Branded gold jewellery retailers seem to be on an expansion spree. This is despite high gold prices dampening demand in the last few months.
The sharp rise in gold prices and the high taxes have worsened the situation for standalone jewellers already battling the economic slowdown.
About 90 per cent of the market is dominated by unbranded single shop jewellers. Branded jewellers have decided to increase their market share by opening showrooms in smaller towns.
Prominent Kerala-based Kalyan Jewellers last week opened its first showroom at Ahmedabad. It intends opening three more at Rajkot, Vadodara and Surat at an investment of Rs 300 crore by the end of this fiscal. At present, it owns 37 stores and hopes to open 100 by 2015.
The 150-year-old Mumbai-based Tribhovandas Bhimji Zaveri has ventured east by opening two showrooms in Kolkata. Shrikant Zaveri, Chairman, TBZ, said that in the last six months, three showrooms had been opened in Pune, Mumbai and Vadodara. With the opening of the two showrooms in Kolkata, TBZ now has 18 in Maharashtra, Gujarat, Madhya Pradesh, Kerala, Andhra Pradesh and West Bengal.
Besides established players spreading their wings into new markets, Nalli Silks plans to diversify into the jewellery business. Nalli Jewellers opened its first store in Chennai recently. It aims to open a jewellery outlet at the 25 destinations where Nalli Silks has a presence.
Gitanjali Gems has also set a target to open 300 retail outlets this fiscal. Of these, 40-45 stores will be owned by the company, while the rest will be via the franchise model. The company currently has 4,000 retail outlets across India.
Abhishek Gupta, President, Gitanjali Gems, said that in recent times there has been a significant shift in jewellery trade from the unorganised sector to branded jewellery, with consumer preference for design and purity of the yellow metal.
“With rising cost of fund and slowing demand, small players are also finding it difficult to hold on to high inventory. This has opened up fresh opportunities in the franchising business,” he added.
Stabilisation of rentals at leading malls and prominent shopping places in the rural areas should also help jewellers when they negotiate long-term contract for the stores.