How Tanishq is changing the Indian Jewellery Market!
Tanishq operates in the market where trust is REALLY REALLY IMPORTANT - Jewellery. Traditionally, we have seen our grandparents and parents going to the same jeweller - generation after generation as you need to have complete faith in your jeweller. It is very easy for anyone to sell you a lower carat gold and charge you higher.
Tanishq has leveraged the TATA brand name like no other business could ever do.
NUMBERS
Total Stores - 582 (Tanishq, Zoya, Mia and Caratlane). These stores are located across a whopping 250 cities.
Revenue - 23,000 Cr
EBIT - 3000 Cr (~13% Margin)
Company’s focus is now on Tier 2/3/4 towns where there is a huge value addition possible by making high quality finishes available to the customers in a transparent manner without any fear of getting cheated by the unscrupulous jeweller. The company also has very very transparent exchange/return policies.
Total Gold Demand in India
Total gold sold in India was 774 Tonnes during 2022 which would be around ~4 Lakh crore in value. With a revenue of Rs. 23,000 Cr - Tanishq already controls around 5% of the overall Bullion demand in India and more importantly - this market share is growing rapidly.
Masterstroke
One masterstroke that Tanishq has made is that it is now exchanging gold purchased from other jewellers as well. Why is this a masterstroke - because now it is tapping into the next market which is people who are not looking to buy new gold but want to use the existing gold to buy new jewellery.
Why is his a masterstroke:
Two main reasons
This is a big big market. As per estimates, Indian households hold gold worth USD 3.8 Trillion (34600 tonnes). Tanishq exchanging this gold gives it access to this huge market. This is 40 times the annual Gold demand
Tanishq’s main value proposition (in addition to beautiful designs) is 100% correct caratage. Once, the exchanging users checks the purity of gold purchased from their other jeweller - he would get to understand how she has been defrauded by that jeweller for generations. And then Tanishq would have a customer for life.
I got my own gold exchanged at one of the Tanishq’s store. The experience was a bit intimidating initially.
Firstly, we are going for exchange and not to buy. Are we poor? How would Tanishq staff treat us? Would they treat us differently
Secondly, how would they value our Gold. During the process, they would melt the metal - What if they siphon out some Gold. How would I even know. Also, what if they under report the purity.
I had all these questions - which I think anyone who is going for the Gold exchange for the first time would face.
Here, Tanishq might make good growth but to take it to the masses, these customer apprehensions need to be solved for. But the question is, how would it be solved.
Now onto the actual experience:
Staff treated us the same as when we are going for fresh purchase so the first problem was not a problem at all.
After that comes the valuation part -
The way Tanishq deals with this issue is very simple - It gives a rough estimate initially - which is given without melting the jewellery. This gives us a ballpark of how much we are going to get.
After that, we selected the pieces of jewellery.
Post this, we went for the actual valuation. There was an actual electrical furnace. The Kaarigar showed us the actual cylinder in the furnace where the Gold would be melted and asked us to confirm that it was empty. Post this, he put the jewellery in the furnace. After a few minutes, he took out the molten gold which got solidified instantly. Then, he washed it in water and then put the solid metal into the machine which checks its purity.
Post this, the actual valuation is received. In our case, the actual valuation was better than the rough estimate.
So Tanishq is slowly capturing more and more market from New Gold sale. In addition, it is also now sneakily capturing Gold exchange market. And both of these markets would be built on the most important metric “High retention”.
It is Tanishq’s market to conquer unless it commits some huge mistake.