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After making its presence felt in the non-south market through the franchise model, Kalyan Jewellers plans to test the same model in the southern markets by converting some of the company-owned stores into franchise.
The company’s franchise-owned-company-operated model has worked well with the company planning to more than double the showrooms in non-south markets by adding 52 showrooms in this fiscal against 24 added last fiscal.
Expansion plans
It has already signed letter of intent for all the showrooms to be opened this fiscal. The company plans to open 30 showrooms in the first half of this fiscal and the remaining in the second half. In all, the company has 147 showrooms against 127 recorded in last fiscal.
Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers told businessline that the company is receiving lot of enquiries to roll-out franchise model in the south and a pilot project will be executed in this fiscal.
Once the pilot is successful, the company will convert some of the 77 company-owned showroom in south into franchise model and reduce the working capital, he said.
The capital saved will be ploughed back into business as there are ample growth opportunities across India, said Kalyanaraman.
Investments
A franchise will be a financial investor and hold the cost of inventory. Kalyan Jewellers will account for the revenue and invest in staff, marketing and managing the day-to-day activity of the showroom.
Despite record high prices, gold jewellery demand in last 45 days has already crossed that of March quarter and will be higher than June quarter of last year, he added.
“Consumers are more concerned on volatility in prices rather than it hitting a new high. In fact, the high prices give consumers the confidence to go for it. Moreover, jewellery purchases for weddings are not affected by rising prices,” he said.
Surveillance
Though the government has rolled-out hallmark unique identification (HUID) number, it has not been implemented to the fullest. Once the government officials start surveillance to check on HUID number, more sales will start shifting from unorganised to organised players like Kalyan Jewellers, said Kalyanaraman.
The company added three new showrooms in West Asia in this fiscal taking the total to 33. It has started testing out franchise model in West Asia and plans to convert most of the showrooms to franchise model in two years, he said.
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