Tier-II and -III towns add glitter to branded jewellers

Growth for branded gold jewellery will come from retailers in the smaller Tier-II and -III towns rather than the larger metros, at least over the medium term, says rating agency CRISIL, in a study of 63 gold jewellery retailers rated by it, who collectively account for 20 per cent of revenue of the gold jewellery retailed in India in 2010-11.
 
Around two-thirds of the new outlets that jewellery retailers set up over the medium term will be in such small towns, CRISIL said, adding,  "The demand for gold jewellery in these centres is strong and growing, buoyed by increasing affluence and preference for branded jewellery."

Gold jewellery retailers are expected to derive over half their revenues from such small towns by 2012-13, as against around 40 per cent in 2009-10.

In the decade through 2010-11, some of the rated jewellery firms have grown from being one- or two-outlet retailers, and expanded significantly in the metros and Tier-I cities. In the process, they have established a distinct identity through brand-building initiatives that have fuelled their growth.

''However,'' says Gurpreet Chhatwal, director, CRISIL Ratings, ''the intensifying competition in the large cities has led to stagnation in growth for players. The branded jewellers are, therefore, now increasingly pursuing opportunities that expansions into Tier-II and Tier–III centres can offer.''

Rising disposable income in households, favourable demographic trends in customer profile including the increasing proportion of young consumers, and growing consumer preference for branded jewellery, are among factors that will buttress the retailers' expansion plans.

Chhatwal says, ''The wide variety of designs, aggressive marketing and promotional strategies, including hallmarking, and innovative offers such as gold deposit and buy-back schemes, will also bolster the growth of branded players' in the Tier-II and Tier–III towns.''