Titan Company sees revival in consumer demand only during the second half of Calendar Year 2016, though sales picked up marginally during the December quarter. Bhaskar Bhat, managing director of the company, feels there will be single-digit growth in revenues for the time being. Customer walk-ins are still a challenge, he tells Mahesh Kulkarni in an exclusive interview . Edited excerpts:
The first half of this fiscal was disappointing for Titan. However, Q3 was better as you posted a 17.3% growth in net sales with 20% growth in jewellery sales. How did you manage that?
Firstly, jewellery sales were clearly impacted by the end of the golden harvest scheme (GHS). It got over the vacuum that was created because now the GHS is back. The second, of course, was that we advanced our consumer scheme during the third quarter that helped in better sales. Lastly, the wedding season was strong post-Diwali. It is a combination of all the three that helped. Diwali was comparable with last year, but still nothing great.
Does it mean the consumer demand is back?
I think it is not yet clearly visible. Single-digit growth rates are the only thing we can see in terms of volume. Customer walk-ins are still a challenge.
Do you think the growth in Q3 was a one off? Will it sustain in Q4?
I doubt. It won’t sustain at that rate. The jewellery business under Tanishq and all other businesses also may not see such growth. Eyewear is a little different because the penetration is low. We will continue to grow in this business.
When do you see further momentum in demand?
Six months from now, we can expect some momentum — in the second half of this calendar year. The wedding season is on till up to March and then for a very short period in April. Then there is a gap.
The jewellery sector is facing new obstacles in the form of new PAN norms. Is this a dampener on your sales given the fact that Tanishq brings in a majority of your revenues?
We can’t say clearly. But customers are staying away. They are not coming at all. Those who are habituated to buying in a certain way. It is definitely a dampener for sure. It is not helping in curbing the so-called black money as was the idea. We participated in the jewellery strike yesterday. We are aligned with other jewellers only because we also believe that enforcing the customer to show the PAN card even while paying by cheque or credit card is not required. Actually, you really don’t need to produce a PAN card because banks would have done the KYC.
For us, it has had marginal impact because the sales value is very small in most of the transactions. Our average price is R65,000. The bulk of the sales, say about 70-80%, is below R5 lakh per transaction and are not affected much. We have lost some business in transactions of above R5 lakh each.
At a time when the festive season demand is lukewarm, how do you plan to shore up demand?
By launching new products and introducing new consumer schemes and then the revival of the golden harvest scheme. For example in watches, the launch of new products brings back customer to the store. Like our new smart watch JUXT. Today, in consumer durables, especially in accessories, when customers see the product, they get an interest. But, the opportunity to see is not so often. If you take an urban area like Bengaluru, to go out to a store itself is quite a project. Therefore, being online is helping. For example, JUXT has done very well on online formats. People have browsed and found out what it is all about and some have bought it.
You have joined the league of technology majors like Apple and Samsung by launching your own smartwatch. How has been the response till now?
Extremely good. We have had lot of good reviews in all the social media. I think, basically, there is a strong Titan loyal base (Titan has over 150 million customers till date). Now, the penetration of Titan watches is very deep. For people to buy the next Titan watch is not easy. So, when something new like this comes by, it gives people an opportunity to get back into the brand. And that is what has happened. For us, it is both kind of helping the brand apart from getting us the business. Interest in anything new like JUXT is very high.
What will be your digital strategy going forward? Will you be launching more wearable devices in partnership with HP?
We are working on the next versions of the watch. Our goal is to enhance the functionality of a watch. We could bring a ladies’ watch under JUXT in the next six months. We are also working on many new devices based on the technology developed by IIT Madras Research Park.
What kind of impact do you see on your sales from e-commerce players?
I don’t look at it as an impact from e-commerce sites. Because it is here to stay. Consumers who are finding this a great opportunity are not getting into the hubbub of traffic. A watch is the easiest thing to buy online, other than groceries. We have started selling on our own website and exclusively on Myntra.
How much of your sales comes from online channels and how do you see this growing?
We have seen good traction. We have seen about R100 crore sales so far from online market places. From our site, it is about R20 crore and set to grow by 350% next year. It is unimaginable according to me. It will be 10-15% of our total sales in 10 years.