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Published on: Sept. 26, 2022, 12:01 p.m.
Senco Gold: Jewel of East India
  • Sen: leveraging the hub-and-spoke model; Photos: Sanjay Borade

By Lancelot Joseph. Executive Editor, Business India

Every piece of jewellery makes the wearer unique by showcasing its own story! Senco Gold stands apart from the rest of the pack of jewellers and has consciously walked an offbeat path to create a new paradigm with its focus on intricate karigari. The company has been present for the past five decades with its oldest operational showroom located in the Bowbazar area, a jewellery market hub. Under the mentorship of its founder, the late Shankar Sen, Senco Gold has always kept an eye on growth, expansion, profitability and corporate governance.

After establishing a compelling presence in east India and growing at a glittering clip, it is now expanding in a focussed contiguous manner across the country. Senco Gold’s combined showroom strength has increased from 97 stores in 2018-19 to 127 stores as on April 2022. Among the eastern players, it has the widest geographical presence in India.

While building a strong presence in West Bengal, Senco has also strategically expanded to 13 other states across India. The firm, in fact, has 70 company-operated showrooms and 57 franchisee showrooms, located across 89 cities and towns with about 393,000 sq ft of cumulative retail space. 

Senco’s franchisee expansion strategy is unique, which is why it has been able to expand nationally. While entering a new geography, Senco establishes a presence first in the state capital or one of its largest cities through a company-operated showroom, followed by a franchisee-operated one. Later, expansion to other towns and cities is done using a franchisee model. The strategy places Senco on a strong footing. 

“We have been associated with Senco Gold & Diamonds for almost 15 years now,” acknowledges Lalit Kumar Kyal, Asansol franchisee showroom owner. “We are grateful to the company management for their constant support in all areas for business growth – whether it is regular supply of stock or software support or customer relationship building initiatives”.

“We are happy with our association of 17 years with Senco and appreciate the efforts by the company for enabling smooth franchisee operations and stock supply,” endorses Siddhartha Khan, franchisee owner of four showrooms across Bankura, Raniganj, Kharagpur and Durgapur.

Franchise model 

Not only is Senco leveraging on the logistical efficiency of its inventory, but it also maximises the return on capital by zero investment in inventory, as part of its asset-light franchisee model. It reduces the capital expenditure requirement and enables a faster expansion. “Our expansion plan leveraged the hub-and-spoke model, which is not only asset-light but also helps us build a high level of efficiency in our business,” says Suvankar Sen, MD & CEO, Senco.

For the company, the advantages of a franchise model are plenty. Apart from establishing its brand ‘Senco Gold & Diamonds’ as a large organised pan-India player, it also enables the firm to balance risk and transfer optimal cost of inventory to franchise partners. It enables the company to strategically penetrate Tier II and Tier III cities, leveraging on the goodwill and the capital of the franchisee partners. 

“We are pleased with our association with Senco since 2014,” observes Vivek Mathur, partner, Elevation Capital. “We were impressed by their management, strong brand presence in core geographies and a capital efficient own-plus-franchisee store driven business model. Since then, the business has expanded nationwide and continues to post strong growth, while keeping the interests of all stakeholders at the forefront”.

  • Joita: building a holistic experience for our customers

Senco has consciously created relevant brands for the young and young-at-hearts! This comes at a time when jewellery consumers are making a sure-footed shift to branded and light-weight jewellery. The firm has developed a proclivity towards the upwardly mobile class and younger generations, where brands play a critical role. This segment also tends to have slightly higher disposable income. Besides, many working women are exposed to global designs and consumers have also started to prefer light-weight contemporary jewellery.

Looking at this growing segment of the market, the company has launched two brands called ‘Everlite’ and ‘Gossip.’ In its Everlite brand, Senco retails branded light weight gold and diamond jewellery based on themes, which retail for Rs5,000-60,000 per design. This segment has been fast catching on with the new generation Indian women and is offered with various collections known as Venus, Tribe, Floral, etc. The aim here is to promote daily use of jewellery inspired by nature. 

Senco’s Gossip brand is also unique, catering to the silver and costume jewellery needs of its young customers. It’s a fast-moving, fashionable and easy-to-wear jewellery, which gives customers an option to change jewellery and match it to the clothing for different occasions.

In fact, the ‘Gossip’ brand is made of base metals and studded with semi-precious stones and imitation stones including zirconia and coloured crystals, which adds the heft to its looks and style, and is gaining in popularity. 

“Senco Gold has always kept design and innovation in mind,” adds Sen. “This is one of our strong USPs, as we are able to recognise the rapidly changing consumer preferences and market trends. We also pride in the finish of our products, and our wide range of products enables us to cater to a wide segment of customers, including the younger generation and the upwardly mobile”. 

In the premium and higher end of the jewellery market, Senco Gold has launched the D’Signia showrooms and the Vivaha collection in 2020, targeting the affluent class, where brands play an important role in the decision-making framework. This range caters for weddings and offers a unique range of collection with a host of products including waistband, rings, jhoomar, nath, necklace set, armband, etc. 

Senco Gold’s jewellery offering for men ‘Aham’ is also picking up pace ever since it was launched with the cricketer turned administrator Sourav Ganguly as the face. This too can be used for daily wear and includes a range of rings, bracelets, cufflinks, chains and pendants in diamond, platinum, gold and silver. Its ‘Perfect Love’ Diamond Solitaires collection based on perfectly-cut Hearts & Arrows cut diamonds is for the discerning connoisseurs.

Omni-channel strategy

Even as Senco Gold’s showroom experience for the customers is gaining ground, the firm is complementing its offering through marketing via multiple channels such as websites and mobile applications. It has launched a mobile application ‘MySenco’, which allows customers to review, purchase and receive delivery of jewellery from the comfort of any location.

Going by the way buyers are going online, it’s no surprise the app has seen more than 1.5 lakh downloads. Apart from this, Senco has also adopted augmented reality through ‘magic mirror and virtual try-on’ of ornaments for better customer care.

  • Banka: minimising risks

    Banka: minimising risks

In addition, Senco is also making a splash of its brands and sales prowess through its website www.sencogoldanddiamonds.com and www.mygossip.in and www.mydigigold.com. The firm also has tie-ups with online marketplaces. “We continue to increase our presence in the digital space through our online platforms as well as through online marketplaces,” says Sen.

“With the increasing use of the internet in India and the continued development of online channels, we believe that we will be able to expand our customer reach and increase our sales through the digital channel, with relatively low investments. In addition, we believe that we can enhance our brand awareness among internet users and cater to awider customer segment”. 

Senco Gold has been continuously investing in good brand campaigns during auspicious and wedding seasons. The firm has also tied up with celebrities as brand ambassadors to promote its brand and collections, and also sponsors teams and events. Over the years, the firm has seen celebrities such as Kiara Advani, Sourav Ganguly, Vidya Balan and Olympian Dutee Chand.

In line with its hyperlocal strategy, Senco has also roped in leading Bangladeshi actress Jaya Ahsan, Madhumita Sarcar and Sunita Devi, who have huge fan following in the states of Bengal and Assam respectively, to enhance its brand presence in these markets.

“Creating jewellery with great craftsmanship and aesthetics that appeal to everyone including the young upwardly mobile is our passion,” says Joita Sen, director, Senco Gold & Diamonds. “As we continue to deliver on this core promise, our brand ambassadors help enhance our brand equity, and build a holistic experience for our customers. Our focus on quality, craftsmanship and original and innovative designs, together with our targeted marketing and customer service, has contributed to our strong brand recognition and customer loyalty." Towards building its brand presence, the firm has been continuously investing on advertising and sales promotion which has ranged between 1-2 per cent of its sales. 

The firm’s in-house manufacturing facility at Ankurhati, near Kolkata, operated by its subsidiary is a state-of-the-art facility. It enables Senco to drive agile manufacturing processes using modern technologies such as 3D printing, CAD-driven design and laser-cutting. Such facilities help in reducing delivery timelines and help provide uniform quality across products. Senco has also implemented a multi-stage quality control procedure with its workers and karigars to ensure that not only the purity of its products aremaintained but also that jewellery is standardised and without any flaws.

Senco’s jewellery is made by over 100 experienced karigars in Kolkata, West Bengal and across India. These karigars are renowned for their exquisite and artistic work in the carving and processing of plain gold, studded gold, platinum and diamond jewellery.

Many of these artisans have been associated with the company for several years. Senco is also able to ensure a higher volume of work to karigars; which helps them offer quality finished products to Senco at competitive prices while allowing us to maintain exclusivity of our in-house designed jewellery.

Besides, the karigar workshops are audited regularly to make sure of compliance with quality and security standards. “Our commitment to stringent quality control has been critical to our success in the Indian jewellery industry and has contributed to customers associating our brand with trust and transparency,” explains Sen. “Our operations integrate our sourcing, manufacturing, retail and export sales, to provide us with several competitive advantages, including the ability to adjust our product range to continuously address shift in customer preferences, just in time inventory availability and changes in demand”. 

  • Senco has consciously created relevant brands for the young and young-at-hearts!

“The gold used as raw material is sourced by way of gold metal loan facilities, offered by bullion banks. We follow a policy aimed at de-risking the business from gold price fluctuations by sourcing gold under the gold metal loan facilities offered by banks. Under such arrangements, the price of gold purchased is not fixed on procurement, but rather within the applicable credit period. As a result, risks related to gold price fluctuations between procuring raw material and selling finished products are minimised”, says Sanjay Banka, CFO, Senco.

“For the jewellery business, a strong inventory management system is a must. On that count, we at Senco have a system where each piece is barcoded, tracked, and controlled through an ERP system. We take stock review every year, and based on sales patterns, placeour procurement strategy. Besides, slow moving items are rotated between showrooms to increase inventory turnover”, adds Banka.

All this has enabled Senco to post a steady growth during the last three years. Senco’s revenues have expanded from Rs2,484 crore in 2018-19 to Rs2,660 crore in 2020-21. This is despite lockdowns, which necessitated many of its showrooms to be shut. So, net profits have grown a tad slower, during the period due to higher operational costs. While net profit stood at Rs72 crore in 2018-19, it has come down to Rs61.4 crore in 2020-21. 

Since the reopening of the showrooms, the firm has taken several brand building measures and also invested in phygital measures such as jewellery purchase through video calling, digital catalogue, etc. But over the years, Senco’s expansion spree has helped the firm clock revenues of Rs2,467 crore in the eight-month period ending November.

The firm’s profitability gained sharply and came in at Rs1,01.5 crore in the same period, showing a sharp jump from 2020-21’s full year profit of Rs61 crore. Its return on equity hovers around the 15 per cent mark for the eight month period ending November 2021. For the same period, the inventory turnover ratio has been at two times.

“Senco has a formidable brand presence in its home markets and is growing rapidly across India. Senco has amongst the best growth and profitability track records within the sector. It figures amongst the few jewellery chains to have successfully established a franchisee showroom network and is now leveraging e-commerce to build a direct-to-consumer business”, discloses Srinath S, CEO, OIJIF-MC (Oman India Joint Investment Fund Management Co).

“Consumer demand for diamond jewellery in India has increased at relatively higher rates compared to the demand for gold jewellery. We intend to further increase diamond jewellery sales as a portion of our overall sales, and thereby attempt increase our overall profit margins. We also aim to reduce the holding period of our inventory by improving operational efficiency,” says Banka.

  • Our focus on quality, craftsmanship and original and innovative designs, together with our targeted marketing and customer service, has contributed to our strong brand recognition and customer loyalty

Shining industry 

On the industry front, gold consumption in India remains high even as jewellery demand continues to grow. While China consumed 675 tonne of gold jewellery in 2021, thereby occupying the pole position in global gold consumption, India ranks second place with 611 tonne purchases.

Global gold jewellery consumption rose 52 per cent year on year in 2021, led by significant growth in the two major consuming countries, India and China. Indian jewellery demand improved 93 per cent supported by economic recovery and easing lockdowns. 

Further, demand is expected to remain strong. A low base, pent-up demand, expected gold price reduction and more weddings are likely to boost jewellery demand in the near term. Over the long term, improving economic growth (7-8 per cent annual real GDP growth projected over the next five years), easing short-term disruptions caused by Covid-19, rising urbanisation, and increasing disposable income levels are expected support growth. CRISIL research expects consumption demand for gold to increase at a 13-15 per cent CAGR over the next five years. 

This portends well for players like Senco Gold. “The branded jewellery retail market has significant growth opportunities. With the increasing number of working women, exposure to global designs, and rising number of young consumers who prefer to purchase jewellery for adornment rather than investments, consumer preferences are shifting to contemporary jewellery. Our strategy is to increase our business through the digital platform and leverage our manufacturing capability on creation of an asset light sales channel, thereby offering a seamless combination of both offline and online buying choice for customers,” says Sen. This and its other business strategies should keep the glitter high on growth. 

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