Small Towns & Millennials Are Driving the Growth of Jewellery Franchises
Jewellery has been a significant part of India culture from ancient times. Indians love for precious jewellery can be vouched for the fact that India is the biggest buyer of gold in the world.
Gold, silver & diamond jewellery holds economical as well as religious value in the life of Indian consumers. For many decades gold has been synonymous with investment for all sections of society. The Gems and Jewellery industry in India is one of the largest in the world, contributing 29% to global jewellery consumption. The market size of Gems and Jewellery in India contributes to about 7% of the country’s GDP and has grown at a CAGR of over 14.8% over the last 50 years.
A major shift from unorganised to organised sector
Earlier, the jewellery market was largely dominated by local jewellers and unorganised players. However, with time people became sceptical of the quality & purity of the jewellery made by local players. This has made the consumers increasingly shift from the unorganised to the organised sector.
With the rise of the urban population and increased disposable income, there has been an increase in demand for premium products and established brand names.
Huge Opportunity in Small Towns
It is a common misconception that residents of metros have access to, and interest in, jewellery labels. According to experts, the people in small towns and rural areas are likely to contribute more to the jewellery business in the country as they purchase more ornaments compared to people living in the metros.
In rural areas, people are buying jewellery as a means of investment and also for marriage purposes. However, in the metro cities, people are holding back their money waiting for the prices to go down.
Around 26.4 trillion of household income in India is concentrated in tier II-III markets as opposed to 800 billion in India’s big 8 metros. Thus, there is a huge market waiting in small towns for jewellery franchises to tap in as people there are attracted towards big names. The potential of tier II and tier III towns are proving an irresistible lure for jewellery franchises.
Focusing on Millennials
Gone are the times when young women were attracted towards heavy jewellery, today’s generation, also called millennials are most likely to spend their money on phones & gadgets than investing in gold.
Thus, to attract this generation, who also happens to be an important consumer segment, various brands are coming up with new offerings according to their preferences. For instance, millennials don’t believe in investing in heavy jewellery which they can only wear on occasions. They believe in purchasing everyday wear items.
They are not only driving the growth of gold but also precious stones & metals such as diamonds and platinum etc. Many jewellers are creating new lines of gold jewellery (including 14-carat products,) and introducing silver jewellery that is more affordable as everyday wear in order to create a consumption pattern for gold jewellery in the next generation.
Millennials have spun the success story of many online jewellery brands such as Caratlane & Bluestone, as they were affordable, light daily wears and offered the option of customization. These brand have now entered the offline market via franchising and are glittering with profits ever since.
A Jewellery franchise is a profitable business model in today’s time as the organised sector is growing at a fast pace of 10-11% by 2022.
There are many franchise brands available in the jewellery industry such as Tanishq, PC jewellers; new players like Caratlane, bluestone etc.
The investment requirement if higher compared to other businesses. For a Bluestone franchise, an initial investment of 1.5 –2 crores is required for an outlet of 400-500 sq. ft. The franchisor will provide support in marketing, tie-ups, advertising, location selection, research, facility planning and in architectural designing of the store.