Sage Business Cases

Tanishq: Pricing, Retail Selling and Inventory

Management of Jewellery

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Author: Tara Tiwari, Arvind Sahay

Pub. Date: 2023
Product: Sage Business Cases
DOI: [Link]
Keywords: pricing, customers, prices, stores, India, inventory, management, sales, retailing, branding
Disciplines: Consumer Marketing, Marketing, Business & Management, Advertising & Promotion, Pricing
Access Date: November 24, 2025
Publisher: SAGE Publications: SAGE Business Cases Originals
Online ISBN: 9781529611175

© 2023 SAGE Publications: SAGE Business Cases Originals All Rights Reserved.
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Abstract

The Indian jewellery market is highly fragmented and ruled over by local players. Many unethical prac-
tices exist in the jewellery market, like the undercaratage of gold, misrepresentation of quality, etc.
Tanishq, part of the Tata Group, is known for maintaining high ethical standards and delivering value
to its customers through fair and transparent practices. It has a 6% share in the Indian jewellery retail
market.

Case

On a partly cloudy warm afternoon in September 2018, Ameya Kamat, the area business manager (ABM) for
Tanishq in Ahmedabad, India, sitting at his desk, was grappling with ideas to improve the sales performance
of his territory. His focus was on the flagship store in Ahmedabad. However, the sales increase across all his
other stores in the city was also just as significant. The festive and wedding seasons were about to begin,
and he had a target to increase sales by 8% over the previous year. Typically, 40% of his sales took place
in October and November. He kept juggling between ideas—price interventions, salesforce training, incentive
restructuring and inventory management—but, somehow, felt that the right mix eluded him. What kind and
how much discount should he give to achieve targets? Should he change the incentive structure of the retail

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salesforce?

Regular gold sales in India had fallen after the demonetisation of high-denomination currency notes by the

Government of India on November 8, 2016.1 Gold sales saw a huge upswing across the industry on the

announcement night, but the subsequent year had been lean.2 In India, upto 95% of all transactions were

done through cash and cheques.3 However, the current government was clear in its drive to discourage cash
transactions, introduce the citizenry to a more digital economy and come down heavily on tax evaders. New
government rules mandated that any purchase of gold over INR 200,000 (0.2 million) should be linked with

the permanent account number (PAN) of the purchaser.4 Cash withdrawals at banks and automated teller
machines (ATMs) were also coming under increasing scrutiny. This systemic change had an impact on the
gold industry. Consumers feared that the government would also cap gold holdings and gold buying. Then,
in July 2017, a nationwide goods and services tax (GST) was implemented. The GST process was entirely
digitised, giving the government a clear line of sight of all transactions from the manufacturer to the end con-
sumer. For gold, apart from the 10% customs duty, the GST rate had been fixed at 3%. It went from being a
private, closely held, (practically) almost tax-free investment and a saving mechanism to a highly scrutinised
and systemically taxed commodity.

Kamat was attempting to increase his revenues in this challenging background. The clouds cleared for a mo-
ment as the sun shone through.

The Indian Gold and Jewellery Industry

India, the second-largest consumer of gold and the world’s largest diamond processor, accounts for nearly

29% of the total global demand for gold. As of 2018, India’s gold and gems sector5 contributed around 7%

to its gross domestic product (GDP).6 The Indian domestic jewellery market is expected to grow at a com-

pound annual growth rate (CAGR) of 5.6% over FY 18–23.7 Each year, around 800 to 1,000 tonnes of gold
are imported into the country, placing a burden on the country’s current account deficit (CAD). Gold is the
second-largest item on India’s import bill, next only to crude oil, and accounts for 8–10% of the country’s total
imports. India also exports gems and jewellery (G&J)—in 2014–15, the total G&J export was USD 36.16 bil-

lion,8 of which USD 9.84 billion was gold jewellery.9 (See Exhibit 1 for details of the demand and supply of
gold as estimated by the World Gold Council.)

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India’s retail G&J market is highly unorganised and fragmented, with 96% of the total players being family-
owned businesses. Industry estimates of the number of jewellers in the country vary between 500,000 and

2 million; however, only 80 of these players have revenues of over USD 5 million.10 India is also home to

around 450,000 goldsmiths, 6,000 diamond-processing players11 and 8,000 diamond dealers. India’s G&J
market employs over 4.64 million employees and is expected to employ 8.23 million by 2022. The major play-
ers in the G&J segment include Tanishq, Kalyan Jewellers, Joyalukkas, Malabar, Tribhovandas Bhimji Zaveri
(TBZ), etc. Exhibit 2 provides the revenues of the major branded players in the market.

Because of the industry’s highly fragmented nature, tracking gold once it enters the system is difficult. Part
of the gold circulation in the country is recycled gold, about 100–200 tonnes a year—previously owned or-

naments that were sold, melted or mortgaged.12 Although not strictly legal, many small gold jewellers also
provide gold mortgage services. The gold would serve as a security deposit for the loan (usually offered at
extremely high interest rates) provided to people in lower-income groups. Since the credit risk was high, in a
year the interest component on such loans could be as high as 36–50% of the principal amount. On non-re-
payment of the loan, the jewellery arm of the business would sell the gold, thus re-entering the system. Gold
prices, however, were not uniform in India. Different trading centres could create their gold price at any given

time.13

Most Indian families consider gold an investment; this was true in Ahmedabad as well. Conventionally, gold
has been a route for parents to transfer wealth to their daughters on their wedding. Weddings constitute ap-

proximately 40% of gold sales in India as a whole and in Ahmedabad.14 Families would start accumulating
gold for the eventual marriage of their daughters while they are still very young. However, with time, Indian
families have been buying gold not only as a tangible way to preserve wealth, but also as a way of showing
wealth. This gold is typically illiquid and remains within the retail household system for a generation or two
before being recycled.

To ease the strain on the CAD, the government in 2015 introduced a spate of new reforms to monetise the
gold in the system. These included the introduction of gold monetisation schemes, issuance of sovereign gold
bonds, introduction of gold exchange traded funds (ETFs) and efforts to set up a gold exchange, overhaul-
ing the mining policy to revive gold mining in India and imposition of duties and taxes for larger gold-based
businesses. The government had permitted 100% foreign direct investment (FDI) in the G&J sector and had

imposed a 3% GST on gold and gold jewellery, bringing the cumulative tax on gold to approximately 14%.15

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The Bureau of Indian Standards (BIS) had mandated the BIS mark, purity in carat and jeweller’s identification
mark on all jewellery post January 2018.

Titan: A Brief History

Questar Investments Limited (a Tata Group company) and Tamil Nadu Industrial Development Corporation
Limited (TIDCO) jointly promoted Titan Watches Limited. The company, incorporated in July 1984 in Chennai,
was started as a technical collaboration between France Ebauches, one of the world’s largest manufacturers
of watch components, and the Tata Group, India’s most respected and widely diversified business conglom-

erate.16 Initially involved in the watches and clocks business, Titan later ventured into the jewellery business.

Tanishq, established in 1995, was the jewellery business arm of Titan Industries Ltd. By December 2018, Tan-
ishq had 275 retail stores in India, holding about 6% (INR 13,000 crores or 130 billion) of the total jewellery

retailing market worth around INR 225,000 crores (2,250 billion).1718

In 1995, the jewellery business in India was highly fragmented and the concept of branded jewellery did not
exist. In the late 1990s, India had around 0.2 million goldsmiths and about 100,000 jewellers scattered across
the country. People generally bought gold from the family jeweller trusted for generations. These jewellers
made the jewellery on order and often bought back their products at the prevailing market rates. A number of
them also doubled up as informal bankers, lending secured gold loans (sometimes at usurious interest rates)
to the unbanked masses. This increased their systemic importance to the communities they lived in. Thus,
initially, the major challenge for branded jewellers like Tanishq was to overcome the Indian consumer’s pref-
erence for buying jewellery only from traditional jewellers.

The company’s corporate gold gift scheme (“When you want to say thank you, say it in gold”), launched in
December 1998, proved to be a significant success. Tanishq delivered 50,000 customised gold coins to 0.25
million Maruti car owners nationwide as part of the 15thanniversary celebrations of Maruti Udyog. By 2001,
the scheme accounted for almost 5% of the turnover and had over 30 corporate clients like Coca-Cola, UB

Group, Whirlpool, TVS Group, CEAT and Liberty Shoes.19

In India, jewellery is used both as an investment and for adornment. Changing the perception of jewellery
from an asset to a fashion accessory was an uphill challenge. The sleek and contemporary designs offered by

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the branded players did not initially appeal to the Indian customer, who was used to heavy, traditional designs.
Vasant Nangia, Chief Operating Officer of Tanishq, said in 2001, “When we launched the Tanishq range, our
designs were not appreciated initially as they were believed to be extremely Western. Also, we offered only

18carat gold.”20

This was an entirely new concept in the Indian market. Industry watchers were extremely sceptical of Tanishq,
and doubts were cast over its prospects. These doubts were borne out when, even after three years of opera-
tions, Tanishq posted a loss in 1997–98. Jacob Kurian, Tanishq’s then Chief Operating Officer, said, “Tanishq,

as a concept, was far too ahead of its times.”21

Tanishq conducted extensive market research to identify strategic errors. The firm acted on insights from this
research and posted its first-ever operating profit in 1999. In 1999–2000, sales doubled to INR 1,532 million
against INR 743.8 million recorded in 1998–99, and reached INR 2,000 million in 2000–01 (see Exhibit 3). In

India, jewellery stores recorded a gross profit margin of 43.5% in 2013 and 42.6% in 2017.22

By 2018, customers started opening up to modern trends and started accepting more daily-wear jewellery.
This allowed organised jewellers like Tanishq (and others, including, Kalyan, TBZ and Joyalukkas) to corner
about 30% of the market by 2018. The unorganised market had also grown, with an estimate of over 0.4
million goldsmiths in the country. As of December 2018, Tanishq had 275 stores in India across 170 cities.
In 2017–18, out of Titan’s total of INR 15,656 crores (156.56 billion), the jewellery segment contributed INR

13,036 crores (130.36 billion).23 The Ahmedabad flagship store had been in operation since 1999.

In February 2018, the Punjab National Bank (PNB), India’s second-largest public-sector bank, reported that

it had been defrauded of USD 2 billion24 by two jewellery groups. Subsequently, another bank fraud of INR
8.24 billion perpetrated by a Chennai-based jewellery chain was also discovered in quick succession. These
scams undermined the trust in the G&J industry. However, Bhaskar Bhatt, Titan’s Managing Director, was not
worried:

When there is suspicion, the industry suffers. Titan [however] will benefit because the impact on con-
sumer sentiment is they want to go to a safe haven, as in a safe place to buy, like Tanishq. They

want to buy clean gold rather than buy gold in cash.25

Kamat also felt that the problems in the industry were an opportunity for his store in Ahmedabad.

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Tanishq: The Business Model

Tanishq operated its own stores and also on a franchise basis.26 In the own stores, Tanishq owned all the
stock and inventory. In the case of franchise stores, either Tanishq would own the stock or the franchise own-
er could choose to buy and resell the stock. (Stock here refers to gold and diamonds.) In company-owned
stores, the store manager reported directly to the ABM. In the case of franchise stores, the store manager
would report to the franchisee head/franchise owner. The franchise owners worked with the ABM to drive re-
sults.

The category managers gave each store a gold target (in kilogram) and a diamond target (in value). Category-
level responsibilities at corporate headquarters were divided into two verticals—gold and diamonds. Within
each unit, each category manager handled two categories, such as bangles, studs, rings, etc. Additionally,
two inventory managers nationally tracked the inventory turns of every store and helped the stores in rotating
their stock. A management information system (MIS) team that pulled up inventory positions, stock ageing,
demand forecasts and sales data at a stock-keeping unit (SKU) and store level assisted the inventory man-
agers. This enabled inventory managers to advise stores on possible interstore transfers and facilitate the
movement of slow-moving inventory.

The margins in the jewellery business were extremely low; hence, Tanishq had to adopt a strict working capital
discipline. Leveraging the trust in the Tata and Titan brands, it leased 41% gold from various nominated agen-
cies and banks. The gold was then forward sold for six months, during which time the jewellery was sold and
the proceeds were used to pay for the gold.

Exchange programmes and spot buying contributed 40% and 19%, respectively, of gold sourcing for Tan-

ishq.2728 Its franchise-led model meant the business was very asset-light.29 Around 82% of Tanishq’s stores
were franchises. In Ahmedabad, the flagship store was an own store, while the Motera store in Ahmedabad
was a franchised one.

Product Portfolio and Design Strategy

Tanishq’s product strategy hinged on two pillars—creating differentiation and building trust. According to Kuri-

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an, “to provide a point of differentiation in a highly commoditised category— which is the whole point of brand-

ing.… If differentiation plays the role of primary attraction, trust takes care of lifelong loyalty.”30

The first emphasis was on design because local jewellers could offer to design any pattern according to the
customer’s specifications.

Tanishq’s initial foray into the domestic market with sleek, understated jewellery made of 18carat gold had

failed. The Indian consumer demanded 22-carat and 24-carat31 offerings and traditional designs. Research
also revealed that the product design had caused the brand to be viewed as elitist and Western. A total of

35% of Tanishq sales was coming from the wedding market and 31% from new products.32 Therefore, it was
imperative to expand the product line to include “Indian” designs.

However, the wide variety of cultures in the Indian subcontinent meant there was no formulaic “Indian” design.
The people of each state and region had their own design preferences. For a national brand, a generic de-
sign concept with regional variations had to be evolved. To address this challenge, Tanishq set up a seven-
member in-house design team and also outsourced designs from freelance designers. The designers trav-
elled across the country, obtained feedback on Tanishq’s designs and learnt regional and national customers’
preferences. The team then created about 3,500 designs based on current trends and feedback from stores.
Every quarter since then, at least 10% of these designs would get replaced.

Tanishq gave complete freedom to the retail outlets to choose their design collection based on local market
intelligence. Kamat confirmed that the two stores in Ahmedabad also had different designs portfolios despite

being in the same city.33 Additionally, all stores stocked designs that sold well nationally. With the Mia range,
Tanishq created contemporary designs and office-friendly jewellery for working women at more affordable
price points. The width of the product line was increased to include gold, diamonds, kundan, polki and pre-

cious stones.34 To deliver customised jewellery, Tanishq introduced a new programme in 2018, in which de-
signers visited boutiques and co-created designs with the customer.

While regional tastes varied, Tanishq also realised that the large metropolitan cities of India were more diverse
in their population make up. People from every state lived in these cities. The firm decided to view this com-
plexity as an opportunity.

Johnson Varghese, Divisional Head, Sales and Marketing, said:

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We also decided to go in for transmigration of designs. So, we not only got in more Indian motifs
but also started stocking typical designs from Tamil Nadu in Mumbai and those from Bengal in Delhi.
These designs, though Indian, provided variety to what the people in a particular area were used to

seeing.35

These interventions enabled the firm to compete with the local jewellers in their respective markets and gain
acceptance. The Motera store carried different designs as compared to the flagship store on CG Road in
Ahmedabad.

To address the second pillar of their brand-building motto—to build trust—Tanishq decided to look at the issue
of gold purity. Traditionally, local jewellers used the “touchstone method” to test the purity. Used for millennia,
this method relied on the fact that as the purity of gold increases, the strength of the acid required to dissolve
it also increases. A small amount of testing acid would be applied on a lydite stone and the edge of the orna-
ment would be used to draw a line on the stone across the applied acid. While a 14-carat gold jewel would
leave a trace on a nitric acid sample, 24-carat gold would only leave a trace in aqua regia (a mixture of one
part nitric acid and three parts concentrated hydrochloric acid). Besides that, the customers did not trust the
method since a small amount of gold was always lost while testing. In 1999, Tanishq introduced Karatmeters
in its retail boutiques imported from Germany at the cost of INR 1 million each. The machine used X-rays to
give an accurate reading of the ornament constitution within minutes. Apart from gold, it could also accurately
detect the amount of silver, palladium, white gold and platinum. The method was non-invasive and ensured
no loss of gold during testing. Customers could bring their jewellery, irrespective of where it was bought from,
and assess the purity, and receive a printed record of the test. At the time of its introduction, no other jew-
ellery seller made explicit claims about the quality of their gold products vis-à-vis the competition. Naturally,
this resulted in a backlash. An industry insider said:

A lot of malpractices used to happen in the industry…. When we first opened a store in Pune on Lak-
shmi Road [which is home to a number of jewellery establishments], we asked customers to pick up
any piece of owned jewellery and check the caratage in our stores for free.… [I]nvariably, we found
a difference. A piece of jewellery might have been sold as 22-carat gold, but the hook at the back
might be barely 18 carats. After we started this, the competition even managed to shut us down for
a few days. [But word had got out to the customers.] … Today a few other larger players have also
started introducing Karatmeters in their stores.… Similarly, for the mangalsutra, it typically has beads
of precious stones, but people were paying just based on total weight…. For every piece of Tanishq

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jewellery, we list the parts with the caratage, record the margin of error and issue a certificate of
quality signed by our Head of Sales or Marketing. If this is incorrect, you could take us to court.

Kamat believed that the Tanishq store in Ahmedabad enjoyed the fruits of the trust that had been built up
over the years by the Tanishq brand. The focus on quality extended beyond the manufacturing facilities. Pro-

grammes such as “Mr. Perfect” were set up for karigars,36 and monthly quality programmes across all levels

of employees, numerous vendor assay centres and regional assay centres were also started.37 Tanishq sold
only brand-new products to its customers. Each Tanishq product would be marked with a “Q” on it.

Supply Chain

Like each store manager, Kamat also received a target from the category managers. The targets were set
based on the location and assessed potential of the store. Each store was compared against its peers in simi-
lar locations and category-wise targets were arrived at. The store manager would then decide the assortment
that would best suit their market in consultation with the inventory manager. This demand estimation was
done at the beginning of the year and remained largely frozen (except to allow for minor modifications).

The inventory managers would work with the store managers to identify seasonal peaks and troughs of de-
mand and operationalise the logistics of moving inventory from regions of low demand to high demand. Tan-
ishq had around 80,000 active gold SKUs and about 40,000 diamond SKUs. The inventory managers moni-
tored the ageing of stock at a store level, and matched non-moving stock in one store and initiated its move-
ment to stores where it had demand (stock rotation). However, they would only get involved when stock rota-
tion was necessary over larger geographical distances. Individual stores in the same city could also transfer
stock amongst themselves in the case of unforeseen demand spikes. The centralised inventory system al-
lowed all stores to view each other’s inventory and request for a formal transfer through an empanelled logis-
tics partner. Tanishq was able to achieve an inventory turnover of 4 compared to the industry average of 2.

Finding the right mix of SKUs for a particular store was crucial for maintaining its profitability. Store managers
could request category managers for extra stock (and agree on extra sales targets) for a week and experiment
with a promotional strategy or introduction of a new design. If the experiment succeeded, the design/promo-
tion would be introduced on a more regular basis.

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In-store Operations

The in-store salesforce in every Tanishq outlet consisted of retail sales officers (RSOs), who reported to the
store manager. In stores having over 50 employees, the RSOs reported to their respective floor managers,
who, in turn, reported to the store manager. Every store had a commercial head, who tracked and was re-
sponsible for transactions. All the cashiers would report to the commercial head. Large stores also had a
stock custodian and an assistant commercial head. The store manager was ultimately responsible for the
sales and profitability of the store. A large Tanishq store would have anywhere between 30,000 and 50,000
footfall a month, depending on the season. The flagship store in Ahmedabad was a large store with close to
50,000 footfall in a normal year.

Every store also had at least one karigar, who performed minor modifications such as product cleaning, melt-
ing of old gold and so on. Larger stores had two karigars. The karigars were trained in the use of advanced
techniques and equipment and were also fully covered under medical insurance.

Each Tanishq store had some common branding elements. Customer interaction began with valet parking,
and a smartly dressed security guard opened the door and welcomed the customer in. At the entrance, there
would be some displays advertising the latest collections or promotions. As customers walked into the store,
they would first meet the greeter. About 90% of the greeters were women.

Every store had at least two greeters. The greeter’s role was to greet the customer and make quick, high-level
assessments of their needs: Are they looking for gold or gems, are they purchasing for a specific occasion
like a marriage or is it a general purchase? Do they have a particular item in mind, or do they wish to browse
and so on? By the time the customer took the few steps into the store past the billing counter, they were
made to feel comfortable. The greeter had acquired enough information to guide the customer to the rele-
vant counter where an RSO took over. The greeter would introduce the customer to the RSO and then give a
brief overview of the customer’s requirement to RSO. The RSO then continued the assessment of customer
needs.

The RSO’s role was that of a typical field salesforce. They would quickly build a cordial relationship with the
customer and perform a need assessment by asking simple questions regarding the purchase occasion, us-
age frequency, budget, the person whom the purchase is for and so on. The RSO was incentivised to push
for a range of sales. For instance, if a customer asked for a 1 gram gold coin, the RSO was expected to out-

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line the benefits of taking a 1.5 gram ring instead of a gold coin so that the end-user could use the gold more
frequently. The RSO was expected to mention the value propositions of Tanishq’s quality and transparency. If
the customer was looking for gold as an investment, the RSO would take the customer through schemes such
as the Golden Harvest Scheme. (See Exhibit 4a and 4b for the schemes by Tanishq and its competitors.)

Each morning, Kamat would meet the RSOs in the cafeteria. A board in the cafeteria tracked the performance
of each RSO. Various internal competitions were instituted by the store manager to drive performance. The
RSOs facing a lean conversion patch were met on a one-on-one basis, and tips were shared to improve con-
version rates. Additionally, the area manager also sent report cards to each RSO, where their performance
was ranked against their peers within the entire territory. This information was sent to all the store managers
and RSOs in the territory.

For the company-owned stores, Tanishq defined the pay structure, whereas for the franchise stores, the fran-
chise owner decided the pay structure. Typically, 90% of the pay of an RSO was fixed and the 10% vari-
able component depended on meeting sales targets. For the top performers, the total variable pay could be
as much as 35% of their salary. The monthly salary of the RSO would range between INR 19,000 and INR
21,000. The RSOs and stores could also earn extra incentives by selling the ageing stock. National-level com-
petitions were held as well for the RSOs. In 2015, Tanishq roped in the Bollywood actress Deepika Padukone

as the brand ambassador.38 In 2016, a national-level internal competition was instituted, where the top nine
performers would get to meet her. Apart from their own performance, the RSOs were also incentivised on the
store’s overall performance. The RSO attrition was low at around 8% across all stores.

The organisation also regularly audited the store staff’s performance. Mystery auditors visited the store four
times a month and assessed the performance of the RSO on various factors: whether they pushed for a purity
check, whether they encouraged trial and provided feedback on the trial, did they encourage the customer to
join the loyalty programme and the Golden Harvest Scheme, whether the RSOs and greeters smiled at the
customer and so on. Overall, the store was assessed on 40 different parameters. If the RSO received over
two consecutive instances of negative feedback, the store manager and the ABM worked together with the
RSO to correct the behaviour.

Kamat had to decide the kind of change, if any, in the incentive structure that would help to drive sales towards
target levels.

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Marketing and Promotional Strategies

Gold-buying behaviour was different for people from different regions. For instance, Tamilians (predominantly

living in south India39) would typically buy gold during Akshaya Tritiya (mid-April), in contrast to residents of

northern and western parts of the country who would buy during Diwali and Dhanteras (November).40 Dif-
ferent regions also had seasons where people would not make any high-value purchases (such as gold and
real estate) or hold any religious ceremonies. Demand could be expected to slump in those times of the year.
Hence, seasonal promotional strategies needed to be customised based on geography—for example, in north
and west India, customers demanded white gold and diamond jewellery. (Exhibit 5 displays some advertise-
ments of Tanishq and other leading jewellers.)

Additionally, the attributes considered necessary by people in various geographies were also different. Kamat
said, “In Chennai, for example, people are very conscious about cost, whereas in Ahmedabad, not so

much.… In Ahmedabad, if you can convince them about quality, you are through.”41 The coming two months
would be quite crucial for Kamat in Ahmedabad.

Tanishq also focused on opening showrooms in the smaller cities across India, such as Trichy, Nagpur, Am-
ritsar and Patna, with the annual growth being higher. All Tanishq stores offered a 100% return guarantee on
its bands of jewellery. Other jewellery was exchanged after deductions, depending on its purity.

Tanishq also layered its collections according to the market segment.42 Various segments had been identified
and collections had been tailor-made to suit their needs. For instance, the Rivaah collection was appropriate
as wedding jewellery, while Mia was targeted at independent working women. The Tanishq website allowed
a customer to stay informed about the latest promotions available at any time and also allowed potential cus-

tomers to browse catalogues for designs and rates.43

Pricing

Tanishq had a standard pricing policy across all its showrooms.44 Although there were regional pressures on
pricing, the same list price was maintained across all stores. Before the advent of branded chains, such as

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Tanishq, customers would travel from smaller cities to the metros for large ticket jewellery purchases since
prices would be lower in the metros. Today, such travel has reduced, and customers only travel to the larger
cities if they are not satisfied with the locally available range.

Gold prices at Tanishq were based on international exchange prices, and international gold prices were dis-
played in each store, regardless of the location. Each jewellery item was also labelled with its various com-
ponents, its caratage and the margin of error as measured in the factory. In India, gold is sold as 22 carats,
which has 91.6% gold in it; the price was quoted in terms of 10 gram for pure gold (that is, 24 carats). De-
tailed estimates were shared with the customer, which included the gold weight, caratage, stone weight, stone

rate, making charges45 and taxes. Making charges varied from 5–25% of the jewellery price, depending on
the amount of gold and work. Typically, discounts offered to the customer were from the making charges.
Competitors also offered discounts on the making charges. In Ahmedabad, TBZ offered INR 225 as making
charges per gram purchase of gold, whereas PC Jeweller and Kalyan Jewellers offered a discount of up to

30% and 15%, respectively. A local jeweller offered a 40% discount on the making charges.46 The price for
the customer for the gold jewellery was the price of the gold on the day of purchase plus the making charges
and GST. Tanishq not only showed, but also ensured that the customer was aware of all three components of
the price.

The entry price for Tanishq’s range of jewellery was about INR 3,000 in 2018 for 14-carat gold jewellery
items targeted at young women (typically the Mia range). For heavy wedding jewellery that weighed upto 500
grams, prices could be upto INR 1.5 to 5 lakhs.

For the traditional jeweller, the profit came from the inventory. For Tanishq, the margins also came from scien-
tific inventory management and proper demand estimation and design of jewellery. Tanishq charged a premi-

um of 8% over the Multi Commodity Exchange (MCX) price,47 due to which its margins were 1.6 to 1.8 times

more than those of its competitors.48

Tanishq had a higher inventory turn that varied between 3 and 4 compared to 2 for the industry, and had
inventory that was lower by 30–40%. The inventory management system was based on the theory of con-
straints built for Tanishq by Goldratt Consulting in Israel. Further, Tanishq carefully selected its vendors—it

would take upto 1.5 years to approve vendors.49

Tanishq classified its customers according to the frequency and amount of purchase. The salesperson had

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the authority to give up to 3% discount on the price. For higher levels of discount, they had to get the approval
of the store manager.

As Tanishq had its own in-house manufacturing plant, the losses were less (2%) compared to those of local

jewellers (8–10%).50 It maintained uniform list prices across its stores, even though actual prices varied by
the store and customer. While there were store-level targets for sales, RSOs were not expected to sell based
on the price, but the promise of the most transparent pricing and standardised quality.

Large jewellery shops were typically located near each other, and since gold was a large ticket purchase,
customers did shop around for the best price. In recent years, with the advent of smartphones, the daily gold
rates were available to all customers. Limited pricing power existed at the store manager and franchise owner
levels.

Ahmedabad had a Kalyan Jewellers store and a Joyalukkas store within 500 metres of the Tanishq flagship
location. Kamat needed to work on the degree of pricing flexibility that he would institute in the festive season
to increase sales. How should he frame the sales to make it more attractive to the customer?

Different customers had different motivations for purchasing jewellery. For example, some customers bought
jewellery as a symbol of uniqueness and personality, while some bought because it gave them a sense of
pride. Some customers bought jewellery (friendship rings, unity rings, etc.) to belong to a niche or a group,
and some bought to satisfy the desire to gain something new. About 60% of the jewellery purchase was relat-
ed to weddings. Tanishq’s sleek and contemporary jewellery was designed to attract all such customers.

Competition

Joyalukkas

Joyalukkas started its first jewellery showroom in 1956 in Thrissur, Kerala. Since then, the Joyalukkas Group
has rapidly expanded its foothold globally. The group has operations in India, the UAE, Singapore, the UK,
Kuwait, Bahrain, Oman, Qatar, Saudi Arabia, Malaysia and the US. The group has over 140 showrooms
across the globe, with 10 million customers and a highly committed and satisfied team of over 8,000 people
in 11 countries. Bollywood actress Kajol promoted its exclusive range of ornamental pieces across all sec-

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tions, that is, gold, silver, platinum, diamond, ruby, etc. The entry price for Joyalukkas gold jewellery is around
INR 1,500, and the range of brands offered are Eleganza, Lil Joy, Zenina, Pride, Apurva, Veda, Masaaki and
Ratna for selling earrings, pendant sets and pendants, chains, rings, bracelets, bangles, necklace sets and
necklaces and nose pins for daily wear, party wear, office wear and so on.

Joyalukkas revolutionised retail jewellery trade in India by introducing training programmes for its employees

and also created the concept of “wedding centre”51 within the jewellery store. It opened the world’s largest
showroom and the first Diamond Cave in Chennai, India.

Kalyan Jewellers

Kalyan Jewellers opened its first store in 1993 in Thrissur, Kerala, with a capital of INR 7.5 million; since then,
it has grown to become the largest jewellery store chain in India. It has approximately 8,000 employees and
100 showrooms across the country. The company offers an array of traditional and contemporary jewellery
designs in gold, diamonds, precious stones and other precious metals through its Mudhra, Nimah, Anokhi,
Rang, Vedha, Tejasvi, Apoorva, Ziah and Laya brands.

The company is known for challenging conventional beliefs and creating a strategy that brought about a shift
in the industry standard. It stocked ready-to-wear ornaments at a time when made-to-order was the norm. It
introduced detailed rate tags and educated customers on how to verify the purity of gold. Further, it educated
people on how to buy pure gold and ran a campaign called “My gold, my right”. The entry price for Kalyan
Jewellers is around INR 2,000.

PC Jeweller

PC Jeweller Limited, one of the leading jewellery companies in India, was incorporated on April 13, 2005 with
their first store in Karol Bagh, New Delhi. It offers a wide range of products, including gold and diamond jew-
ellery. It has 95 showrooms in 75 cities. It is known for its contemporary designs, innovations and showrooms
laced with best collections for wedding and special occasions. It has significant jewellery-manufacturing ca-
pabilities that cater to its sales in India and abroad. Its stores stock a wide range of jewellery across all price
points, with an increasing focus on diamond jewellery. It only sells hallmarked jewellery and certified diamond

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jewellery with INR 2,200 as the entry price for its range of jewellery.

TBZ

Tribhovandas Bhimji Zaveri Ltd. (TBZ) is a trusted and well-known jewellery retailer in India since 1864. It
has a presence in 12 states, 27 cities and 38 retail stores in India. It primarily sells gold jewellery and di-
amond-studded jewellery (for everyday wear to delicately crafted pieces for occasions). The designing and
manufacturing of its products are done either inhouse or by third parties. It offers a wide variety of jewellery
from across India and from various parts of the world such as Italy, Turkey and Thailand. It offers its jewellery
across different price points to maximise its potential customer base. It has its own manufacturing facilities for
diamond-studded jewellery. Besides, it outsources the production of jewellery as well as purchases jewellery
from third parties. (See Exhibit 2 for a comparison of major branded gold players in India.)

Future Opportunities

Tanishq had leveraged the design skills that were part of the Titan heritage to refine its products, and it had
invested a lot in research and customer-focused studies on what Indian women were looking for. It had to ne-
gotiate many bumps and curves to reach the highway to success. Tanishq had managed to carve a niche for
itself within this segment by becoming India’s first branded jewellery manufacturer and retailer and by bringing
professionalism to the market. Its arrival had helped change customer attitudes while altering the traditional

way jewellers did business.52 C. K. Venkataraman, CEO, Titan Company Ltd., also admitted that they were
facing stiff competition from organised jewellers from south India, who were on an expansion spree. “The ac-
tion is heating up. People now have more choices. We will have to do our jobs better,” he said when asked

about the competition from other jewellers.53 The Ahmedabad store was now one of the best performing
ones in the nationwide chain.

Kamat had to make some quick decisions on the pricing and discount structure and the salesforce incentive
structure for the coming festive season for Ahmedabad, which would then need approval from the Managing
Director at Tanishq and Titan. His goal was to increase sales by 8% over the previous year for the flagship

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store in Ahmedabad and for the region more generally.

[Link]

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