Competition Heats Up in India’s Jewellery Sector

Titan Company, India’s largest watch and jewellery group, is on a spending spree. Last year, the Bengaluru-based firm opened three stores for its gold and diamond jewellery brand Tanishq in cities across Texas and New Jersey where affluent members of the Indian diaspora have put down roots. The US entry was part of a broader global expansion plan including two new boutiques in Qatar that brought the brand’s total in the Gulf region to 11 and a debut in Singapore.

Back in India, the company has been opening large format stores in cities like Jaipur, Hyderabad, Ahmedabad, Vijayawada, Baroda, Indore and Patna in a bid to win over customers in every region. “We’ve also made some of our existing older stores bigger, bolder, better and relocated [some of them to more prominent locations],” said Ajoy Chawla, chief executive of Titan’s jewellery division, which includes brands like Zoya and Mia alongside Tanishq.

Though Titan’s retail rollout has been particularly bold, it is only one pillar of the firm’s strategy to gain an edge over competitors. Another is M&A.

Owned by Tata Group, one of India’s largest diversified conglomerates, Titan has deep pockets to leverage inorganic growth. In August, it spent 4,621 crore rupees ($555 million) to up its majority stake in Chennai-based gold and diamond jewellery brand CaratLane by around 27 percent.

Titan, which has since expanded CaratLane’s physical footprint to around 250 stores across India, first invested in the digital-first business in 2016 to bulk up its jewellery portfolio. “[Back then] we were pretty much only brick-and-mortar [so] we looked at it as an opportunity to leapfrog into digital,” said Titan’s Chawla. The latest deal raised Titan’s ownership to around 98 percent.

Titan is not the only company pouring money into India’s jewellery sector. Private equity and venture fund investment has made its way into start-ups like direct-to-consumer jewellery brand Melorra, online gold and silver jeweller Giva, and jewellery e-tailer Bluestone.

“One thing that [investors] really liked about Bluestone was our strong tech background and our ability to actually leverage that very strongly and efficiently,” Bluestone co-founder and chief executive Gaurav Singh Kushwaha told BoF.

The company, which has raised $113 million so far from institutional investors like Accel, Kalaari Capital and Iron Pillar, and angel investors including Indian entrepreneur Sunil Kant Munjal, reported a 67 percent jump in operating revenue to 770.7 crore rupees ($92.46 million) in the fiscal year 2022-23.

At the same time, some of the country’s largest incumbent brands are also raising the stakes.

Companies like Kalyan Jewellers, Joyalukkas, Malabar Gold and Diamonds (all headquartered in Kerala state), Chennai-based Vummidi Bangaru Jewellers (VBJ) and Mumbai-based Tribhovandas Bhimji Zaveri (TBZ), are expanding their offering and investing in retail networks at home and in overseas markets like North America, Southeast Asia and the Middle East while adding new factories and contract manufacturers to their portfolios.

“[Many] markets are open for Kalyan to expand into in the immediate future, meaning the next three-four years,” said Ramesh Kalyanaraman, executive director, Kalyan Jewellers, which opened its 19th showroom in the United Arab Emirates in September and is planning to launch 25 mono-brand stores for its digital-first brand Candere in the current financial year.

India’s major luxury fashion players are also shaking up the sector. In addition to Tata, two of the country’s largest multi-sector conglomerates have decided to either enter or expand their presence in the jewellery industry.

Last year, Aditya Birla Group announced its foray into branded jewellery retail with an investment of about 5,000 crore rupees ($600.4 million). The new venture, Novel Jewels, plans to build large format stores across the country, featuring in-house brands. One of its objectives is to counter arch-rival Reliance Industries-owned Reliance Jewels, which has been in the market for 16 years, boasting over 350 outlets and an innovative in-store app Jewels Hub.

But what is driving all this dynamism in the sector?

A Jewellery Market Like No Other

For one, the Indian jewellery market is nearing recovery. Retail sales reached $60.3 billion in 2022, according to Euromonitor International, edging closer to pre-pandemic levels in 2019 of 62.6 billion (sales had plummeted to 48.8 billion in 2020).

Indeed, much of the sector’s recent activity can be attributed to the fact that “the economy is back on track” with “consumer sentiment [being] positive” in India, suggested Kozhikode-based Malabar Gold & Diamonds chairman M.P. Ahammed. According to the World Bank’s latest India Development Update, the country was one of the fastest-growing major economies in FY 2022/23 at 7.2 percent and is forecasted to see growth of 6.3 percent in FY 2023/24.

Malabar, India’s second largest jeweller by retail sales after Titan’s Tanishq, according to Euromonitor, plans to invest 4,000 crore rupees ($479.8 million) over the next two years to boost its retail and manufacturing capabilities, with about a third of that allocated to overseas spending.

One feature of the local market that can help it remain relatively buoyant — even when the macroeconomic picture is less rosy — is that “gold is an intrinsic part of the cultural ethos of our country,” said Ahammed, referring to the auspicious status of the precious metal in India.

Although per capita GDP in India is a modest $2,388.60, according to the World Bank, the country continues to be the world’s second-largest consumer of gold jewellery, with bridal jewels accounting for about half of the market share, according to the World Gold Council.

Thanks not only to demand from the expanding middle-classes and increasingly wealthy high net-worth individuals but also highly motivated lower income consumers, the gems and jewellery sector overall accounts for 7 percent of the country’s GDP, according to India’s ministry of commerce and industry.

There are other unique characteristics to the local jewellery market that help explain the recent wave of investments.

“A large part of the jewellery retail market is still fragmented and unorganised in India. That presents a huge opportunity for growth for the organised jewellery retail players,” said Ahammed.

Indeed, the sector is rapidly formalising, consolidating and professionalising as consumers seek trusted brands and modern designs. Last year the government imposed rules regulating the purity of gold through a hallmark unique identification number (HUID).

According to Chawla, broader regulatory moves like the introduction of the Goods and Services Tax (GST) and demonetisation have also contributed to the sector’s growing formalisation over the years. The government’s decision to place the gems and jewellery sector within the Prevention of Money Laundering Act (PMLA) is also helping, he added.

Interestingly, another factor compelling some consumers to shift from unbranded to branded jewellery is work-related migration. “[Many Indian consumers] are no longer living in the zip codes they were born in [so] when you go back to your hometown, you might go back to your family jeweller, but when you’re outside, you will gravitate towards brands you think you can trust,” said Chawla.

Many of the family jewellery businesses that were once dominant in a particular region or state, such as New Delhi-based Hazoorilal Jewellers and Khanna Jewellers, or Chennai-based GRT Jewellers, are now beginning to see competition from other organised players expanding nationwide.

“Organisation has [already] happened in the middle of the market. The premium jewellery segment, where Tanishq, Malabar and Kalyan Jewellers play… is where the bulk of the organisation is happening [now, but] the higher end is still dominated by family jewellers,” said Neelesh Hundekari, partner and head of fashion and luxury for Asia-Pacific at consultancy Kearney.

Where does this leave global jewellery brands, particularly European and American players who already have a presence in India?

Carving Out a Niche in a Complex Landscape

India is a rising star in the luxury fashion and premium beauty segments with brands like Louis Vuitton, Christian Dior and Estée Lauder, all cementing their presence in the country. However, it continues to be a complex market for foreign jewellery brands with Cartier and Bulgari each operating just two Indian mono-brand stores, and Tiffany & Co, operating one.

“The penetration of foreign brands into the Indian jewellery market is still minuscule [and]… that has not changed in all these years,” Hundekari said.

Experts say it is far easier for foreign players to sell luxury watches than jewellery in India as the country has few big luxury watch brands of its own. The Indian jewellery market, however, continues to be dominated by local companies.

“The daughters of rich families who have lived abroad have a greater fascination for [foreign jewellery brands] and they’ll wear them. But there’s only a small segment of consumers that might actually recognise a Chanel necklace or earrings if somebody’s wearing them. For the larger masses, most [foreign] brands are irrelevant [in the jewellery category or represent]… a niche market,” said Hundekari.

Mithun Sacheti, who co-founded local brand CaratLane with Srinivasa Gopalan in 2008, believes that most foreign players don’t address the full spectrum of Indian consumer needs and desires. “The Cartier love bracelet and Bulgari Serpenti both solve for a status symbol, but they don’t solve for differentiation,” he explained. “Indian consumers value that significantly.”

Cartier’s parent Richemont and other western jewellery companies operating in India contacted by BoF did not immediately respond to requests for comment.

“Of course, as the income and wealth pyramid widens, and lifestyles change, there is bound to be a shift in [consumers’] design ethos [that could benefit foreign brands]. However, I see no reason for domestic brands to be specifically disadvantaged, unless they choose to not adapt and evolve with the shifts in the market,” Hundekari added.

The jewellery business may be particularly challenging for foreign players but that hasn’t stopped luxury groups Richemont and LVMH from opening stores for some of their portfolio brands in India’s newest malls such as Reliance’s Jio World Plaza in Mumbai.

“The primary market for international luxury jewellery brands is [still mostly limited to] Mumbai, Delhi, etc,” Hundekari explained, in contrast to local brands which are sold much more widely in tier two and three cities across the country.

Another area where local players have an edge over their foreign counterparts is in the variety of the offering. Most major jewellers in India say they introduce hundreds of new designs each month, along with traditional pieces relevant to each region in their local stores.

Tanishq, for example, says it has about 4,000-5,000 SKUs in a midsize store, of which 15 to 20 percent would have been launched in the last 12-18 months. Kolkata-based Senco Gold says it would have about 140,000 designs in store of gold jewellery alone. Kalyan, meanwhile, says 30-40 percent of its retail inventory consists of local staple products, like a kasu mala (a type of traditional necklace) or a brahmani nath (traditional nose ring) in Maharashtra.

Understanding how to tap local holidays like Diwali and other cultural occasions is another important factor.

According to Devangshu Dutta, chief executive of retail consulting firm Third Eyesight, the Indian jewellery market is dominated by bridal jewellery, which tends to be more traditionally designed than it is trend-led, and consumers who are driven by an investment and “holding” mindset. “Thus, domestic players have a home-ground advantage, in terms of understanding the design, pricing and purchase behaviour much better,” he said.

The other defining characteristic of Indian consumers that industry insiders say foreign brands can’t cater for as well as locals is value consciousness. Gold jewellery, for example, is still sold on a breakdown basis. This means the jeweller includes the weight of gold, current gold prices, production charges, and the Goods and Services Tax (GST) in the final bill.

“Indian consumers want to know how much gold is around the diamonds [in jewellery pieces], what is the quality of the stones and so on,” said Hundekari. This makes it hard for luxury brands which have high markups. It also makes it easy for Indian consumers to get some foreign brands’ signature designs copied at a fraction of the cost by a local jeweller.

To succeed in the market, experts say foreign players need to play more to local tastes and improve consumer insights to create the right product mix. Otherwise, “it’s important to face the fact that their core appeal could be [limited] to a customer who is already aware of their brand and what it offers,” said Dutta.