Kalyan sticks to saturation approach
Indian jeweller plans to open seven stores on the same day for its Qatar launch
Indian jewellery retailer Kalyan does not believe in the one-at-a-time approach. For its upcoming entry into Qatar, the company confirmed that the plan is to have seven outlets open on the first day itself. No date has been fixed as yet, but it should be before March 31, which is when the company’s financial year closes.
Multiple openings on a single day was the same approach the jeweller took in the UAE, when it launched operations in December 2013.
“This helps us when it comes to gaining market share in a new territory as well as in winning repeat customers,” said Ramesh Kalyanaraman, Executive Director.
“We are growing at 40 per cent in the UAE and we are still adding to the network.
“Having more locations will create those volumes and amply compensate for the fact that base gold prices have actually fallen. The Qatar and Saudi presence are thus vital for us to push the Gulf’s share of the group turnover to the 40 per cent mark, which is our medium-term target.
“This financial year (ending March 31, 2016), the UAE and Kuwait sales would be about 15 per cent of the targeted Group turnover of Rs130 billion. And by March-end, we will have 101 outlets between India and the Gulf.”
Five outlets are due to open in Saudi Arabia next year, plus five more in the UAE. A couple of the Saudi Arabia stores will be within malls, but for the UAE, Kalyan is not pursuing the mall option. “There’s still so much we can do in the Gulf ... for us between confirming a new location and opening it takes four months,” said Kalyanaraman. “That’s the pace we want to keep maintaining.”
As of now, the higher margin diamond jewellery represents 15 per cent of the retailer’s Gulf revenues. It compares quite favourably with the 10 per cent average that it has in India.
Kalyan also operates a jewellery manufacturing plant in Sharjah, with a capacity for 150-200 kilos a month. Investments on it had topped Dh50 million. “With each new market we enter in the Gulf, the requirements on the Sharjah facility will get bigger,” said Kalyanaraman. “At the time, we will top up production here rather than invest in a greenfield facility elsewhere. All of the intra-GCC imports will be through the Sharjah hub.”
Five outlets are due to open in Saudi Arabia next year, plus five more in the UAE. A couple of the Saudi Arabia stores will be within malls, but for the UAE, Kalyan is not pursuing the mall option.
Indian demand
On some of the moves by the Indian Government to reduce reliance on bullion imports, Kalyanaraman said: “The gold scheme whereby jewellery owners could keep their holdings with nationalised banks and earn an interest has had a slow start. But time can often be the best remedy to build up momentum for such schemes.
“These days, no one talks about the need to reduce the gold import duty from 10 per cent. The trade in India has got used to it and with the weakening of gold prices even more so.
“But despite gold’s drop internationally, the actual retail price in India has not dropped in sync. That’s because the rupee too has weakened. Yet, the demand domestically is still very much there.”