After months of gloom, jewellery retailers in the country are expecting to see better growth in the current financial year as they bet big on the upcoming festive season and the addition of new branches to lure customers. Gitanjali Gems, India’s largest jewellery retailer, is expecting a growth of 35-40% increase in sales this year, fueled by expansion of branches and newer brands.
Jewellery firms will continue to expand their footprint in newer geographies to drive growth, which will help them in braving the current economic slowdown, a Crisil report said Wednesday. The rated retailers are expected to expand over the medium term, with two of every three new stores coming up in the smaller towns.
Gitanjali Gems’ jewellery sales stood at $1.5 billion last year. ?We expect a 35-40% rise in sales this year with new brands and outlets. In India, we opened 300 sales points last year, targeting 250-280 more this year,? Abhishek Gupta, president, Gitanjali Gems Ltd told FE. Sales points refers to franchises, own stores, distribution and e-commerce platforms. Last month, the company unveiled at least 4 new brands and came up with new collections.
Tanishq saw sales of its gold jewellery increase 16% in the current quarter to date, helped by higher prices of gold. Going ahead, retailers expect the wedding season, which starts from November to March to pump up their sales especially in smaller towns. About 45% of India’s population is below the age of 25 and retailers are targeting them. Since last year, retailers like Gitanjali and Tanishq have been focusing on smaller towns where disposable incomes are on the rise. Rural demand contributes to about 70% of Indian gold demand. Also, October-January is a good time for jewellers as the festive season spurs spending on gold and diamond.
?We have seen a pause in buying in the last 6-8 months, but the good part for us was that we opened new stores and brands. So incremental sales came from this expansion. For the coming season, we expect people who had deferred their buying decisions will now buy,? said Gupta.
?Smaller showrooms and lower rentals will help retailers save around 25% on operating costs. The favorable demand and cost structures in the smaller towns will help them attain early break-even and maintain profitability,? said Subodh Rai, senior director, Bank Loan Ratings, Crisil.
Gitanjali Gems also expects a 15-20% increase in advertising spend and new campaigns this year, from the R120 crore last year.
Earlier this month, gold prices touched a record high of R31,850 per 10 gram.
Such a steep rise in gold prices due to the depreciating rupee had hit its demand severely.
