Glitter mobility

RETAIL: It's time for Titan's Tanishq to encash its early-mover lead, and that means fanning out fast.

There is something about the glitter of gold that defies artificial barricades. And for far too long, branded jewellery showrooms have been thought of exclusively as a metropolitan phenomenon. Bhaskar Bhat, on a frenetic tour of India's smaller cities and towns, is changing that.

The managing director of Titan Industries believes it's time to reach out far and wide. Titan plans 150 Tanishq stores by 2010, almost double the current number.

More interesting, however, is its second-tier penetration plan under Gold Plus, a retail chain aimed at the budget buyer who may be looking at jewellery (any brand) as an investment "" in the traditional sense.

In the latter half of the 1990s, gold prices had turned so stagnant that Tanishq's optimal strategy was to emphasise the self-expression function of jewellery "" selling it mostly as a fashion accessory.

But with gold zooming in recent years in line with oil prices, the classic investment function is back, and so the brand has been repositioned slightly: as the traditional route to contemporary life.

That goes well with the Gold Plus plan. The implications include capitalising on demand such as that generated on Dhanteras (the annual day marked by tradition for gold accumulation) and traditional sub-branding of Tanishq collections.

The overall market is placed at Rs 65,000 crore annually, of which branded players account for just a 2-per cent sliver. Yet, even a minor dent in that large market could spell big bucks. Titan hopes to rake in jewellery revenues of Rs 1,000 crore plus in two years, double its figure of Rs 531 crore in 2004-05.

Beyond the Westernised youth segment, jewellery in India remains a fragmented show, dominated by made-to-order products. Wedding jewellery, particularly, often serves as a badge of lineage, with the intricacy of down-the-generations design playing a symbolic role. This calls for intense localisation "" right down to the neighbourhood level.

Bhat admits that it would be a challenge. "Typically, these buyers would go to their family jeweller, but Titan is banking on the brand equity and trust associated with 'Tata'. The stores are designed to cater to local tastes, the products are at the lower end of the price band, while the advertising has been restricted to local newspapers and sponsoring of local events."

"Earlier," adds Vikram Satyanath, senior vice-president, Lowe, "we had positioned the product more as evening-wear or social-wear, but now we are infusing more tradition or ethnicity into the campaigns "" though the girl is always shown as being free-spirited and with a mind of her own."

The campaign for the new Moham ruby-embedded collection, for instance, has a young bride teasing her husband ("though the scene is set in medieval times").

As for Gold Plus, Bhat says the response in Erode (Tamil Nadu), its first outlet, has been good, though that in Ratlam (Madhya Pradesh), its second, has not been too encouraging. "It's hard to break old traditions," he says, "in Ratlam, for instance, jewellery is always bought through a broker."

Still: "We want to crack this market because it's a huge business opportunity, but it's not going to be easy. We need strong supply-chain efficiencies and faster stock turns, since the margins are very low."

Shortening the metal-to-cash-realisation cycle is crucial in such a working-capital intensive business, and if done well, could even provide a financial edge over smaller jewellers.

Studded jewellery, though, offers a higher operating margin: of around 15 per cent, nearly four times that for plain gold. So Titan wants the proportion of such products to go up from about a third to half the total sales.

The shift towards profitability was evident even earlier: Titan's jewellery division profits (before interest and tax) for the nine months ended December were up nearly 70 per cent, at Rs 28 crore.