Its first sub-brand, Mia, faces tough competition in the crowded domestic jewellery market.
Tanishq stores across the country have just started showcasing a new sub-brand Mia. The sub-brand, which is the first in the Tanishq stable, is targeted at working women in the age-group of 20-30 years.
The designs conceptualised by a 20-member team at the Tanishq Design Studio in Bangalore will be a step away from the traditional designs that dominate close to 90 per cent of jewellery sales in India. “Mia will not be a Tanishq collection like Taj Collection or Fuluknuma which have a limited shelf life. With Mia, we want to invest for the long-term,” clarifies Sandeep Kulhalli, vice president (retail, marketing and merchandise), Tanishq.
Analysts observe Tanishq is following a strategy similar to parent company Titan. Watch maker Titan too over the years has introduced several brands like Raga, Fastrack, Nebula - each targeting a different consumer set. And some like the youth-focused Fastrack, have been extremely successful contributing 25 per cent to the watch division’s profits.
Kulhalli, agrees. The objective is to take jewellery wearing occasions beyond weddings and special events. Kulhalli believes targeting the five million working women is enough opportunity as increasing aspiration levels and the number of women entering the workforce will drive spending. The new sub-brand will also help open up a new consumer age group, in a jewellery market where bulk of the sales is in the 30-60 age group.
For Tanishq, the largest organised player, growth has to come through capturing market share from competition. “There is enough demand that exists,” says Kulhalli. And he might be right. According to industry estimates, only 5 per cent of the Rs 250,000 crore domestic market comes through organised retail, while the rest is through small-time jewellers. But within organised retail too, competition is stiff from retailers like Gitanjali Gems and Reliance Retail which have deep pockets, and have been fairly aggressive in the last few years.
Gitanjali Gems for instance has a brand Asmi which is targeted towards working women, and the brand has been growing at 50 per cent CAGR in the last three years, says Abhishek Gupta, head (corporate strategy), Gitanjali Group. Regional players like Tribhovandas Bhimji Zaveri (West), Joyalukkas (South) and PC Chandra Jewellers (East) too have big ambitions and have filed for or are contemplating IPOs to establish national presence.
Besides the new sub-brand, Tanishq will continue to drive sales of its diamond jewellery segment, which accounts for 30 per cent of total Tanishq sales, the rest being contributed by plain gold jewellery. Earlier this year, Tanishq had roped in couple Amitabh and Jaya Bachan to promote the diamond range.
Like diamond jewellery, the margins (the Mia range will be priced between Rs 6,000 and Rs 50,000) from the new sub-brand will also be higher than plain gold jewellery. Kotak Institutional Equities analyst (consumer) Manoj Menon believes it could have other spillover benefits. It might help move the brand from a commodity driven one (where one is charged per grammage of gold plus making charges) to a brand driven market (similar to international retailer Tiffany’s where consumers pay a premium for the brand irrespective of the grammage of gold).
On the distribution front, unlike the Tanishq collection which is exclusively retailed through its own stores, with Mia, the company is exploring multi-brand outlets as well. “With Tanishq, the entire collection cannot be showcased at multi-brand outlets, but Mia’s small design range (100) and cheaper price points make it suitable for this channel,” explains Kulhalli. Tanishq is currently in talks with modern retailers like Shoppers Stop and Lifestyle. For Tanishq both urban centres and tier 2 and 3 towns contribute equally to turnover, but with Mia, Kulhalli expects sales to be skewed towards the metros until the brand establishes itself.
To take the brand to the next level, the company is focused on expansion of its large format stores from the existing five to 10-15 over a year, taking the total count to 150 stores across 76 cities by this financial year. “We are a national brand, but in many cities, we do not have the largest stores,” says Kulhalli. Thus, the strategy is to make a big impact in each city or town through a large store. “It changes the impression customers carry about your brand,” he explains. Additionally, it has a positive effect on the smaller stores within the city. Of course the profitability aspect that a larger retail format brings is also a key driver.
For sister jewellery brand Gold Plus (second largest jewellery brand in Titan's portfolio) targeted at the small town buyer, a large store strategy is also underway. “Gold Plus is in consolidation mode right now and we are looking at converting some of our current stores to larger format stores,” points out Kulhalli.
To drive sales, the company’s jewellery buying program ‘Golden Harvest Saving Scheme’ will be extended to Mia as well. Kulhalli says the scheme has done well for Tanishq and 25 per cent of sales come from Tanishq consumers who subscribe to this scheme. But, Kulhalli hopes with Mia, off-the-shelf purchases will be higher given the jewellery prices are much cheaper.
For now, Kulhalli will not speculate how much the new sub-brand will help in incremental sales, but for the Rs 4800 crore brand which contributes to over 70 per cent of Titan Industries turnover, Mia might just be the stepping stone to a successful sub-brand strategy.
