We aim for US$6.85 bn increase in turnover by 2023: MP Ahammed, Malabar Gold & Diamonds
Ahammed, Founder and Chairman of Malabar Gold & Diamonds talks about the challenges faced by the group during their initial days, marketing strategies, investment plans etc
Malabar Gold & Diamonds, one of the largest chains of jewellery stores in the world started their journey 26 years ago from a small place called Valiyangadi in Kozhikode district of Kerala. Over these years from a local entity they have grown as an Indian international brand with a strong retail network of 250 outlets spread across 10 countries. In a conversation with exchange4media, M P Ahammed, Founder and Chairman spoke about the challenges faced by the group during their initial days, marketing strategies, investment plans etc.
Last year Malabar Gold and Diamonds has celebrated its silver jubilee. It has grown up from a local entity to an international Indian brand. What are the factors that catalysed this enormous growth and what were the challenges faced by the group during the initial days?
Trust, transparency, teamwork, and goodwill – these are not just catalysts for growth; they form the core ethos of our business. The journey which started from Valiyangadi wholesale market in Kozhikode in Kerala has been adding milestone after milestone, banking on these four aspects. There is always a strong emotion attached to jewellery purchase. Our efforts have always been to help the buyer express the emotion in its purest form through jewellery. Challenges have always been a part of the journey of any business which transcends decades. Challenges always motivate you to excel and bring out the best in you. And, challenges are different at different phases of business. The initial challenges were mainly related to funding, gaining consumer trust and acceptance, organising the supply chain, etc.
Your business model is based on the concept of ‘the association of many people’. Can you tell us more about this model?
Our humble beginning in Kerala with a handful of investors, friends and family members taught us the most valuable business lesson – people are the biggest asset. Our efforts have always been in involving people at different levels of our business – be it in the form of employees and investors. We have tried to implement the best of the corporate structure in the family business fold – a rare feat to achieve, indeed!
In our business framework, we have tried to inculcate the spirit of ownership among our employees. We have a unique business model in which our expansion is fueled by investors who become shareholders in different entities in a very transparent ownership model. We currently have over 3000 investors under different entities who share the same vision, dedication, and passion. Around 19.4 per cent of these investors are full-time employees with the Group, including the front-end managers and directors. Frankly speaking, the model has worked for us in terms of higher employee retention and lower employee turnover. The business model has made us a transparent and accountable organisation with a solid foundation where all investors have a financial and moral stake in the company.
How is the jewellery business picking up in Kerala post flood?
The per capita expenditure on gold jewellery in Kerala is the highest in the country. However, the floods in 2018 have affected the gold jewellery demand in the state. The growth in sales after the floods has been modest. However, the demand is in revival mode.
Please throw some light on your marketing budgets and strategies?
Our marketing strategies differ from state to state and country to country so is budget. We take a combination of media planning with maximum cost efficiency. In general, we communicate through all verticals ie. Print, television, radio, outdoor, and social media. We work in tandem with the marketing calendar.
How do your marketing and advertising strategies differ from the Indian to UAE and Southeast Asian markets?
Our Indian operations are managed from our corporate office (MHQ) at Calicut through the regional head at Bangalore, Chennai, Mumbai, and Delhi, this is controlled by our managing director- India operations. Our international office is in Dubai and our managing director of international operation and his team take care of our business in 9 countries outside India.
Has GST fueled the demand for gold in India? What are the ways in which the introduction of GST has benefited and affected the jewellery business in India?
GST has impacted the demand for gold positively, as it has organised the trade. It has drastically reduced the unaccounted business and increased the market share of organised players. It has sparked off a transformation of sorts in the industry where more and more players have started adopting an organised way of doing business. GST has created a level playing field for the organised jewellery retail players like us. Thanks to GST, sales of organised players like us have increased.
Tell us more about your investment plans?
Malabar Gold & Diamonds has very clear plans for its future, the total number of stores will be increased to 750 numbers spread across 14 countries. We generate funds from the financial institutions as well as from individual investors, in addition to the company owned funds.
You have an active online presence as well. Do you think omnipresence retail is the future?
In jewellery retail, online and offline jewellery retail complement each other perfectly. Consumers explore new designs and price-points online to form the base of the purchase decision only to go to the offline store to buy jewellery. However, during that journey, they want a seamless buying experience. Consumers in India are evolving and gradually showing confidence in buying lower price-point jewellery online. However, they still prefer to stick to the touch-and-feel aspect while buying highly-priced precious jewellery. So, omnichannel retail will take time to come of its own in India as far as jewellery retail trade is concerned.
9) What are the company’s future plans?
Our plan is to triple our retail network from 250 showrooms this year to 750 outlets in the next five years with an annual turnover exceeding US$6.16 billion (INR45,000 crore) and the Group turnover to US$6.85 billion (INR50,000 crore) by 2023.
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