Indian jewelry retail business: technology in retail

Splashes of IT sparkles

While India makes an indelible mark globally in the gems and jewelry market year after year, it is the technology that is going hand in hand to consolidate the success story

Urvashi Kaul

Tuesday, June 05, 2007

While India makes an indelible mark globally in the gems and jewelry market year after year, it is the technology that is going hand in hand to consolidate the success story. Emerging from relatively humble beginnings of a small and unorganized sector in the 1950s and 60s, the industry is well on its way to become a technology savvy corporate entity.

With the domestic market peaking $10 bn (4% of the total global market) in 2006-07 and the exports touching $15 bn (which is 18% of India's total exports), the industry seems all set to roll.

Not to mention the rising growth charts of the industry that are pushing up the IT spends, too. With the IT spend only growing by leaps and bounds, the gem and jewelry sector is poised to become the hot sparkling destination for the technology vendors.
Nagaraj Bhargava, SAP's vice president, Marketing and Sales Operation, associates the huge boom in the retail as one of the primary drivers for use of technology by the industry. "With world-class retail players entering jewelry retail in India, customers are changing their buying habits, and so gem and jewel retailers are placing an emphasis on producing a consistent and high-quality customer service experience."

Eastern Software Systems(ESS), offering IT products and services primarily to SMBs, while taking in the retail factor, also includes the manufacturing and export side. Director of ESS, Sanjay Agarwala says, "Firstly, it is the retail side which is most visible to the public, and the other is the manufacturing and export side, which is driving the use of technology."

The retail industry has matured tremendously, and is now more process driven, standardized and most importantly, brand and quality assurance matters more than anything else, adds Agarwala.

And this, of course, is being driven by customer maturity to a great extent, he says. With customers becoming more mobile than ever before, the loyalty to family jewelers is fading and the brand is becoming increasingly significant.

"He is willing to pay slightly more, provided he is assured of quality, as one may not find his family jeweler everywhere," explains Agarwala. India accounts for about 20% of total consumption of gems and jewelry products, which by far is the largest.

This is where technology comes into the picture. As the industry matures, taking a call on delivering better services to customers is becoming top priority.

Technology is not just restricted to designing anymore-managing processes, controlling supply chain, quality assurance, export documentation, inventory management, production control, managing accounts are key areas where technology is core to driving business for many players in the vertical.

Bhargava says, "IT adoption in jewelry is just picking up. Players are realizing the value of an integrated IT application. What is driving adoption is competition and the need to be organized." He points out that two years back, only the traditional jewelers dominated the business across the country. "Today, we have retailers jumping into the bandwagon," he says. Hence, the traditional businesses are looking at IT to deal with competition and manage expansion plans.

Points Laabh Jeweller's CEO, Vipin Sharma, "IT has become an integral part of our entire business approach. We have the IT architecture but as we diversify our activities, it just becomes a matter of strengthening the infrastructure more and scaling up the hardware, applications and the bandwidth."

Laabh Jewellers plans to get a good grip on technology as it draws its expansion roadmap. Laabh Jewellers went for an ERP from ESS and managing the supply chain, primarily, was a daunting task until it decided to go in for an ERP-based solution. Kama Jewellers too went in for the ERP from ESS. Kama Jeweller's CFO, Pradip Shah, points out that as volumes grew, there was a need to align manufacturing package with the financial package. "That's what drove us to hunt for an ERP," says Shah.

Another case in point is the Surat-based Venus Jewels, which has been one of the early adopters of technology. "We have adopted information technology tools since 1987 and its early application at an early stage allowed our business to be more transparent, flexible, and controlled," says Anil D Shah, partner, Venus Jewel.
"We have achieved complete IT Governance in all aspects of business leading to integration and transparency in all business operations," says Anil Shah. He points out that the company's IT infrastructure runs in a redundant mode at all levels ie, from manufacturing to final sales.

"We have a substantial amount of investment in IT, throughout our business model, right from manufacturing to sales; the entire business profile has changed making it more easy, comfortable and flexible for the customers to buy diamonds," he says.

Also, in 2007, the company hosted its website on its in-house web server to help customers access real time inventory with fast, easy and safe transactions.

The indispensability of technology to business requirements is the story for the Gitanjali Group too, which started way back in 1966. Considered as one of the earliest diamond houses in India, the Group covers many popular brands like D'damas, Nakashtra, Asmi, Sanghini, Damas Solitaire.

The brand is looking at pocketing heavy investments in upgrading its IT infrastructure. Sam George, CTO says, "Currently, we are using native tools, which are basic to any business; however, we have initiated a Gap Study for ERP implementation."

The group felt the need to go the IT way as it realized the increasing need to have the customer voice in sync with the business voice. Gitanjali business is conducted at over 1,000 locations in the country.

George feels, "As the country makes huge progress in the retail segment, the jewelry industry is taking note of the change, as it prepares to gradually adapt to the changing environment."

Industry agrees, IT adoption drivers are primarily going to be the realization that companies need to serve customers better, and the necessity to move with the current trends.
Two crucial areas where, in the vertical needs to improve is bringing down the production time, which currently is 60 days on an average, and integration of business, says Anup Varma, Oracle India's regional sales director, mid-market technology sales. Varma says that these directly effect a company's brand image and consequently their customer relations.

The organized sector comprises a very small 3% of close to 3.5 lakh players in the industry. This is the precursor to the IT trends in the gems and jewelry vertical. "It is imperative for the industry to reach out to the remaining 97% in order to come closer to the customers," says Varma.

"While the growth and trends of the industry are pushing contours to expand like never before and the potential is huge, it is only the periphery that we have managed to scratch," says Varma.

On a positive note Bhargava adds, "In the next one or two years, with global jewel retailers setting shop in India, I see a lot of IT adoption. This will drive local players also to adopt IT to compete and differentiate in the market."

While the potential is enormous, there is still time before the thought that "buying jewelry is not just buying a piece of precious gem, gets deeply entrenched in the unorganized sector." How fast this vast unorganized gang joins the organized sector, poses a huge challenge for the technology providers and facilitators, and the industry as a whole.

Source: Dataquest