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‘We Are Seeing An Upward Trend Each Week’ Ajoy Chawla, CEO, Jewellery Division, Titan Company
In a candid video interaction, Ajoy Chawla, CEO, Jewellery Division, Titan Company tells ASHISH SINHA of BW Businessworld that the jewellery business is up and running with a lot of pent up demand across smaller towns and the hinterland. Excerpts:
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Can you give us some insights on consumer sentiment?
Consumer sentiment is far better for this category. In bigger cities— Mumbai, Delhi, Chennai and Kolkata — the sentiments are mostly impacted. But in the rest of the country, particularly in the smaller towns, the mood is better because the impact is less. We are seeing a good recovery rate since we started reopening our stores in May. As of early June, we opened 295 (of 330) Tanishq stores in 194 towns (of 207 towns) because of improved recover rate. At same stores comparing the average daily sales (last year around the same period) — the dispersion is between 60-70 per cent. On a weighted average basis, it is 67-70 per cent (Q12020-Q12019) between the same stores. The recovery ‘We Are Seeing Upward Trend Each Week’ rate of stores that were opened for four weeks have climbed from 60 per cent to 70-75 per cent. Those that opened for three weeks saw the recovery rate climb from 70 per cent to 90 per cent. We are seeing an upward trend each week. We are not seeing ‘doom and gloom’ from the look of it.
What is driving demand?
There are components of demand. Pent-up demand -- the ones who missed buying jewellery on occasions like birthdays, anniversaries, Akshaya Tritiya (AT) and Gudi Padwa, are now driving the demand. Then there are those who deferred buying are enquiring about wedding related purchases because weddings have got deferred from Q1 to Q3/Q4. On Akshaya Tritiya last year, we clocked sales of around Rs 1,800 crore. That number won’t come back. In April, everything was shut.
What factors determine the inclination of Indian consumer towards gold and jewellery?
Local conditions determine the mood/consumer sentiment — it is true for India. Consumers are not seeing jewellery as a discretionary purchase for pure indulgence, but jewellery is also seen as a product which has got an appreciating/asset value. We have seen this in weddings. There are deep-rooted connections with gold when it comes to weddings and rituals in India. For every festival, gold has a certain aura and auspiciousness. We are serving to 6-7 million customers in the country. On an annual basis, last year, we served closer to 2 million customers. But the customer base of 6-7 million represents a fraction of India’s population. We are serving a different category of customers. At lower price point, we may witness a certain amount of stress. Last year, because of the rise in prices of gold, we saw an impact on the number of buyers in the sub Rs 50K to Rs 100K price band. That base had poorer sentiment. It will again affect us this year. But overall, we may still be better off than many other players who cater more to the bottom of the pyramid segment.
How are gold prices impacting the customer behaviour?
In the last 14-odd months, gold prices have gone up by 50 per cent. There has been an increase of 15 per cent in the last 3-4 months. In grammage terms the purchase will become lower. On the preference front, we have not seen any increase in exchange. We haven’t run any offers yet. There is a lot of preference towards coins, 100 gm-500 gm gold biscuits. In jewellery, customers are preferring plain gold jewellery but studded jewellery is slowly picking up. Gold as an asset class has a natural edge. People are unsure of mutual funds and other investment instruments. So we launched a scheme where customers could buy a gold coin now, even if there is a making charge on it, we will set that off against future jewellery purchase. So that has seen a lot of traction.
Are these trends that you talk of visible across the country or are they limited to certain geographies?
South India sees a lot of exchange compared with north India. In north, when people come for exchange, they end up buying more gold. Recovery rates are applicable to entire India — east, west, north, south. It doesn’t include Mumbai, Delhi, Kolkata and Chennai. The metro effect in trends is much more subdued.
How have you personally handled the lockdown challenges?
Personally, I see this as the nature’s way of teaching us about many things — balance: people, planet, all living beings are important; simplifying our lives: do we need so much consumption? It acted as a pause button in our hectic lives. It is also a time to reflect, a time for collaboration, a time to strengthen relationships. It taught us that life is fragile, live it fully, now. As a leader and as an individual — it has been about being empathetic, infusing positivity, reducing anxiety and about being thoughtful in our responses to the ecosystem. At the same time adopting and adapting to behave like a startup, experiment, learn and push forward.
Were there any layoffs at Titan due to Covid?
No layoffs. We have requested our vendor partners and franchise partners to follow this. In fact, they took care of our employees, paid their salaries during the shutdown. We supported some of our partners with working capital loans, but we have ensured that nobody in our 20,000 people ecosystem has had to face too much of a stress.
This article was first published in the print issue of (25 June- 09 July) BW Businessworld. Click Here to Subscribe to BW Businessworld magazine.