Informist, Friday, May 12, 2023
By Reshab Shaw
BENGALURU – High gold prices are not a cause of worry as the commodity has been hedged, which will safeguard margins in the coming quarters, Titan Co Ltd Chief Financial Officer Ashok Sonthalia said. However, prices of the precious metal have suddenly gone up which the company would want to stabilise and consolidate at current levels, Sonthalia told Informist in an interview.
Titan has been seeing volatility in demand linked to gold prices. Speaking to analysts after declaring Jan-Mar earnings, the company's management said the volatility may continue going forward. Nonetheless, the company had a stellar March quarter earnings, beating Street view on both the bottomline and the topline.
"Titan always is completely hedged, as far as gold prices are concerned," Sonthalia said. He further said gold price volatility affects sentiment and consumers also defer their purchases because of prices moving back and forth.
"So for us the best situation is that when gold prices are stable and have a bias towards gradual appreciation".
The geopolitical situation remains fragile and if it deteriorates further, prices may shoot up, he said. He also said that interest rates are almost at their peak. "It is pretty balanced at this point."
Talking about customer behaviour, he said they generally walk in with a budget in mind rather than the grammage of the yellow metal. And for the company to generate more revenues, Sonthalia said, "We are very, very interested that we must attract more number of customers, our footfalls should increase, (and) we should add new customers on our fold." This would also mean the company gaining market share from its rivals
LEVERAGING DIGITAL DATA
In this internet-age, buyers carry out most researches online in almost all the categories. "Digital is growing and it is an unstoppable trend," Sonthalia said, adding that using omni-channel for sales makes the buying journey almost seamless.
He gave an example for this, saying Titan leverages the search data of customer to show them those particular items, and not begin from scratch. Of course, the identity of the person has to be established first.
Tanishq, the jewellery retail brand, has digitally influenced about 8-9% of sales, wherein, first the customer searches the product online, followed by video calling, and finally an offline visit culminates into sale.
However, certain categories are more amenable to the digital way of purchasing than other, such as eyecare. In this vertical, technology has not matured enough to be able to take care of everything by itself.
The Tata Group-owned company's chief financial officer said it will be the frontrunner in using customer data and analytics, predicting consumer behaviour which would then be used to position products to potential customers.
The Bengaluru-based company is even leveraging data generated from e-commerce in planning its retail expansion strategy. Sonthalia said aspirations of buyers in today's day and age know no boundaries, be it Mumbai, Chittorgarh, or Chapra. The company is reaching out to smaller cities and finding success from day one itself.
He said that the share of top-10 cities in revenue has gradually fallen to 53-55% from 60% in the last four or five years. "So the trend is very certain that gradually... these markets are getting saturated in a way... so the headroom for further growth is coming from tier II and tier III towns," Sonthalia said.
VERTICAL PLAY
In the March quarter, all verticals of the consumer lifestyle retailer performed well, with sales in jewellery, its biggest vertical, rising 33% on year to 86.31 bln rupees. He said a lot of progress has been made in the jewellery business in the last two-four years and the company is now "solidifying".
The watches and wearables division, the next biggest vertical, and is an "exploding space in India" and the trend is set to continue for another three-five years. Sonthalia said analogue watches are delivering on premiumisation of products and not on volumes as customers are ready to pay more because of it becoming accessory. He said teams are working to create more premium analogue watches.
Its Helios business is also commanding premium prices now, Sonthalia said. This is because many customers who were earlier wedded to just international brands are now finding Titan's watches equally beautiful and having a compelling value proposition.
Titan uses the Helios channel to sell international watch brands along with Titan World watches. "And international brands are also getting good traction because many more footfalls are happening
Sonthalia said there's huge headroom for the company to grow going forward as its market share is still in single digits in most of the categories.
Today, shares of the company ended 0.6% higher at 2,773.20 rupees on the National Stock Exchange. End
Edited by Akul Nishant Akhoury
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