The jewellery market in India is one of the largest in the world. With a multitude of players in both organised and unorganised spaces, consumers are spoilt for choice. According to a recent report by the Indian Brand Equity Foundation, the overall gross exports of Gems & Jewellery in April 2016 stood at US$ 3.23 billion, whereas exports of cut and polished diamonds stood at US$ 1.78 billion.
According to a report by Research and Markets, the jewellery market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of 15.95 percent over the period 2014-2019.
According to India Retail Report 2015, total jewellery retail market is worth RS.2,01,344 Cr (US$ 33.56 bn) growing at 24-26 per cent and is expected to reach Rs.383,000 crore (US$ 63.87 bn) by 2017. Modern retail is estimated at 10 percent of this total market and is expected to grow at a little under 22 percent.
Sharing the opinion on future prospects of jewellery market in India, VP – Retail, Tara Jewels, Sunayana Vora says, “The jewellery market in India is expected to see reasonable growth in the coming years. There is a dynamic change in consumer preferences due to exposure which has made the customer more astute and aware about trends and quality.”
“Branded jewellers are more equipped than the local organised players to appease consumers’ growing demand for design innovation and variety. An increase in disposable incomes has also been an important factor for an increase in sales of jewellery. In India, customised jewellery is a niche market and is showing significant growth year-on- year and would likely take precedence in near future,” she adds.
Adding to this observation, CEO, Entice, Jitender Jain opines, “The current jewellery market is growing, but cautiously. Customers are spending wisely and looking for value of money. Customers are also now gathering quite a lot of education on jewellery and thus, going ahead, buying would continue to be cautious as jewelley transactions involve a large sum of money. India is gaining a lot of attention on a global scale and thus, in the next five years we see more and more international clientele added to our Indian client lists.”
Consumption: Typical and New-age
Jewellery as a category has diversified market segments in terms of its contents — material used, purpose, price value and type of products. As far as content is concerned, gold jewellery rules the market with 72 percent share followed by diamond studded jewellery with 22 percent share. Based on the purpose of wearing, ceremonial or bridal jewellery accounts for the largest chunk. Fashion wear constitutes the lowest share on the occasional aspect.
We Indians have an unending appetite for gold and there is a sentimental as well as aspirational value attached to the yellow metal. There is a segment amongst the consumer that still prefers gold as one of the safest investment options and the industry has been identified as one of the growing sectors by the government.
Indians are the largest consumers of gold in the world where there is huge potential in the market and the industry is expected to grow at the pace of 10 to 15 percent in the next five years.
“Gold is the all-time favourite metal because of the relationship it shares with the consumers,” explains Director, WHP Jewellers, Aditya Pethe.
“Diamond jewellery has emerged in last 10 years while silver and platinum are still establishing themselves in the Indian market. In fact, there is a growing demand for silver as a replacement for fashion jewellery; consumers are opting for the pleasure of acquiring a precious metal at a smaller ticket size, while also investing in more contemporary and edgy products. This also led to the launch of our latest innovation, IZAARA, a premium silver jewellery brand,” he adds.
Elaborating on this trend, CEO and Director, ORRA, Vijay Jain, notes, “Traditionally the industry has been biased towards gold with an 85 percent preference for gold, withthe remaining 15 percent for diamond and platinum. Demand for the three can be segmented based on both market segmentation and consumer psychographics. Currently, the rate of growth of diamond and platinum however, is twice that of gold. Silver jewellery is perceived more as fashion rather than precious jewellery.”
The Indian jewellery Industry is slowly moving away from ‘one size fits all’ ready-to-wear jewellery to more customised pieces. The desire to own a unique or signature piece is permeating into different sections of society. There is a shift from very heavy gold jewellery to light and contemporary jewellery for daily use. Customers are buying trendy jewellery in gold and platinum with a variety in gemstones combinations.
In India there are cultures, traditions and geographical differences which influence regional consumptions and tastes. These influences are based on content type, quality of material used, kind of jewellery and the buyer. Traditionally, consumers from east and south of India consume more gold than their counterparts in north and west of India owing to tradition, festivals and ceremonial demand. Designs in these markets are also typically traditional. Northern and western Indian consumers, on the other hand, prefer white gold and diamond jewellery, which reflect status, fashion, aspiration and demand for modernity.
Shifts and Trends
Moving away from occasion-based consumption, Indian consumers have evolved to treat jewellery as fashion accessory, and this is driving retailers’ incorporation of distinct collections such as wedding wear, work wear, regular or daily wear and fashion wear.
Indians have for long been comfortable in staying loyal to the family jeweller. It is perhaps for this reason that one sees the rise of community centric jewellers. However, with increased exposure, shrinkage of joint families and mobility of labour, not only are these traditional linkages breaking, but more importantly, giving rise to consumers who are are more demanding of design innovation and craftsmanship.
Going forward, the jewellery industry will see an evolution similar to what the apparel industry has seen in India.
Referring to shifts in consumer behaviour, Jain of Entice states, “Jewellery using a combination of three colours — rose gold, white and yellow — is a big trend these days. Everyone is looking for such pieces, especially for daily and work wear.”
He further adds that it will be gold that will rule the roost. “Demand for gold will always be bigger than that for silver and platinum; gold has sacred and religious significance in many Indian ceremonies. That being said, silver is also gaining importance due to gold’s prohibitive prices. Platinum is also gaining popularity due to more awareness and availability of the metal,” he notes.
“A style statement piece, for instance, a pendant /earrings/bracelet/ring is the trend. Changing fashion statements andr apparel choices are also impacting jewellery demand,” says Chandra Surana, Director of retail chain Bhuramal Rajmal Surana. “The fastest growing category is wearable jewellery.”
“Gold will always rule the Indian market,” says CMD, PNG Jewellers, and Director, IBJA, Saurabh Gadgil, adding that demand for platinum is rising with customers preferring the metal over diamond. “Silver is considered only for gifts, fashion jewellery, silver coins and smaller ticket items for gifting purposes. There is an upsurge in demand for precious and semi precious stones,” he states.
Offering his perspective, Director, Dia Gold, Varda Goenka says, “In the present scenario, gold dominates, although the jadau segment is also very active in places such as Jaipur and Hyderabad. As per our estimates, gold jewellery comprises 80 percent of the market while diamond jewellery comprises the rest. Platinum has a tiny market share — less than one percent.”
Adding facts to the analysis, Founder and Creative Head of Aurelle, Leshna Shah, states, “The jewellery market in India is growing at a fast pace. Not only is India consuming more jewellery as a whole, the country’s jewellery export figures have gone up substantially. With an 8 per cent share in polished diamonds, India has become the world’s third largest diamond consumer.”
“The Indian gems and jewellery market today is home to more than 500,000 players, with the majority being small players. Now, with international players entering India and realising the potential of the market, these numbers and going to increase. In the coming years, growth in the sector will mainly be brought about by the development and establishment of large retailers and brands,” she adds.
Jewellery has certainly become more young and vibrant, seconds COO and Co-founder, Orsuq.com, Minesh Shah, “Gone are the days when jewellery was meant to be worn just by adult women. Today there are ample choices for young girls too,” he says. “What a woman wears represents her style statement therefore she is very particular about what’s trending these days. Jewellery has become an expression of an individual’s style statement. The younger generation tends to observe the ongoing trends as a competitive gesture among peers. They prefer jewellery that reflects their age and makes them look funky and vibrant.”
A Gender-biased Category?
Jewellery has been mostly associated with women, but now men are also buying jewellery, and not just for gifting purposes but also for themselves. Gold chains, solitaires and bracelets are the typical jewellery choices for modern Indian men.
Putting things in perspective, Jain of Orra says, “Gender-led purchases would be occasion led. For big family functions, we do see more women walk in. However, for anniversaries and birthdays, we see more footfalls from men. When it comes to diamonds, however, we already see around 60 percent of purchases for solitaires being made by men, signalling a change in tastes. While the first purchase is made by the man, we tend to see thereafter, an accompaniment of the significant other for choice of designs.”
According to Gadgil of PN Gadgil, jewellery is definitely a gender biased category; for him, the ratio of women to men when it comes to buying jewellery is 90:10.
Surana of Bhuramal Rajmal Surana jewellers also notes having registered more men coming into the chain’s stores. “Men’s jewellery is in fact an upcoming trend. Around 10-15 percent of our total clientele comprises men,” he says.
“Earlier, it was believed that jewellery was limited to women but not anymore. Over the past few years, Indian men have developed a fascination for jewellery. At Jewelsify.com, we offer a fairly wide men’s collection, which includes cufflinks, ear studs, tie pins, pendants, etc,” says Hardik Kapoor, Founder and Director of online jewellery retailer Jewelsify.com.
Online shining bright
The online jewellery market in India is expected to hit USD 3.6 billion in value in the next three years, accounting for roughly 20 percent of the global market size estimated at USD 18 billion, mainly on the back of the eCommerce boom.
Brick and mortar jewellers now establishing omnichannel models are discovering that online commerce offers great opportunities for retailers to extend their brands to digital spaces with a virtual storefront.
“So far we were using the traditional retail channel and have expanded through 21 company-owned-company-operated (COCO) stores,” says Pethe. “With a recent eCommerce foray, we have now also become an e-tailer. With IZAARA on the other hand, we will be using the COCO model (as shop-in-shops) in large format chains such as Shoppers Stop as well as on online platforms to ensure that more and more consumers are able to access the unique jewellery line the brand has to offer. ”
At Orra too, there has been a fundamental shift in the consumer outlook. “The consumer is simultaneously on more than one channel,” Jain notes. “One in three consumers is simultaneously on his or her cellphone while watching television. While the traditional place of discovery used to be the store or word of mouth, today this has shifted to become the social and digital media. Our key focus has really been to build a stronger connect with the consumer through our omni-channel presence. Our efforts towards capitalising on the digital medium have led us to being featured as a case study by Google in India.”
“We believe that Orra is at a unique advantage, given our strong offline presence with 32 stores across 24 cities and an equally robust online presence. We are working on enhancing our diamond-centric positioning while introducing the special cut Orra Crown Star,” he informs.
Talking about Tara Jewels’ omnichannel strategy, Vora states, “When it comes to brick and mortar, independent jewellers often face issues in sourcing and stocking high-quality, certified diamond jewellery. With this in mind, we have designed a programme for jewellers to incorporate a Tara kiosk in their stores and become our TMK Partners.”
According to Vora, TMK Partners would enjoy lucrative benefits: low investment in silverand Cubic Zirconia lines, along with Tara’s support of state-of-the-art design software, best-in-class equipment, world class craftsmanship, and a vast, never before seen, digital library. “Furthermore, TMK partners get access to our newly developed TMK app, which is being termed as the digital future of customised jewellery. This app allows jewellers to have a massive virtual inventory at almost no cost, while spoiling the end consumer with numerous customisation options. We also offer TMK Partners additional benefits in marketing, display, training etc. to set up TMK kiosks at their stores,” she adds.
Kinks in the Chain
Many jewellery retailers looking to expand their retail footprint have been shying away from the franchise model. A primary reason could be the fact that to start with, traditional jewellery businesses were built on decades of relationships with customers, which have been passed on as legacy to subsequent generations. Franchising — given the potential unpredictability of franchise partners — is seen as a risk to this comfortable model. In addition to that, traditional businesses tend to be highly image conscious, and that could be difficult to uphold under a franchising model.
The other problem with jewellery retailing is winning the trust of customers. Although most modern retailers have tried to eliminate this anomaly by issuing authentications, certifications and other such guarantees, there is still a long way to go because 90 per cent of the category is still not organised.
Sharing his views on the key challenges impacting branded jewellery retail, Gadgil says, “One major issue faced by the industry is the requirement to access customers’ PAN Cards for purchases over Rs 2 lakh in value. This which affects sales to a great extent.”
“Yet another challenge is the loss of skilled artisans; many artisans have left the profession completely. There is also a general lack of skilled artisans who can create bespoke jewellery due to improper training and guidance,” he adds.
Limited access to funding and slowing demand over the past 12 months are also currently impeding growth in jewellery retail, Gadgil notes. “As far as customer trust issues are concerned, BIS Hallmark is something all jewellery brands should focus on incorporating,” he remarks.
According to CEO and Co-founder, VelvetCase.com, Kapil Hetamsaria finding the right pool of talented individuals with a strong sense of work-ethic, team spirit and passion for change is the harder bit.
“Another one I can think of are the Interstate logistics and policies. The documentation, policies and procedures that are required each time we ship fine jewellery are not the easiest and can be quite a cumbersome process, especially with each state having its own requirements. Even shipping a simple piece of jewellery from Mumbai to Bengaluru can result in quite a process. We are waiting for the GST roll out in hopes of simplifying this,” he says.
Talking about challenges faced by modern jewellery retailers, Vora says, “The Indian consumer has become more knowledgeable about jewellery and this will challenge the industry and constitute an important factor in its growth and working. Jewellery now is not only an investment but it is also considered as a status symbol where in each piece makes a different statement. Independent jewellers often face issues in sourcing and stocking high quality certified diamond jewellery.”
“High inventory carrying costs is another major challenge,” she adds. “With multiple government policies such as import and excise duty and the uncertainty of GST, jewellers not only face competition within the industry but also from the luxury retail sector as a whole,” she adds. “The idea of using technology in the distribution of jewellery is in the early stages. Brands are working towards creating an innovative space that will make jewellery shopping a unique experience.”
Director, Indian Gem & Jewellery, Pratik Dugar, says, “Lots of new retailers is a big challenge in terms of higher competition, but we have always excelled in retaining customers. Secondly, we also place huge importance on product design and innovation. We have a very strong design team that works hard to continuously offer our clients something new.”
“Today, supply is more than demand and thus, customer is king. We try our best to counter this by offering unique jewellery pieces every few months,” he adds.
India possesses one of most competitive gems and jewellery markets in the world. This can be attributed to low labour costs and availability of highly skilled artisans. The sector has been further blessed with government support in the form of incentives and establishments of SEZs. The retail market is, however, still dominated by unorganised players. The need of the hour is to formulate policies that aim at bridging the gap between organised and unorganised players.