The pandemic, rising gold prices and an overall muted consumer sentiment has dealt a huge blow to India’s jewellery industry
The pandemic, rising gold prices and an overall muted consumer sentiment has dealt a huge blow to India’s jewellery industry. Tanishq’s Ajoy Chawla talks to Venkata Susmita Biswas about what’s in store for the jewellery industry, the company’s upcoming affordable range and ramping up efforts to boost online sales. Edited excerpts:
With some of your stores now open, are you seeing any signs of recovery?
We were completely shut in the month of April, and gradually opened stores in May. It is only in June that 85-90% of our stores were open. Essentially, close to two months of the first quarter were almost washed out. However, we are seeing a healthy recovery in cities, and it varies. Initially, cities like Bengaluru, Lucknow, Patna and Bhubaneswar were doing well; the response has, in fact, been better than anticipated. We have been tracking same store sales, and the sales during this period is 65-70% that of last year.
How long before the business bounces back to normal?
The second quarter of 2020-21 will continue to be a recovery phase. We may face challenges in cities such as Mumbai, Delhi, Chennai and Kolkata. The next three to six months will continue to be a little tricky depending on how the situation evolves.
Last year, the market declined by 10-15%. Tanishq had targeted a growth of 20% for FY20, but ended up with only 9% aggregate growth. Until February, we seemed on track for a 13-14% growth in the second half of the financial year. Unfortunately, from the second week of March onward, we had to start shutting down stores; and finally saw a decline of 4% in the last quarter.
No player in the jewellery market will be expecting to see growth this year. There will be a decline over last year, and that will depend on how the rest of the year pans out. We believe that if our recovery rates continue this way, by Q4 we could achieve 100% recovery.
How are you stimulating demand in these times?
Our restart strategy has been based on building customer confidence, supporting our ecosystem of 10,000 karigars and vendors, and offering benefits to our customers who had Golden Harvest Schemes maturing at Tanishq during the intense lockdown months. The other crucial initiative has been to enable customers who do not want to step out of their homes to shop online in a variety of ways. This includes booking an appointment to visit the store, video calling with our store staff to choose products, increasing our catalogue online by showcasing the entire range of products from across the country, chatting with a store staff online, and introducing virtual try-ons.
Have you tweaked your product portfolio to make it more pocket friendly?
The demand for wedding jewellery is not lost; it has only been deferred to the second half of the year. People will scale down their celebrations and spends on catering, venue and other elements of a wedding. The expenditure that people don’t incur on other fronts could find its way to gold and precious jewellery.
We estimate that this year, customers will prefer to keep their budgets a little tighter. So, we expect greater pressure on high-value studded jewellery, as people gravitate towards lower-value products. Therefore, we are working on creating a new product line in the sub-Rs 2 lakh and sub-Rs 1 lakh price range, which will be launched before Diwali.
How comfortable are consumers buying gold online?
In April, for Akshaya Tritiya, we saw 14 lakh visitors on our website. In the months of May and June, too, we saw about nine lakh visitors on the platform. In 2019, our sales on e-commerce was to the tune of Rs 25 crore, and during Akshaya Tritiya this year, the advance collection was around Rs 27-28 crore online. We saw 35-40% new customers place orders online. This means even traditional customers who prefer offline purchases, came online. Further, our ticket value during Akshaya Tritiya ranged from Rs 20,000-45,000.
Even after Akshaya Tritiya, we are seeing close to five-times more orders online as compared to last year. There has been a significant shift towards online, even though it is still a small part of the overall business.
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