Scale for Profitability!
Ways to Increase Profitability
Setbacks are part and parcel of any business and this year there has been a lot of room for uncertainties, mainly because of the aftermaths of demonitization and more recently the GST. There is light at the end of every tunnel and even during the toughest of times, these jewellers have managed to not only increase their turnover but also open more number of branches. These successful jewellers give hands on tips on how to sustain and increase profitability in jewellery business. By Vijetha Rangabashyam
Not everyone has what it takes to cope with the changes the industry throws at them. However, there is no magic formula or hidden skill that one needs to acquire in order to gain a fruitful business. While sustaining a gainful business in the midst of an economic downturn and policy changes is difficult, it certainly isn’t rocket science. The jewellery industry is predominantly run by family-owned set ups in India and not every jeweller has been quick to evolve and change with times – change management has not been easy, rather family run businesses have not been open to change. The first step to profitability is to be open to change. While money should be a trigger, today, with customer service being a central element in every business, the purpose of jeweller should no longer be just money. And this is just how Mr. R. Satish, CEO, Vaibhav Jewellers turned his family-run business into a 1000 Cr empire today. “We started off 25 years ago with a small store of 900 square ft. Business was doing good enough and we were growing but we felt why not move into a bigger space. We created a jewellery mall of 3-4 floors and from 100 cr we got the turnover to 400 cr. People are willing to spend money if you give them the choice, the choice of experience, the choice of designs, the choice of customer service and so on.” In a small town like Vizag, people really appreciated the concept of an exclusive mall because they enjoyed the experience that came along with it; they enjoyed the comfort and service that was given by Vaibhav and urged them to come back again. Customer service is no longer a fringe factor in growing your brand; it is the only way forward.
“There came a point when we felt that we need to move beyond Vishakapatnam. We knew that our turnover will reduce if we limited ourselves to one place. Hence, we came up with small concept showrooms because every place has support services; the smaller area will come to the bigger areas to purchase everything. We mapped ourselves in costal Andhra and we identifie places where we can open large showrooms. For every large store, we opened 2 smaller stores to support it. Hence, people started using the facilities of showrooms everywhere,” adds Satish. What worked for Vaibhav is the trust, quality and transparency they built with their customers over time and more importantly, they never missed a chance to innovate. Innovation is important to stay relevant in a competitive industry such as jewellery. “We opened in many places in Andhra Pradesh and we moved to Telangana and we have already opened in Hyderabad as well. If we get stuck with one store and one concept, our profits are going to decrease for sure. We need to get closer to customers to get them to buy,” he adds.
Having an aggressive marketing campaign helps. “When we open a showroom, we consider it a wedding and we invite customers in that area. Two people go to each and every house to distribute the cards. When we opened our Hyderabad store, we covered one lakh houses in 90 days with 70 people working on it.” Hyderabad was a new market for Vaibhav and such a strategy help them garner many walk ins. Customer service and experience leads us to a more important point of investing in the business skills of your staff. For jewellers, the biggest misconception is that they believe that the staff ’s skill set is not directly related to profitability, while it most definitely is. Attracting the right kind of talent & honing the staff ’s business skills are extremely important. Having morning meetings, creating HR policies and looking after your staff in general will all lead to profitability.
Keep an eye on your Stock turnover ratio & timely purchase as it plays a major role in any business and this has remained the core focus for Ranka Jewellers “According to me it plays a very major role in garnering profits. In simple words, stock turnover ratio denotes the number of times we sell our stock during the year. Industry standards say that anything between 5 to 6 rollings is an excellent ratio to have. If you have 100 kgs in your store and you have a turnover of 600 kgs, you are doing really well. Anything below 2 is not good for the organization,” says Tejpal Ranka, Partner, Ranka Jewellers. How do you identify this ratio? Let us assume we have an opening stock in January and we have the closing stock in December. If you have two data points, you take the average of it and you have the total sales, you divide it by that and you get the ratio. “We have 10 stores and every store is in a different locality. Some of them are in high streets and some of them are in residential areas.
We identify the clientele and we identify the ticket size, meaning, how much would the client buy. According to this we break up our stock,” he adds. A second main factor that is related to stock turnover ratio is a timely purchase. “Initially we would buy once a month. Now we are in a situation where we have to buy once in a week. We have a system in place where we can identify what we have sold and how much we have sold. Because of this our payments are on time and we are also able to buy our goods at a very reasonable price.” Beyond all this, the only element that will draw more customers to your store is design. Jewellery that has unique designs sell. Being clued in about trends, tastes and consumer preferences is mandatory and ensure you have the latest designs in stock