Productive Lockdown for the Gems & Jewelry industry and students
Warning: This is going to be a long and actionable read. Sit with your notepad please.
Recently, we took a virtual class for our Diamond Graduate students as all sessions on campus have been suspended temporarily due to the advent of COVID-19. To commence on a lighter note, we named the session as “Productive Lockdown”.
As the name suggests, the reason for this virtual classroom session and this blog was to discuss the opportunities that has arisen amidst this unfortunate lockdown. Not just the gems and jewelry industry, but the world’s economy will take a big hit, and the huge setback that the world’s citizens will face due to the tragic loss of lives and loved ones. The fact that you are reading this blog, you may be in a better position than the world right now. So let’s get to it.
Gold and allied markets
One of the things you need to keep a track of during this lockdown is the gold markets. Among constant and drastic fluctuations, you can see that the graph is rising. However, this may change once things have normalised and we’ve beaten COVID-19. At that time we will see an infuse of funds back into emerging markets which will be hungry to get back to business and set the ball rolling. This, of course, would include India.
As the investments flow in, the capital markets will rise. Now, we all know and the capital markets and the gold markets have an inverse relationship, usually. Hence the gold prices will start reducing post normalisation as its investment attractiveness reduces. This is where we bring the gems and jewelry industry into the conversation. Due to the lockdown and the economy taking a hit quite poorly, there would be a rise in the reselling markets, i.e. the people will liquidate their gold in the form of ornaments, coins, etc. This would give jewelry retailers and wholesalers an opportunity to buy gold at a price lesser than the market price.
As many of you would be planning a revamp on your stock holding, this will help you reduce your cost of purchases/production. However, this would work only if you have the buying capacity and liquidity, something you should have planned as the rise in this epidemic was known to all with the Chinese example.
The rough diamond producers have reduced the base prices of their inventories to be put up for auctions. Rapnet has also reduced listed prices on its website. Even IDEX. However, these may not have an immediate impact when everything normalises. In the short term, the wholesale diamond market will see a slight fall in the pricing as those holding inventories will sell off immediately to meet working capital needs.
The diamond jewelry retailers may find it difficult to sell at higher prices. They may have to compromise slightly, in a nominal way, in the profit margins. It should be noted that this will only impact the retailers in the short run and the bounce back will be higher for the retail industry. This is because the wedding season will only be postponed and not cancelled. If the gems and jewelry industry can manage their working capital and cash flow requirements well, we can choose to be more optimistic than pessimistic.
So, what can you do sitting at home in this lockdown apart from binge watching Netflix and Hotstar? Get a notepad right away.
If you are from the gems and jewelry industry, here’s what you need to do:
1. Customer Database and KYC
We have learnt a lot from our earlier generations on how they handled their customers and sold jewelry of their choice using their own intuitive analysis. Now we need to work on developing an organised system that can utilise the business wisdom of the old guard and use modern day data analysis to know more about the customer. This system should ensure timely decision making leading to increased sales by each team member and the reliance on the owner for sales reduces. Divide customers into segments, based on their choices, age, gender, marital status, location, relationship with you, etc. This will help you not only sell better but also delight them in a way that they come back to you, again and again.
You need to ensure that you have an automated ERP in place that assist in collating all the customer data and takes timely action of communicating with the customers. Messages with vouchers should be regularly sent on new launches, birthdays, anniversaries, etc. ERP can also help you manage your stocks better, identify dead stocks, identify fast moving stocks, etc.
Based on the research done above, you will be in a position to understand your target market. During this lockdown you can collate different set of designs based on your customer segments. It could be wedding based designs, fast fashion designs, theme based designs, etc.
If you’re an e-commerce jeweller or a jeweller focussing on fast fashion markets, you will need a collection of theme based designs, specially those designs giving out a message on compassion, unity, environment/nature, etc.
4. Pricing Strategy and Stocking
Now, based on the designs selected, you will have to focus on your pricing strategy. We’ve covered pricing strategies during our jewelry estimation sessions, and you will need to stick to basics. If you’re a manufacturer, raw material purchases, specially diamonds and gemstones should take priority to take advantage of the fall in prices in the short term.
5. Brand Positioning
Your brand, irrespective of whether you’re a wholesaler, manufacturer or retailer has to come out stronger than ever in such times. Your communication has to be strong yet compassionate. From budget perspective, it will be more economic to take the digital route of branding than print/TV commercials. You can filter the exact target audience based on your customer segmentation and accordingly promote your jewelry brand. You need to clearly state the objective of your brand positioning and what you wish to achieve before creating a digital strategy.
6. Create a Digital Strategy
You need to come up with a comprehensive digital strategy to kickstart or branding campaign. It is pertinent to note that brands will progressively have better market penetration as compared to local jewellers. Jewelry, being a luxury product, should ideally be promoted on Instagram and Youtube. Based on our research, these two digital channels are responsible for a maximum exposure. Other platforms would include Facebook and Twitter. Next, get your budget sorted. Decide how much you want to spend on each platform and whether you want to promote the brand or the product ranges.
7. Content Generation
Create a content strategy right away. On social media, there are thousands of jewellers putting up thousands of designs. If you do the same how will you stand out. Your engagement rate needs to be high and that will not happen if you are not creative with your content.
Jewelry, being a luxury product, is not just about the design but also the efforts and the story behind each of those master pieces that are created. You need to bring this out in your digital campaigns. Think of ways you can showcase the “behind the scenes” to your prospective customers who will appreciate your product even more.
You can also showcase customer testimonials and how your jewelry brand has been associated with “that” special occasion for your customer. It could be in a story or video format. Such gestures are highly appreciated by the digital consumers as it holds emotional value, an under estimated variable, today.
Based on the above, jot down at least 30 content ideas for your brand that you can start implementing right away, sitting at home.
8. Communicate and get feedback
During this lockdown, you have spare time. Make the best use of this by communicating with your customers. Conduct their interviews, get their feedback and survey your customers with the motive of understanding them better.
Before you start this process, first identify your prime customers. We have all heard about the 80:20 rule. There may be very few customers who bring maximum revenues for your jewelry brand. It is pertinent to identify and prioritise them in such communications. If possible, do not miss out on speaking to a single customer. When I say communicate with them, it means actually talk to them over a call. Not a Whatsapp message or email. These communications serve a purpose. It builds a good relationship and rapport with the customer as they feel important. Get to it NOW.
9. Read Annual reports of listed gems and jewelry companies
Now, this is a very good habit to adapt. Annual reports include financial statements, director’s reports and auditor’s reports of these companies. Since these are listed companies, it is compulsory for them to publicly disclose these documents. These reports hold a lot important information as well as learnings. Titan (includes jewelry brands like Tanishq, Caratlane, Mia, Zoya), Rajesh Exports, Asian Star, PC Jewellers, TBZ and international brands such as LVMH, Tiffany, etc.
By reading these, you will not only understanding their balance sheets and profitability but also their strategies going forward and how they foresee the markets to behave.
10. Financial prudence
Continue to keep a track of all your funds. Not just your money but also keep a track of the bank where are money is saved. Given the recent Yes Bank debacle, it would be a good practice to regularly check the financial health of your bank. You can do this by keeping a tab on the bank’s share price and any related news. Alongside, you can overall keep a check on blue chip companies and major indices such as Senxes, Nifty, etc. to give you a broad understanding of where the economy is headed.
11. Sit with the wise old guard at home
Make sure you spend more than enough time with the elder generations. Ask them questions about issues that you think you may face in your business or profession. Parents are the ultimate source of inspiration and motivation. Learn from them. You have walking talking business encyclopaedia at home. Why not utilise this lockdown time to learn from them while spending quality time with them. These days are never coming back.
Hope the above aspects would help you chart a path to the future once everything normalises. Stay Home and Stay safe. Maintain social distancing. And pray for the warriors fighting on the ground while we remain safe at home.