In an industry that has already been grappling with changing consumer preferences and dismal growth, the recent pandemic has and will continue to gravely impact consumer confidence. Needless to say, a time plagued with pessimism about the future and a significant decrease in the general level of disposable income has hit consumer's propensity to spend the hardest. Expenditure on jewellery amidst other luxury and discretionary products have been among the first to face the ramifications of this. Accounting for variables like how and when the economy begins to open up, sales are projected to decreaseby over 25 to 35 per cent this year. Jewellery sales in India are predicted to plummet to a 25-year low. Matters are only made worse by a slumping economy and sky-rocketing domestic prices for gold, with its demand falling by over 20 per cent in the first quarter.
The question persists, however, in a time riddled with uncertainty and pessimism, what is it that we can do for both our customers and our firms as a whole?
As wework remotely, we have the time and opportunity to bring in the institutional changes we have always wanted to implement and emphasize projects that differentiate ourselves. It is integral, more so now than ever before, to use this time wiselyand focus on the big picture.
Some strategies retailers could employ include:1. Venturing into E-commerce:
With social distancing becoming the new normal, the traditional brick and mortar retail model will undeniably see changes. Jewellers should take this as an opportunity to digitize their inventory and create a platform to showcase their merchandise online. Doing this would not only help provide a new source of revenue in the short-run but also gear us for the future.2. Re-evaluating inventory:
Retailers need to determine optimal inventory levels and work towards improving inventory turn. Afurther 'deep-dive'into inventory requirements and stockpiling of the most frequently sold goods, would allow us to cut costs and increase profitability in the long-run. Implementing these changes would enable us to provide high-quality products to consumers at lower price points, something that consumers would demand post lockdown.3.Improvements in efficiency:
While it may be seemingly apparent that cutting costs would be beneficial, blinded by ineffective institutional practices, we often overlook more efficient and innovative processes. The manufacturing process for precious stones and jewellery is often unnecessarily long and inefficient. It is essential to devise a more efficient manufacturing pipeline, to allow for increased responsiveness to changing consumer trends.4.Building a brand:
With over 100,000 jewellery retailers in India, it is integral to create your niche market, whether it be through aggressive advertising or product development. While retailers have an incentive to cut advertising costs,capitalizing on 'top of mind' awareness could lead to an increased volume of sales when markets rebound.5.Maintaining contactwith consumers:
Periodic texts, phone calls, posts on social media, videoconferences are some ways retail jewellers can interact with customers who aren't able to visit the physical store. With social media becoming an increasingly used platform, it could offer potential opportunities for low-cost advertising and consumer acquisition.6.Revitalizing the retail experience:
Supply-side disruptions should be viewed as incentives, for retailers to reverse the aggressive discounting techniques that they have depended on. Instead of selling at discounted prices, often at a loss, it could be beneficial to consider the prospects of manufacturing lesser and selling at original prices, enabling us to meet profitability targets on lower volumes of output and maintain a high-profit margin. While it may seem counterintuitive to not discount prices when consumers need them most, here is where the creation of a niche market and promising brand comes into play.8.Being proactive:
We need to build flexible systems that can adapt. Success now and in the future will depend on the agility, pliability and scalability of the systems we put in place.
On a positive note, it is vital to bear in mind that the COVID-19 pandemic is not a permanent state of affairs. While this crisis is grave, it is temporary. As consumers begin discretionary spending again, jewellery due to its innate value will regain its importance as not only a luxury product but also a long-term investment. Consumers will still celebrate birthdays, engagements and festivals, and what better way of expressing your love for someone than jewellery? So instead of dwelling on the problem, we should take this time to reinvent ourselves and provide consumers with new choices and better value. While the exact implications of COVID-19 are far from being accurately ascertained, learning from our past experiences, we should never stop innovating and fully utilize this opportunity.