Overview of Jewellery Industry in India

There are some conflicting figures related to World and Indian Market size. It is due to the fact that the exact size of Indian market is not been estimated correctly. 

Global Gems and Jewellery Market

According to CARE Research, the US is the world‟s largest market for jewellery accounting for an estimated 29% of the world jewellery sales in 2008.The US is followed by China (11%) , India (10%), the Middle East (9%) and Japan (8%) as the biggest consumers. In Europe, the UK(4%) and Italy (5%) are the largest consumers, and Italy is also one of the world‟s largest jewellery fabrication centres. These seven key markets account for about 80% of the total worldwide sales.

According to the CARE Report, global retail sales value of jewellery, including diamonds and gemstones, is expected to reach US$185 billion in 2010 and US$230 billion by the year 2015 growing at CAGR of 4.6% between 2010 and 2015. In 2005, sales totalled US$146 billion and grew at a CAGR of 4.8% between 2005 and 2010 period. During 2009, the world GDP decreased by 0.8% to US$57,228.37 billion while for 2010 and 2011, world GDP is estimated to grow by 3.9% and 4.3%, respectively, according to International Monetary Fund (IMF). Historically, it has been observed that the correlation between the global jewellery sales and world GDP was very high at 0.99.

Of total global sales of US$146 billion in 2005, diamond-studded jewellery was the largest segment, representing 47% of total jewellery consumption. By type of jewellery, diamond-studded jewellery accounted for the largest share of the global jewellery market, followed by plain gold jewellery (42%).

Indian Gems and Jewellery Sector

According to CRISIL Research, the Indian jewellery retailing market is estimated at Rs. 973 billion as of 2009-10, contributing around 6% of the overall retailing industry in India. This makes jewellery the largest contributor of India‟s overall retail industry.Within the jewellery retailing market in India, the share of gold jewellery is estimated to be around 80%, according to CRISIL Research.The two major sub segments within jewellery are gold (22 carat and above) and diamonds, with the former constituting of 80% of the value of jewellery consumption and the balance 20% comprising of diamonds(15%) and gemstone jewellery. The overall size of domestic Gems and Jewellery sector is pegged at Rs. 870 billion as of 2008-09 according to a FICCI-Technopak study and is expected to grow up to Rs. 1,832 billion by 2014-15.

In India, organised retailers account for a mere 4% of the total jewellery retail market.There are about 15,000 vendors across the country in the gold processing industry, with over 450,000 gold smiths spread across the country. There are also more than 6,000 vendors in the diamond-processing industry.

Gold is consumed most in south(37%),west(32%) , north(18%) and east(13%) in that order. In 2009, total Indian gold consumption reached US$19bn or Rs. 974 bn equivalent at the end of 2009. Over the past decade, this has increased at an average rate of 13% per year, outpacing the country‟s real GDP, inflation and population growth by 6%, 8% and 12% respectively.

Gold jewellery demand in India, the world‟s largest gold jewellery market, rose 67% year-on-year to 272 tonnes in the first half of 2010. Over the same period, the average domestic gold price surged to almost Rs.52,800/oz, before hitting a new high of 60,460/oz on October 15, 2010. Gold jewellery accounted for around 75% of total Indian gold demand in 2009, the remainder being investment (23%) and decorative and industrial (2%).

Dimonds are consumed most in West(35%), North(32%), South(25%) and East(8%) - in that order. 

Trends for Gems and Jewellery in India

The growth outlook for the gems and jewellery sector in India is stable and CARE Research expects the domestic industry to grow at a CAGR of 10-12% up to 2015. There is a shift in consumer preference to low priced diamond jewellery which is about 50% cheaper than normal diamonds and also cheaper than pure gold jewellery. Consumers are gradually preferring diamonds because of the guaranteed buy-back schemes, transparent written pricing and, most importantly, third-party certification. Branding and organized retail share will grow in urban markets and the focus on rural markets will increase. According to CARE Research, family owned businesses will need to move towards greater degree of professionalism and trust on the neighbourhood jeweller will be replaced by the hallmarking and certification of jewellery. Apart from that particularly in Jewellery, the following trend shift is observed:

1. Gold Jewellery which traditionally generates its demand from investment viewpoint and traditions, now is regarded as a fashion accessory by the young population. 

2. The demand that used to peak during wedding and festive seasons, now increasingly getting evened out throughout the year for regular wearing and gifting purpose. 

3. Trend is shifting from pure gold-22 caret in traditional designs. More and more now low carat and lightweight jewellery is preferred. Moreover, modern and contemporary designs are finding their way. 

4. Traditionally purchase from neighbourhood jewellers used to dominate purchases, which lacked transparency. Now there is growing preference for brands, retail store and e-retailing. There is an introduction of hallmarking and certification. 

5. Gold jewellery used to dominate. Now there is an increased preference of white gold, platinum and diamond studded jewellery. Even imitation jewellery is gaining acceptance. 

6. Traditionally gold jewellery is sold on prevailing gold price plus labour charge. Now branded players sell on fixed price basis. 

Industry Concerns

Some of the key concerns faced by the jewellery retailing industry, even as it is getting increasingly organized and a branded play, are as mentioned below.

Volatility in raw material prices

According to CARE Research, Indian consumers have a tendency to postpone their purchases until the prices seem reasonable and restrain from panic buying. It has been observed that consumers lay emphasis on stability of gold prices rather than absolute prices of gold to make their purchases. Retailers who quote making charges as a percentage of the raw material cost may be negatively impacted by a significant decline in gold or diamond prices.

Long gestation period

Retailers across verticals typically face long gestation periods for their projects. This is mainly because retailing (including jewellery retailing) is a low margin business. According to CRISIL Research, in case of jewellery retailing, profits earned by large organized players are exclusively on making charges. Apart from this, brand establishment is a long process and according to CRISIL Research it can take three to four years for a retailer to establish a presence in a market, due to the highly fragmented jewellery retailing market.

References

http://www.sebi.gov.in/dp/tribhovandasdraft.pdf

http://www.sebi.gov.in/dp/jayalukkasdraft.pdf

http://www.sebi.gov.in/dp/ratanchanddraft.pdf

Garment Industry Vs. IT Industry

Garment Industry Vs. IT industry

It is a buzzword to shape the merchandising department to the tune of IT industry. However there are certain fundamental differences between the two industries. It would be futile to camouflage the real nature of the garment industry by simulating appearances like culture of first name basis and providing cubicles to the merchandisers.Unlike the pure black and white logic in the IT industry, the garment industry is characterised by shades of gray and color. The problem becomes more complex when the merchandising department becomes IT enabled.

Today in order to look "hype", the garment industry is changing its appearance. There are working hour norms in place. There is a provision of working from home. One can see the emergence of email as the only medium and evidence of communication. "Punctuality" has acquired a new meaning.The point of doing all this is to give garment industry the appearance of that of an IT industry in order to make it attractive for the employees and to ride in the boat of "efficiency" and "speed" in the name of ITising the industry. The question is if this analogy is perfect or even similar.

For one, IT industry is based on a project based organisation where teams get built for a particular project, then are reorganised for someother project. The whole culture of the IT organisation is based on this approach. When there is a project that needs to be completed, then punctuality doesnt matter as long as one is doing the task that is assigned. There is no need for a business attire as the bosses are temporary. There the culture is on first name basis as the hierarchy is flat. One can work from home and one can get organised with one's emails as all those things remain till the project last. It seems and is clear that the demands of the project based organisation
shape the requirements that are listed in this paragraph.

Take a look at garment industry, primarily garment industry is characterised by multiple ongoing tasks with no project based requirements. The bosses are usually permanent, and have a significant stake in their long term employement. Thus all the tools and camouflaging imposed by HR department become a tool to ensure that goal. Mails are used to gain time as well as to safeguard their positions. Also mails sent at odd hours are used as a way to influence their bases. Then they need subordinate to locate and organise those mails. Thus mails become in their hands as a way to manipulate and consolidate their position. Sometimes, huge 'mail-mail' games are started in which an avalanche of e-mail is catapulted from both sides. This distorts the vary purpose for which emails are needed.

"First Name Basis" is a trap, that most people find it hard to resist. Of course, employees want to call people higher in the hierarchy on first name basis. The problem starts when people equate the first name basis as a means to assert their equality which doesnt go well with most of the bosses in the garment industry who, as said earlier are permanent in their positions and would like to safeguard their positions by building huge ego defences. Tensions also develop when an employee cannot call his or her boss on the first name basis because of their attitude, but he/she has to do so because "first name" is promoted by the organisation.

Working hour norms dont work here again because of peculiar nature of the garment industry. If a consignment has to go on time it has to go on time, in that case, one has to put more hours and more often than not consignments in a garment industry are almost always late because of so many factors beyond the control of the management. So one finds herself working late almost daily.

The most important difference between a garment and an IT industry is the role of logic in the whole operation. IT product has a lifecycle and it is operated and built upon by pure logic. In garment industry the product is image based product, since image is subjective, therefore the product depends on so many factors as season, color, taste. Even the raw material of the product i.e. fibres are so variable in nature that we can only do a statistical analysis on them. Also the suppliers are spread in different location and their interpretation of a particular is different. Thus the very base of garment and IT industry is different.

The situation becomes compounded when we try to ITise the garment industry. Thus an ERP package is introduced which can at best increase the existing camouflaging and confusion. Things go bad quickly and in huge quantities because of this. And in order to thrust IT logic onto garment industry create so ridiculuous situations that it often happens that the ERP package is done away with. If the management still has that euphoria of IT, they will go for a 'bigger' and 'better' ERP package which makes existing situation even worse.

The solution, understand the true nature of the industry, its peculiarities and its idiocyncracies and design your organisational policies keeping those points of view into consideration. Merely thrusting some industry's requirements onto some other industry will only complicate and aggravate the matters further.