Tanishq Glimmer, shimmer and more
Business World — August 7, 2006

In a country that drives gold prices across the world, selling jewellery is easy. But getting people to switch from their trusted goldsmith is quite another thing. Tanishq, however, seems to be managing it well after 10 years of keeping at it. At Rs 761 crore, it already forms half the revenues for the Rs 1,439-crore Tata-owned Titan Industries. It has displaced the older mother brand Titan, which clocked Rs 621 crore in sales in the same period. By the end of March 2007, it aims to become a Rs 1,000-crore brand, making it the bread and butter of the Rs 1,900-crore (estimated) Titan Industries.

By all accounts the Titan watch team should be biting its nails wondering what the future will be and the management should be scrambling to keep motivation at the watch division high. None of that, however, is happening. "Both have different markets and consumer segments. Titan Industries is enjoying growth overall," says Harish Bhat, COO, Titan Industries (formerly COO, Tanishq). Titan, too, is growing, he points out. The only difference is that Titan is growing at 25 per cent while Tanishq, clearly the star, is shooting ahead at 40 per cent.

Much of this good news is tempered by rising gold prices that have already hit margins (not substantially though). Then, there is the issue of how much it can grow. Of the estimated Rs 65,000-crore jewellery (not just gold) Indians bought last year, brands got a measly Rs 1,500 crore - Rs 2,000 crore. About half of this was sold by Tanishq. The brand, therefore, has to chip away at what looks like a Rs 65,000-crore mountain along with competitors such as Gili, Asmi, Nakshatra and others.

The Tanishq strategy for the coming couple of years relies on two things — increasing penetration in the domestic markets and going abroad in order to diversify its revenue portfolio. It is already ramping up its retail presence from 84 to 100 outlets in the coming two years. Many of these outlets, says V. Govindraj, vice-president (sales and marketing), Tanishq, will be in towns with a population of less than 500,000 - read small-town India, almost every marketer's destination today. There is also a slew of 'concept' stores, the first of which, costing Rs 10 crore, opened in Kolkata recently.

"The idea of such a store is to harmonise the tradition of the past with the modernity of the present," says Govindraj. Add the world to this. After hitting six countries in the last four years, Tanishq is entering the $57-billion US jewellery market with two exclusive stores, one in Chicago and the other in New Jersey, by the first quarter of 2007-08. S. Ravi Kant, COO (international business division), Titan, says: "We are not looking at the NRI market only. We want to understand the American consumer."

He claims that Tanishq's market researchers team is figuring out the market and a designer who can create new products for it. To push penetration in other markets, Tanishq will use the 'shop-in-shop' concept that it already does in 50 stores across different West Asian markets. "This reduces distribution costs. Also, for the consumer it remains a Tanishq store and helps us get a foot into the market," says Kant.

Much of this is obvious stuff, you might say. It will increase volumes and turnover, but will profit margins improve? Arguably, what works for Tanishq is good designs at every price range -from a few thousand rupees to lakhs. What is missing is range. For instance, while it does light and heavy jewellery, diamonds were not a strong point, say analysts. So, now it is working at those.

However, Bhat knows that it will be a long haul, because even now, Indian consumers prefer their goldsmith to a mass-manufactured brand. So far, only the impersonal, less-driven-by-relationships' metros that have taken to Tanishq. And as it shoots for growth beyond them into inner India and the outer world, Tanishq will have far more to worry about than what its sister brands across the aisles will.