ExpertDabbler

I was in Madurai on May 8th, the day of Akshaya Thrithiyai, a day designed to make Jewelers rich :-). I had a chance to talk about the jewelry business to my uncle who is a jeweler himself and had been part of the whole tamaasha for long. He is taking it light nowadays – been through a by-pass surgery et al.

His take on the scene and how big players like Tanishq, Reliance franchisees and Joy Alukkas have completely rewritten the rules of the game was very illuminating to say the least.

According to him, thanks to the entry of big players, margins in this business for small traders have come down drastically. They are happy with a margin of Rs.30-50 per gram, approximately eleven hundred bucks nowadays. He even asked me to go around South Avani Moola Street to find jewelers offering EMI scheme to attract the salaried crowd. Apparently the bazaar resembles that of a ration shop during the first week of every month. He himself got a business over phone as he was talking to me and he instructed his associate to handover the jewel to the customer and collect only a portion and get the balance later.

On the other hand, big players like Joy Alukkas generally do not give credit nor breakups to the gold purchased. For e.g – for a piece of jewellery, they quote the price but do not say how much they’ve factored in for making and other charges unless we ask for it specifically. But if the customer is not willing to take it, they offer to negotiate by bringing down the price substantially from their initial quote. For e.g if a piece costs Rs.30,000, they would even be willing to come down by even Rs. 3,000 for the discerning customer. He was quoting his experience as a customer in Joy Allukas.

A friend of mine in Chennai, quoted a similar experience of high making and other charges in Keertilal so it looks like there is some element of truth in it. Only that Keertilal was not willing to negotiate on the charges quoted. Eventually he had to call off the purchase. But honestly not many would be so price conscious when making a jewel purchase.
We have this mentality of ,’Oh man I am losing Rs.50,000 anyway, what’s the big deal in another 1000 or so?’. But apparently, the percentage works out to much higher than that.
For instance, I along with some friends recently purchased a small ring as a gift for my friend’s new born son. The shop was Nathella Jewelry in Velachery. I neither had the time nor the inclination to ask for the break-up. In hindsight, I think I paid at least 200-300 Rs. extra on a purchase of 1gm ring.

Bottomline, branded retail has entered every business and jewelry business is no exception. I am not here to argue we need to protect the interests of the small trader. But as a consumer I think I should get value for every paisa I spent, be it groceries or jewelry, be it big businesses or small businesses.

The nature of gold per se. easily makes it a high turnover business. But I now realize the biggies have also made it high margin business. From a purely customer standpoint, I think it’s important we negotiate hard and not settle for the price quoted for making and other charges. On the other hand, if you are an investor make sure you get Titan’s hares on every dip