We are targeting 100 per cent normalcy by Q4, says Titan Jewellery CEO Ajoy Chawla

Sangeetha Chengappa Bengaluru | Updated on June 23, 2020 Published on June 23, 2020

Ajoy Chawla, CEO, Titan Jewellery Division,

India’s ₹2.75-3-lakh crore jewellery industry which was hit by rising gold prices and damp consumer sentiment following macro-economic headwinds last year, suffered a heavy blow again with the recent outbreak of Coronavirus and the phased lockdown thereafter. In an interview with BusinessLine, Ajoy Chawla, CEO, Titan Jewellery Division, spoke about the impact of Covid-19 on the business, the lead indicators for demand revival and initiatives for a new normal. Excerpts:

After the double whammy of rising gold prices and damp consumer sentiment, followed by Covid-19, how big was the impact on Tanishq?

We had zero sales in April, and in the first week of May we began gradual re-opening of our stores. Now, over 85 per cent of our 465 stores are open pan India, including 330 Tanishq stores, 65 CaratLane stores, 17 Mia stores and three Zoya stores. In week one, the recovery rate of stores that reopened was 20-25 per cent, which spiked to 70-72 per cent in week four. Sales in June will not start off at the same level as in June 2019. We expect same store recovery rates (average daily sales) to be 66-70 per cent in April/May/June compared to the same period last year. Tanishq posted ₹18,500 crore revenue in retail price terms in FY 2020 and net sales value of ₹16,700 crore. We had ambitious plans to achieve ₹40,000 crore by 2023 for the Jewellery Division, including Tanishq, CaratLane, Mia and Zoya. The target was based on a 20 per cent CAGR year-on-year. But this target may get deferred by 12-18 months because of the impact of the pandemic on the business.

What is your business outlook for the new normal?

It is very difficult to forecast an outlook as growth looks very challenging. While the overall jewellery market has declined, we have been witnessing a slowing down in growth of sales since last year fuelled by a 20-25 per cent spike in gold prices every quarter since Q2 last fiscal, and damp consumer sentiment as a result of macro-economic headwinds, especially in the second half of FY 2019-20 (October 2019 – March 2020).

We saw reduced retail growth of 7 per cent in Q2 of FY 2020 with gold prices spiking heavily and had to reduce our growth outlook to 11-13 per for the second half of FY 2020 from the earlier target of 21 per cent. We were on course to achieve 13 per cent growth for the second half till mid-March, but the impact of the gradual lockdown totally changed our growth outcome. While we have no target as yet for FY 2021, our lead indicators for growth look very positive ― The Golden Harvest monthly savings scheme saw customers continue to pay up every month with very few seeking moratorium and not many requests for refunds. In the last six weeks, we were pleasantly surprised to see that 35 per cent of our customers were new buyers and the rest repeat customers. Q2 plans are being firmed up now and we are targeting 100 per cent normalcy by Q4. And if we achieve that, we can hope to be wildly optimistic in our business outlook thereafter.

Have you rolled out new initiatives to ring fence your customers?

At Tanishq, we have rolled out a host of tech initiatives, such as video calling, live assisted chat on our website, try-at-home and virtual try-ons to make it easier and safer for consumers to shop. We have ramped up our online customer engagement with live chats and remote-selling through video calls ― we had 15,000 live chats during Akshaya Tritiya in April. We are scaling up very rapidly with over 100 stores already remote-selling to customers after products are shortlisted during the earlier interactions. Our store attendant showcases the jewellery by wearing it so that customers can see how it looks, before buying it.

We have introduced new UV chambers to sanitise all the jewellery and have launched the ‘Dua Ka Sona 2.0 campaign.’ The campaign seeks to communicate the message that every little act of support and kindness is a blessing earned, and when you choose Tanishq, you choose gold that is not only enveloped with the blessings of every life it has touched but you also earn a thousand blessings of the karigars who you are supporting with every purchase at Tanishq. We introduced ‘Gold Standard’ safety measures at Karigar Centres across the country to ensure the health and safety of over 20,000 families. We kept them occupied with virtual upskilling and vocational training sessions, counselling sessions and awareness sessions on safety and precautions to keep Covid-19 at bay.

How will jewellery retail in India perform in the short- to mid-term?

The lockdown has been unprecedented, not one that makes it easy to profess an outlook. Four key consumer behaviours and leading indicators will shape and frame the recovery for jewellery. First, the consumer mindset around gold as an investment. Second, the ritualistic symbolism that jewellery has during festivals and weddings. We believe people will continue to follow these rituals although with measured intensity, as evidenced in the recent Akshaya Tritiya, an annual tradition when gold is bought as a harbinger of good times. And the expected packed second half of the calendar year, with weddings and festivals. Thirdly, the pent-up demand around personal celebrations, birthdays and anniversaries, though discretionary, are also becoming means of thanksgiving and celebrating life. Lastly, the lipstick effect among the younger, optimistic and affluent consumer. Safety will however, dominate consumer thinking and brands must create safe, tech-supported, and dynamic innovative ways of shopping.

What impact will the high price of gold have on consumer buying, in the backdrop of fears of a worsening global economic environment?

When there is volatility, gold is always a safe haven, compared to other instruments. For Indians, gold is beyond an adornment metal. It is a symbol of security. So, it symbolises beauty with the purpose of appreciating returns. Since gold appreciates in value, people are also seeing wisdom in hedging and parking money in gold as a safe haven. The business community is positive towards it. Even the salaried class is beginning to see gold as an interesting asset class.

What are Tanishq’s best sellers during the lockdown?

During Akshaya Tritiya, we saw a few trends. Considering gold is the safest haven in these times, customers purchased gold coins. When it came to jewellery, since most of our customers were purchasing jewellery online for the first time, we saw them opting for light-weight gold jewellery with contemporary designs. One of the drivers for sales during this season is weddings and since most of our stores were shut due to the lockdown, we are definitely foreseeing this to pick up in the coming quarters once life gets back to the new normal.

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Published on June 23, 2020
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