To counter rising gold prices, Tanishq bets big on ‘Hi-Lites’ jewellery range

The context is that gold prices have been going up. Over the last two years gold prices have gone up north of 20%. It may have stabilized in the last, let’s say 5-6 months, but they have gone up significantly if I compare it to prices two years back. Gold is a commodity which is volatile, but there seems to be an upward trend.

So because of that, customers we’ve been reaching out, to understand their needs used to tell us that while aspiration for gold (jewellery) continues to be high, their, wallets cannot stretch as much as the gold price has been stretching. To address this customer issue, we looked at the entire product range to see, how can we make products lighter and deliver within the same budget, without compromising on aesthetic sensibility, quality and visibility.

And with that in mind, we undertook a massive exercise about a year back and by October we were able to see the (roll-out of the) first phase of this project. We took up about 4000 different stock keeping units (SKUs) which were amongst our best sellers and products. We have been able to convert about three and a half thousand SKUs in the gold jewellery, including everyday products as well as wedding ones.

To achieve this we innovated on a few things. First was a series of design reconstruction. Technology innovation in terms of manufacturing techniques, specially where there is machine-made products like panels etc. We also have used a patent pending hard alloy. This is a new material which has been used in our 22 karat (gold jewllery), where we are able to give a harder material, so that one can use less of the material (gold), to give the same functional stability and aesthetic sense, sensibility. We’ve done a lot of product reengineering also.

Design reconstruction technology innovation in terms of manufacturing techniques, material innovation in terms of creating a new hard alloy and product reengineering put together, has yielded roughly a 15 to 25% reduction in weight (of gold used). Again, I reiterate that there has been no compromise on quality, finish, aesthetic looks as well as in terms of the spread of the product. It looks as big. We’re not trying to reduce the size of the product.

As part of phase one we (quietly) launched this in the just concluded third quarter (of the current fiscal) and are talking about this for the first time. 30% of the stock of gold products we had in the stores was of this kind and contributed to 40% of gold jewellery sales. We are calling this range as Hi-Lites.

We didn’t want to talk about it until we actually put it in the market and we had seen the impact and we are also seeing some customer feedback. In this calendar year we are expecting to serve over a million plus customers with these products.

This is a completely different alloy. Anybody could create hard alloys. Many people have tried and there are others who might try. However, it is not easy to create a product that it is workable and in particular we’re using it a lot more for machine-made products.

This is something which we have worked internally. We have applied for a patent on the material itself and its composition. This really does help us to innovate, create products which are lighter weight but still retain the functional and product stability because 22 karat otherwise is a soft material you know. At this point, I won’t be able to reveal more than this.

So, this is also resulting in customers wanting to buy more pieces. And this in turn is unleashing its own benefit in terms of volume growth. We are seeing buyer walk-ins higher, especially new buyers in our stores. Because of this initiative new buyer growth has been 39%.

The business has not been impacted. However online sales are still, relatively a smaller percentage of our overall sales but it has gone up significantly. This year (online sales) is already hitting about 4% plus (of overall sales). Which means it’s about double that of last year. Compared to pre-pandemic period it’s an 8X growth (in online sales).

I really think it can go even higher over the next few years because we have very aggressive plans for digital and this is not related to only the current (pandemic) situation. At present the stores are open. But I think the purchase journey is more Omni and not just online. People may start their journey online, but they continue and complete the process offline. I think (online jewellery purchase) is just a new way of shopping and new convenience that people have seen.

We are currently around 380 stores. We have added 27 stores in the first nine months. So we expect to open 7 to 8 more stores in the remaining quarter for this (fiscal). We are still in the process of putting our plans together for the next year but typically when we’ve been adding about 30 to 35 stores every year and we don’t see any change in that.