CI: You recently launched a campaign for affordable diamonds. Could you throw some light on the rationale behind the campaign and its impact?
Sandeep Kulhalli (SK): Last year, diamonds saw an 80 per cent price hike. Diamonds went out of budget for the entry-level buyers because this is one category where the consumer has the tendency of buying a small-ticket item (like a ring, pendant) first. In addition to this, there was a perception among consumers that Tanishq is an expensive brand. We wanted to do something about this declining growth rate of diamond purchase along with refreshing the brand's perception among consumers as a more affordable brand. Another factor that drove the decision was the fact that we could influence this part of the business because of late there's been an increase in popularity of diamonds among urban youth. It has become an aspirational category. We have seen the sales figures go up after the campaign went on air. While the industry average is about 15 per cent, 30 per cent of our business comes from diamonds.
CI: There are plans of retail expansion with 45 new stores by the end of this financial year. Could you share details of the growth plan?
SK: It is an ambitious growth plan. Last year we had set up 17 new stores across the country. Currently we have 137 stores across 80 cities. The 45 new stores would be set up across India, half of them in Tier I, II cities, and the rest in Tier III, IV cities/towns. There are multiple benefits of expansion in the non-metros because they haven't been hit by the retail revolution as yet. You won't find shopping malls in Kota, Bareilly or Bhatinda. But there's a huge demand for gold and diamond in all of these markets. Compared to big cities that have established players, there is lesser competition in small cities/towns. So there's scope of occupying a larger market share in small cities.
While the industry has been growing at 8 to 9 per cenr y-o-y, we have grown by 30 to 40 per cent in value in the last four years. We don't plan to curtail any of our marketing spends because of the current circumstances. Growth figures might take a beating by 5 to 6 per cent this year. But if we are able to provide value proposition to the customer, it'll be easier for us to flourish now, as against (in a) booming economy.
CI: What part of your marketing budget is dedicated to mainstream advertising? Is digital a part of the marketing mix yet?
SK: We devote 60 to 70 per cent of our marketing budget to ATL activities. We are pretty aggressive on digital, specifically for our Mia collection (jewellery for urban segment of consumers). We plan to launch an e-commerce initiative in three months from now. But I'll have to admit that we have not used digital intensively so far. With an increase in the number of young consumers shopping online, you will also see more aggression in our digital activities.
CI: Which region gives Tanishq maximum business?
SK: That would be the West region, followed by North, South and then East. Diamonds are largely popular in the West and North, while Gold is predominantly more popular in the South. Though we are getting better in terms of distribution in the South, a lot of work is yet to be done in that region. We are not even a part of the top ten players in Tamil Nadu, which is the biggest market for Gold not only in South but the whole of India.
CI: Any marketing initiatives undertaken by Tanishq in the recent past to get a better foothold in the Southern market?
SK: We have been engaging in press advertising and social programs in order to engage culturally with the Tamil community. We are also planning to make a Tamil film. The consumer in that market still considers us an outsider as opposed to their local jeweller. We want them to see us as their family jewellers now.