Brand appeal

A replica of the Koh-i-Noor diamond created by De Beers, at an exhibition in Mumbai. - PAUL NORONHA

Branded jewellery has found a niche for itself in the tough Indian market, and its increasing growth rates show that before long it will corner a significant share of the jewellery market.

WITH the retail industry in India burgeoning, several companies have made inroads into the traditional jewellery industry, selling the product that was never really "marketed" in "brand" new ways. So much so that branded jewellery is the new mantra in the market, having rapidly acquired a niche over the past few years.

Some of the companies have even cleverly played on Indian customs and tradition to advertise and establish their brands. Jewellery is now marketed for every occasion; even Valentine's Day calls for "a special something [read diamond] for a special someone".

In spite of pessimism about the marketability of branded jewellery in a country rooted in buying ornaments from the traditional goldsmith, 30 brands were launched in 2004. However, this does not take away from the fact that India is a tough market. According to Mehul Choksi of the D'Damas and Gitanjali Group, branded jewellery has witnessed more than 50 per cent growth in the last three years. The diamond branded jewellery, he says, is especially impressive with the segment witnessing a 20 per cent rise annually as against 10 per cent a decade ago.

Although branded jewellery accounts for less than 10 per cent of the Rs.40,000-crore jewellery market, a study has concluded that it is growing in popularity at a tremendous pace of 20-30 per cent annually. Such is the potential of this industry that the consulting firm McKinsey estimates the branded jewellery market in India to grow at the rate of 40 per cent per annum to touch Rs.10,000 crores by 2010.

Big drivers of this kind of jewellery are the numerous malls opening across the country with the emergence of an affluent class following the successful growth of the new economy companies. In the past decade, the country has seen a section of the population gaining exposure to designer wear, fashion accessories and globally branded products. "Why not have access to them?" asks Rima Khan, a brand executive. "Of course jewellery is harder to brand but it has done well given the tough competition," she says.

One of the reasons branded jewellery is doing well is that now anyone can walk into a mall, window shop and decide at their own what they would like to buy. The entire culture of shopping has changed with attentive and helpful attendants and well-displayed products. "You no longer have the sales staff who look at you and decide whether you are worth serving or not. Everyone is a potential customer in the new market," says Rima Khan. Yet the most important part of branded jewellery is that you can get a piece of jewellery with a diamond for as little as Rs.1,500. And as branded is equated with quality, you are assured of a good product. "Suddenly jewellery has become accessible and affordable for all income brackets."

The shift was visible in 2004 when more than 30 players entered the market. Today there are more than 50 brands, endorsed by models, film actors, sports celebrities and other well-known faces. Some designs of these brands are so popular that local jewellers have begun to copy them. "While it is a compliment to the industry that people like the product, it could also affect the company because the cost may be lower," says Rima Khan.

The growth in diamond jewellery has been particularly remarkable. According to Diamond Trading Company (DTC), the sales and marketing arm of the De Beers Group, "the demand for diamonds has never been stronger". India is one of the fastest growing markets in the world. The diamond market in India is over $1.4 million.

India is still largely a gold-dominated market, DTC says. But as these brands sell diamonds at prices that range from as low as Rs.1,500 a piece, diamonds have become relatively affordable. "Research conducted world-wide shows that nothing is more desirable than a diamond. Almost 94 out of 100 women polled want the real thing," according to DTC. What helps the growth of diamonds is that gold or platinum is not seen as competition. The stone complements the metal or the other way round.

The growth in the market for diamond jewellery brands in India is actually in direct response to DTC's Supplier of Choice strategy, which aims to grow consumer demand for diamond jewellery in the context of the expanding competitive luxury goods sector. DTC's Supplier of Choice encourages clients to operate efficient and value-added distribution channels. "It plans to stimulate advertising and marketing investment to the levels that a luxury product like diamond jewellery deserves," according to DTC.

As a pioneer in the industry, DTC says it is encouraging the development of multiple competing diamond jewellery brands for the benefit of the entire industry. "DTC believes that strong brands are an essential ingredient in the transformation of the market for diamonds. As in any industry, multiple competing brands create category excitement and bring new consumers to the market. This is especially true of luxury goods. Extremely value-conscious consumers are willing to pay a premium for brands only if the brand appeal is high."

"Investing in diamond jewellery also makes sound financial sense," says Cherie Tandon Saldanha, DTC India's marketing director. Of course diamonds are also rare, unique and eternal so there are a lot of emotions associated with buying or gifting a diamond.

Some of the challenges the industry faces are: tough competition from the luxury goods segment, educating consumers on this type of jewellery, and fragmentation of the market. According to DTC, developing and establishing successful brands takes a long time. Branded diamond jewellery, though in its nascent stage in India, has shown encouraging signs but it still competes with other luxury goods. To build a market for diamonds, it is imperative that quality spending is generated in the category through advertising and marketing. There should also be an effort to transform trade to the standards required for selling diamonds.

The biggest challenge perhaps is in educating the consumer. Consumers need to understand the four Cs - Cut, Carat, Colour and Clarity. Companies that brand their products place a lot of emphasis on educating and therefore helping the customer make his purchase. "Buying jewellery is a very personal thing and we need to understand what we are buying," says Seema Thakur, an attendant in a jewellery store at a mall in Mumbai. "We have an average of 50 people on a week day and at least 100 on a weekend who walk in and look around the shop. If you make the product look special, for instance, appeal to a young gentleman to buy it for a loved one, he is often interested." And the big selling point is: "If you can spend Rs.1,000 on two music CDs, why not spend for that special person in your life."

The branded jewellery industry is still in its infancy, but increasing growth rates show that in a short time it will corner a significant chunk of the market. Perhaps the best compliment to the branded segment is that old jewellery showrooms have also begun to design jewellery lines under a brand name.