Tanishq focus on Diamond Jewellery to Derisk Rising Gold Prices

It is well known fact that continued weakness in Greenback [USD] has led to the rise of Gold. However, this doesn’t go well, especially in India, where is is used mainly for ornaments. Tanishq, the first organized retail chain in Gold jewellery de-risked its model by adding Diamonds so that even high prices of Gold shouldn’t deter it sales. Mr. Bhaskar Bhat of Titan said,

We at Tanishq too promote diamond jewellery. Because, if the price of gold is going to go up like this, there could be a serious threat for the plain gold jewellery business. So, we thought we might as well pursue the diamond jewellery part of the business. We opened a store at Chennai exactly three months ago. That store has added to our sales. It has not cannibalised our other stores

Titan’s other businesses have done well during the slowdown as they priced and targeted the real Indian consumer’s pocket. Mr. Bhat said,

We have price points from Rs 295 to Rs 1.5 lakh in watches and we are present in 11,000 outlets. Similarly, in jewellery, we are not a one-town jeweller – we have a network of 120 stores across the country. Therefore, our basic business model is significantly de-risked. Our reading of the downturn was that there were segments and geographies which were less affected. Youth was less affected. Even today, if you go to Lucknow or Patna, sales are booming, especially for jewellery.

W.R.T bottom-line, Tanishq will see lesser growth in Diamond or other precious stones portfolio. However, we have asked if the company would be interested in pushing Gold plated ornaments as SKUs. Jewellery contributes ~75% of the sales followed by watches around 15%.