Gitanjali Gems, the country’s largest branded jewellery producer and retailer, has changed its business strategy from targeting only medium to high-end niche consumers with brands like Nakshatra, Gili, D’damas, Asmi and Sangini to a mass low-end target audience with Amore and G’Divas. Mehul Choksi, CMD talks to Dilip Kumar Jha about the plan and related issues. Edited excerpts:
Whya sudden change in strategy?
The strategy of Gitanjali graduated with the key brands maturing by an average 10 years. For example, Gili has matured by 18 years, Nakshatra by 10 years and Asmi by eight to nine years. Consumers, who used to buy Gili, for instance, have much more purchasing power. They have more money to spare for jewellery. Therefore, the price point of Gili has gone up 10-fold in the past 18 years; the average price was Rs 2,500 at its launch in 1994, it has now risen to Rs 35,000. That’s the maturity all these brands have received. But, what about today’s youth, who do not have the purchasing power to buy ornaments worth Rs 35,000? That’s where we have introduced a basic collection again. With the rising prices of gold and precious stones, the base level ornaments with three to four grammes of gold content can be manufactured at Rs 12,000, which used to be at around Rs 1,500 in 1994 with similar gold and diamond content.
What is the target audience for these low price point ornaments?
Through low price ornaments, we have attempted to cater to the growing consumers, especially college-going youths, first-time buyers and a migration from serious to fashion buyers who can’t afford jewellery worth Rs 15,000-20,000.
Therefore, we have launched collections and brands that are diamond plus alternative metals to combat rising gold prices. The purpose of this alternative metal concept is to make diamonds more accessible for first-time buyers, especially for the youth segments. We have launched Amore with an entry price of Rs 2,500. Available in vibrant colour settings and studded with a solitaire diamond, Amore will become Gili in 15 years. The product will have great acceptability across the world for both price-conscious and other consumers. The acceptability of Amore jewellery is expected to also remain high in Western countries, where many consumers are looking for more affordable options. Both India and the US are going to outperform all other markets with the Amore brand.
How is your gold accumulation scheme different from the one available with other jewellers?
Swarn Mangal is a gold price protection scheme where a consumer can book a few grammes of gold every month in advance according to the amount chosen, of Rs 1,000–40,000 per month. The duration of the plan can be six, 12 and 24 months, at the end of which the member can redeem all accumulated gold grammes by choosing from 22-carat gold jewellery. This offers a 30 per cent discount on making charges. Shagun, a jewellery saving plan, lets a member invest a certain amount per month for a stipulated period, where we pay the last installments as a bonus. The scheme is available for one, two and three years, at the end of which the member can redeem the jewellery with additional bonus. The scheme also offers a 50 per cent bonus instalment on diamond jewellery and other assured benefits, which are being worked out.
You are the only Indian in the world’s top five power list personalities from the sector by JCK. What does it mean for you?
My name in the concept of the ‘Top five international power brokers of the jewellery industry’ means I stand out in the jewellery crowd through innovations and, therefore, create a distinction. The other four power brokers are Henry Cheng, executive chairman, Chow Tai Fook; Bernard Arnault, CEO, LVMH; François Curiel, head of Christie’s jewellery department worldwide and Johann Rupert, chairman and CEO, Richemont.
What is your future plan?
We plan to increase sales five times by 2016 through extensive expansion in retail footprint, both in urban and rural cities. We are targeting to become a Rs 50,000-crore company, with growing footprint in rural and urban India, by setting up around 2,000 owned and franchise stores. And, aim to become the largest luxury giant in the world in the next five years. We own 135 retail stores in the United States and acquired a leading Italian jewellery brand, Giantti, recently, with retail presence in all major European markets, and posted sales turnover of Rs 9,456 crore for the year ended March 31, 2011. The US operations contribute nearly 13 per cent to the company’s sales, which is likely to increase this year with enhanced consumer interest towards jewellery. We acquired four Italian jewellery brands from a unit of Dubai’s debt-laden jewellery group, Damas International. The company currently has 1.7 million sq ft of retail space in the country, of which it added 400,000 sq ft in the first half of last year. The next growth market is Tier-II and III cities for jewellery, where disposable income among service class people is very high.
