Titan Industries is focussing on larger stores and premium collections to steer its jewellery business ahead. Tanishq, the company's jewellery brand, grew by 57 per cent to Rs 2,028 crore during financial year 2008 on the back of retail expansion and improvement in per-store growth.
CK Venkataraman, chief operating officer (jewellery), Titan Industries, said, "Tanishq opened 30 retail stores during FY08, taking the tally to 130 stores and was successful in achieving 20-25 per cent growth per store. There is an immense scope for further growth as Tanishq comprises a small share of the overall Rs 70,000-crore Indian jewellery market."
Traditional jewellers have been rebranding themselves and are expanding in smaller towns to widen reach. "The emphasis for Tanishq will be on special collections, diamond jewellery and bigger stores of about 4,500 sq ft," Venkataraman said.
Currently, the average store-size for Tanishq is 1,000-1,500 sq ft. The stores operate on the franchise model. In the last quarter, Tanishq launched the Hrithik Roshan-Aishwarya Rai-starrer Jodha Akbar inspired jewellery collection.
The Tata Group has positioned Tanishq as a jewellery store brand, which competes with close to three lakh traditional jewellers who dominate the domestic market. Venkataraman said that Tanishq would have to strive for larger market share as these jewellery stores have become brands in themselves.
Tanishq will make its much awaited foray in the US market early this quarter.
Initially, it plans to open two pilot stores at Chicago and New Jersey with a retail format of 1,800-2,000 sq ft. Meanwhile, it plans to tap small cities by opening 15 Gold Plus outlets, its jewellery store brand for semi-urban markets. Launched two years ago, Gold Plus clocked Rs 200 crore revenues during FY08.
However, escalating gold prices have squeezed Titan's jewellery business margins, which has grown by close to 60 per cent in the last two years. "High gold prices have helped sales but the profit margins are lower than last year. However, profitability in diamond jewellery retail is helping us compensate for the shrinking margins in gold jewellery."
The company's operating margin slid by 140 bps to 8.4 per cent during FY08. Analysts attribute the 127 bps drop in jewellery margins to the rising prices of the yellow metal and high store expansion costs.