Indian Gold Book:Indian Gold Book - Gold Bars Worldwide

TRADITIONAL JEWELLERY RETAILERS
ANTICIPATED CHANGES IN THE DISTRIBUTION NETWORK
Most traditional retailers expect the jewellery distribution network to evolve over the next 10 years, although
most stress that the rate of change is likely to be gradual. They expect large showrooms to increase their
share of the jewellery market.
Large showrooms will become increasingly dominant in major cities.
The rationale of large retailers is that their large inventories, wide range of innovative jewellery designs and commitment to
promotion will attract more and more of the emerging middle class. Their high profile and prestige will increasingly
reassure customers that are concerned about product quality. The new generation of well-educated (many universitytrained)
family members will also ensure that showrooms adopt improved business and marketing practices. They will also
be better equipped to respond to changing consumer needs and preferences.
Large showrooms in smaller cities will become more sophisticated, and more large showrooms will be
established in major towns and important villages.
There will be a natural evolution. Growth in the size and number will be driven not only by resident retailers, but also by
new entrants (some from outside the city, town or village) opening or franchising new showrooms. This development is
likely to erode over time the sales growth of retailers in those cities that have many “outside” customers.
Some traditional retailers will establish well-branded small regional or national chains of wholly owned or
franchised showrooms.
During the 1990s, many large retailers opened new family outlets within their cities.
Several are now aware that there are opportunities to establish or franchise sophisticated new showrooms in smaller cities
and large towns within their State and nationally.
An important motivation is that competition within major cities is so intense. Another is their view that high growth in the
jewellery market is more likely to occur outside the major cities.
Some have already opened or franchised new showrooms in smaller cities and large towns. Several others report that they
are planning to do so.
However, there is likely to be a contraction over time in the number of traditional retailers nationwide.
Although few outlets have closed down in recent years, the trade expects some contraction to take place across all outlet
categories.
The timing and extent of contraction will be much influenced by the extent to which the gold jewellery market will grow. Its
overall growth has been limited since 1998.
Large showrooms. Vulnerable showrooms are those that are not prepared or not able to adapt to an increasing level of
competition, especially in large cities. The overheads of large showrooms are high.
Medium-size retailers (150 - 300 g daily). Notably those in cities where there are many large showrooms. The trade observe
generally that this is the category most at risk.
Small outlets (less than 100 g). Contraction is likely to be variable. Many small outlets will continue to prosper, servicing
the poorer communities in cities, towns and villages.
They also expect some contraction to occur in the clusters of traditional outlets in some city locations where there is
substantial traffic congestion. In large cities, suburban clusters will become increasingly important.
Traditional jewellers are also aware that, as a category, they will lose market share to non-traditional branded jewellery retail
chains being established nationwide in department stores and shopping centres, and as stand-alone outlets.
Although the retail chains (covered in a separate section) are still at the experimental stage, and their combined volume is
less than 1% of the jewellery market, they are expected to erode the sales of traditional retailers in many cities over time.
AN INTRODUCTION TO THE INDIAN GOLD MARKET 111