A retailers' delight

Always seen as a major retail market, particularly for textiles and jewellery, Coimbatore has seen a sudden rush of major retail chains in the past few years, providing the customers with a wider choice and more competitive pricing.

This has also resulted in an expansion of the retail market for jewellery and textiles, earlier concentrated in Oppannakara St, Raja St, Big Bazaar street area, to Gandhipuram in recent years with some of the existing retailers in Oppannakara St and Raja St also establishing retail sales outlets in the Gandhipuram area (Cross Cut Road and 100 feet road/Bharathiar Road). The city also is attracting jewellers from the North who deal in high-value ornaments such as ethnic jewellery, diamonds and so on.

What is of particular interest is that major Kerala-based jewellery chains such as Malabar Gold, Joyalukkas, Kalyan Jewellers, Bhima and Josco have opened retail outlets in the city to cater to the large migrant population from Kerala living here who were earlier going to Kerala to purchase jewels that met their taste.

According to Mr C.V. Sunny, Chairman, Pavizham Jewellers, one of the earliest from Kerala to set up retail outlet in the city in 1992, the bomb blast in 1998 caused a sudden dip in the retail market in the city and it lasted for six or seven years. During this period, because of the security scare and strict checking by police, the business shifted to Kerala. This business segment constituted about 40 per cent of the local gold ornament business. But with many major Kerala jewellery chains establishing their presence in Coimbatore in recent times, this practice of going to Kerala to purchase jewellery nearly ended since they got the same jewellery here probably at a lesser cost since the sales tax on jewellery business was four per cent in Kerala, whereas it was just one per cent in Tamil Nadu.

He said while Keralites frequently change the designs and want light-weight ornaments, in Tamil Nadu people look at gold as an investment and prefer heavy-weight items. In terms of volume also, people of Tamil Nadu buy more gold than people from Kerala.

Manufacture of gold jewels

Mr Sunny said it was not merely for retailing of gold that Coimbatore was well known. The city is also a major centre for the manufacture of gold ornaments and he ranked Coimbatore as next only to Mumbai in the manufacture of gold ornaments. Almost the entire country was dependent on Coimbatore producers for South Indian jewellery. There were nearly 200 gold ornaments manufacturing units here employing nearly 20,000-25,000 people, catering to the demands both within and outside India. Tracing the growth of the bullion market in the city, Mr Sunny said before he came, the city was a ‘closed market' with little competition. But the market now takes ‘its own course' with the customer being the boss. Correcting the impression that gold in Coimbatore was costlier compared with Chennai and Mumbai, he said this was not so and the ‘net price of the jewellery to the customer is almost the same', after taking into consideration charges such as wastage, making charges and so on. Per gram-wise, including the charges, the cost is ‘almost the same everywhere', even in Kerala and it is just a marketing technique. The ‘genuine hallmarking' also ensured purity and ‘Coimbatore is the cheapest available thing in terms of per gram' on a net basis.

He said that while the jewellery market in Coimbatore was growing, the ‘catchment area' of the city market was actually shrinking. Earlier people from far away places such as Karur, Salem and so on, used to come to Coimbatore to buy ornaments. But with reputed jewellery chains opening showrooms in these towns also, the number has dropped, though some loyal customers still come from these cities to Coimbatore.

Asked about the impact of spurt in gold prices on the business, Mr Sunny said, ‘now the people are much more interested in buying gold' than earlier! The customers may rethink about investing in gold only if there was a sharp correction in gold prices. With gold ‘becoming a speculative business' he found younger people interested in trading in gold bars or coins while the elders still opt for ornaments. With big jewellery chains establishing retail outlets, the smaller shops were facing threat to their business.

Automation needed

He felt there was a shortage of South Indian jewellery in the world market and for the gold ornament manufacturing industry to grow, mechanisation was essential since automation was needed for volume production. A move to establish a jewellery cluster for automated jewellery production here was scuttled a few years back. If it had come about then, the jewellery production here would have grown ten times more than what it is today. A similar initiative that was supported in Gujarat at that time has helped to substantially increase exports from there.

Mr T.K. Chandiran, Managing Director, The Chennai Silks, Coimbatore, which has presence in both the textile and jewellery business, said his family had rich retail experience since his father started a retail showroom in Madurai in 1962. Before his group entered the textile business in the city in 1996, the textile retailing was segregated into different segments such as men's wear, women's wear and so on and the customers had to go to different shops to make their purchase. But his group introduced the concept of ‘everything under one roof' which proved to be a hit with the customers. Their payment practice of ‘bill to bill', rather than insisting on free credit period from their suppliers, ensured fresh supply and a clean balance sheet.

He said when they entered the textile business in 1962 in Madurai, their turnover was just Rs 1 lakh which has grown to Rs 1,000 crore now from textile business alone in the State. The jewellery business, which they started in 1990, generates an equal business of about Rs 1,000 crore a year now and he attributed the growth witnessed by the group to ‘integrity, best price and customer satisfaction'. People are also looking at gold increasingly as an investment option.

BIS marking

Mr Chandiran was confident of the retail business continuing to clock the current growth rate for at least the next five years, though policy changes or global meltdown may temporarily impact the business. Every time when newcomers enter the business in Coimbatore, the market expands rather than the existing players witnessing a shrinking pie. There was also a clear division in market segments with different retailers being present at difference price points which partly explains why retailers expand their presence to different locations. The buyers are also becoming conscious of buying ornaments with BIS marking and billing their purchases. His company has got BIS marking both for manufacturing and retailing.

Mall, multiplex

As if to confirm the city's stature as a favourite destination for retail shopping, the first mall in the city — the Rs 200-crore plus Brookefields Plaza on Krishnaswamy Road has been opened. It boasts of some of the biggest names in the retail space such as Reliance and Mahindra and Mahindra group companies, well-known textile brands such as Pepe Jeans, Van Heusen, Tommy Hilfiger and so on as its clients. Mr M. Balasubramaniam, Director, Brookefields Estates Pvt Ltd, Coimbatore, which had also built the Spencer Plaza in Chennai, said the Coimbatore mall would be the first multiplex in the city having six screens and about 1,600 seats. The multiplex has been leased out to Big Cinema of Mr Anil Ambani group.

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