India’s large retail jewellery chains are expanding at a breakneck speed, with estimates suggesting 500 stores coming up from the top five chains in just two to three years. The mid-size and smaller chains are also joining the race.
Chirag Sheth, principal consultant at Metal Focus, a London-based bullion research fund, said that, “our survey revealed that the top five retailers are looking to add 400-500 stores over the next 2-3 years”.
The market share of the large chains in gold jewellery is expected to grow to 45% compared with a 37% market share in gold jewellery. While brands under the Tata group such as Tanishq are continuing to grow their shopping mall footprint, Reliance Jewels, Kalyan Jewellers, Malabar Gold & Jewels and Joyalukkas are also opening new stores. Aditya Birla Group has also announced a Rs 5,000-crore investment under the brand name of Novel Jewels to enter this growing segment.
Chirag said a few other conglomerates are also exploring the jewellery space either through their own stores or franchise-based.
Kalyan Jewellers has already announced plans to launch a minimum of 130 showrooms in India (80 Kalyan and 50 Candere, digital-first jewellery platform) and six showrooms across West Asia and the US in FY25. It launched 71 stores in FY24, taking the total to 253. Titan has announced addition of 27 Tanishq stores in the March quarter in India and its digital jewellery platform CaratLane added 10 more stores in the March quarter.
There has been a need for small and mid-size jewellery players to organise themselves and also expand their business. Surendra Mehta, national secretary of Indian Bullion Jewellers Association, said, “small and mid-size players have realised that they have to organise and expand”. To generate capital for new business and store expansion, many of them are considering accessing capital market and planning IPOs. Mehta added that the expansion is happening largely in tier 2 and 3 cities.
India is already the world’s second-biggest market for gold used in jewellery, and demand is unlikely to waver with a report by Knight Frank showing the number of ultra-high net worth people with assets of $30 million or more growing 11% in 2021 from a year earlier. That figure is expected to jump by about 39% in 2026, while individuals with wealth of at least $1 million is forecast to surge by about 77% during the five-year period, it said.
The Metal Focus survey of retail jewellery chains says that the expansion plan needs loads of capital which include money to stock jewellery. Expansion by the top five players will need working capital for building stock. This will translate into a minimum of 30-50 tonnes of fresh inventory, benefiting the jewellery manufacturers.
Given the history of fraud in this sector, banks tend to be cautious with regards to lending to the gems and jewellery industry. In view of this, the survey said, many small chains with 15-20 stores also looking at the capital market route. Apart from initial public offers, some players are planning to raise funds on the small and medium enterprise (SME) segment of the major stock exchange.