Gitanjali to double retail store presence

Gitanjali Jewellery Retail, a unit of the Rs 7,000-crore jewellery maker and exporter Gitanjali Group, is planning to more than double the number of its branded jewellery retail stores across the country by the end of the 2012 calendar, according to managing director Santosh Srivastava.

“We currently have 70 outlets pan-India, of which 90 per cent are franchisee-run and the rest company-owned. Our idea is to have 150 stores with a carpet area of 2,500-4,000 sft, each with an investment of Rs 10 crore to Rs 12 crore, by the end of 2012,” he told Business Standard, after launching the company’s second showroom in Hyderabad on Sunday.

The existing outlets manage jewellery and precious stones’ inventory of Rs 700 crore, which would touch Rs 2,500 crore post the expansion, Srivastava said, adding the company was embarking on an aggressive expansion to increase its presence in Andhra Pradesh.

“The demand for branded gold and stone-studded jewellery is picking up as people are seeing the precious yellow metal not only as a style statement but also as investment and gifting options. At present, we have four stores in Andhra Pradesh – two in Hyderabad and one each at Visakhapatnam and Guntur. We will be opening three more in Hyderabad and 15 across the state in the next one year,” he said.

According to Srivastava, the gold jewellery retailing market in India is currently pegged at Rs 1.5 lakh crore, and growing at a compound annual growth rate (CAGR) of eight per cent. Of this, the organised sector accounted for eight per cent, growing at a 25 per cent CAGR. “With the influx of more domestic and international brands, organised jewellery retail will occupy 25-30 per cent of the market by 2015,” he said.

Srivastava said unlike other retail formats, which took long gestation periods to break even, jewellery retailing took three-four months to achieve operational break even, with the payback period being between 30 and 36 months.

“At present, retail operations contribute 50 per cent to the group’s turnover. We expect this to account for two-third in the next two years once we have all our expansion plans in place – including taking the number of single-branded stores across the country from the present 125 to 300 – in the next two years,” he said.

Srivastava said the company was currently piloting its new lifestyle format in New Delhi, Mumbai and Gurgaon with seven stores, which will offer not just jewellery but also watches, designerwear, pens and bags.

“The new format will target the niche segment,” he said, while refusing to comment further.