to do exceedingly well and we expect a 15 per cent rise in consumption despite the increase in prices,” Venkataraman says.
Tanishq, which reached out to the semi-urban and rural markets through a separate mass-market brand called GoldPlus, is now in the process of consolidating its position. “We have 31 stores in various parts of Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra as of now. We have been consolidating the operating model of Gold Plus to bring more efficiency into the system,” Venkataraman says.
However, Tanishq also has to fight the perception of being a premium brand due to what many call a case of over positioning. A lot of effort has to be taken to spread the message that Tanishq also makes affordable jewellery. To tide over the problem, Tanishq came out with small priced collections.
Tanishq, though, has no plans to enter foreign markets in the near future. “Opportunity in India is higher than any other country. Unless domestic demand plateaus, we don’t see any convincing and compelling reason to go outside,” he said.
Some others say the company’s branding strategy needs to be fine-tuned to showcase more youthfulness. “Diamond is not a brand of older people and Tanishq should reposition the brand to attract more young people to buy diamond,” Harish Bijoor, chief executive officer of brand consultancy firm, Harish Bijoor Consults Inc, says.
He, however, says that Tanishq has evolved as a brand of ‘integrity and value’ with a high level of consumer trust on the brand. In 1995 when it was launched, Tanishq brought in a wide design expertise and a plush retail environment to a segment which until then was limited to local family jewellers and small set ups. For example, it was the first to introduce the karat meter to measure the exact purity of gold.