It's a rainy Saturday evening in Bangalore and regular weekend shoppers are hurriedly wrapping up their buying. At Infantry Road's Safina Plaza, a once hip mall (now more used to housing saree exhibitions and the occasional upscale boutique), a few people walk past a brightly lit end-of-season garment sale and head for one corner. Their destination; the 1,000-sq. ft Titan Eye+ store to leisurely browse through dozens of frames and try on everything from a Rs 300-pair to a Rs 30,000-high fashion brand. While eyeglass shoppers have been used to squinting at their options often through stained and scratchy glass, this store hands power literally back to the consumers. So, row upon row of frames are kept in the open for people to try on and smart salesmen (or more correctly, fashion consultants) help people choose the right frame and select from a mind-boggling 16,000 varieties of lenses.
From a company that re-invented the then prosaic watch market two decades ago by bringing in new-age retailing and designs, Titan Industries now wants to overhaul another market. This time it is the Rs 2,000-crore eyewear retailing business, currently dominated by dozens of unbranded players and a few larger ones such as GKB Opticals and Lawrence & Mayo. "At least 300 million Indians require sight correction and currently just 85 million have got their eyes checked," says Bhaskar Bhat, Managing Director, Titan Industries. In 1984, Titan began operations to provide a fresh face to the watch market but in the last couple of years, the company has stepped up its efforts to look beyond watches and into jewellery, precision engineering, exports, and has most recently launched the eyewear business.
"We have just launched the prescription eyewear business, but we plan to have an aggressive national roll-out of up to 200 stores across 35 locations," says S. Ravi Kant, coo of Titan's Eyewear Business. He expects this nascent business to grow into a Rs 400-500-crore entity in the next couple of years. "We are entering a market that is dominated by unbranded and low-quality products. We want to bring the same brand recognition and quality from our watch and jewellery business to eyewear," says Kant. Besides a glitzy store front, Titan Eye+ has hired optometrists from the top three institutes in the country for expansive eye tests to add an edge to the business. "Owning glasses is not just about vision correction anymore; like watches, this has become a style statement," says Kant.
From its initial foray into watches, Titan is now looking at becoming a lifestyle brand. "We are much more than a watch company now. Tanishq, our branded jewellery foray, already outsells watches with Rs 1,250 crore in revenues and this could top Rs 2,000 crore this year," says Bhat. "The branded segment accounts for maybe 3 per cent of the jewellery market and we are a clear and unchallenged leader in this segment," says C.K. Venkataraman, coo, Jewellery. According to industry estimates, Titan enjoys a 40-50 per cent share in this market, with the #2 player well behind at around 15-20 per cent.
With a fourth floor office that overlooks the verdant gardens of Hindustan Aeronautics on Bangalore's Airport Road, and World Space radio softly playing in the background, Venkataraman continues to plot the rise of his business. While upscale urban women may want to shop at an air-conditioned store adorned with posters of beauty queens and socialites, Tanishq has also launched Gold Plus, a chain targeted at small town India. "The jeweller will show people around, sales people will talk the local language and the look and feel will be more homely," says Venkataraman. "Until recently jewellery buyers relied either on their family jeweller or a local store for their requirements. However, changing economic conditions and the increased movement of people has broken down this system," he adds. Tanishq (and now Gold Plus) are trying to fill this vacuum by providing high-quality, fashionable jewellery to the masses.
Away from the spotlight are two of Titan's lesser- known businesses, Titan Automation Solutions, its Rs 100-crore precision manufacturing enterprise as well as its international business, which yields similar revenues. "Precision engineering began as an in-house requirement but has grown rapidly. We have used the same focus on quality coupled with India's low-cost manufacturing edge to grow this business," says Bhat. Meanwhile, almost unnoticed, Titan has set up operations in around 26 countries and is looking to ramp-up this business. "We will enter at least five new countries in the next 12 months and Tanishq will also foray into the US market," says Kant, who ran this division before taking charge of the new eyewear business. While Titan may be among the best recognised brands in India, life is much more difficult overseas, with even markets such as West Asia boasting of upwards of 300 watch brands from across the world.
Entering new markets like jewellery and eyewear may have helped Titan extend the reach of its brand, but Bhat & Co. will have to keep a wary eye on the company's margins. Although Titan crossed the Rs 2,000-crore turnover mark in the last financial year, its operating margins have been headed south for the last five years, from over 13 per cent in 2002-03 to just 9.5 per cent in 2006-07, even as the company's revenues and bottom line have continued to grow. "The onus is on us as a market leader in each of our categories to innovate and look for new growth avenue," Bhat says boldly. That is why it is launching higher value watches (such as Xylys, a Swiss-made range) and deepening its presence in jewellery with more diamond-based offerings and even perhaps platinum options too.
Despite Titan's focus on growing its new businesses, it faces the biggest challenges in its watch business. For one, the watch is today seen more as a fashion accessory rather than a functional time-telling device. And, second, Titan can expect to face up to much tougher competition across segments, ranging from Maxima Watches from the pa Group to renowned European names such Rado, Tissot and Omega for its top-end Xylys range. "We have created different brands such as Titan, Sonata, Raaga and Xylys, which are clear market leaders in each segment," says Harish Bhat, coo for Titan's watches business. He estimates that Titan has a 65 per cent share of the Rs 1,500-2,000 crore organised watch market and is working on expanding the reach of its wares. "We are India's largest speciality retailer and in watches alone; we have 216 World of Titan exclusive stores and 98 Timezones (multibrand outlets) nationwide and sales will soon touch 10 million watches," he adds.
A strong believer in the tenets of Feng Shui (he even has a fish tank and a small water fall to attract positive energy into his office), Harish Bhat will require all the positive vibes at his disposal to ward off increasingly strong competition. Already, Titan's closest rival in the budget market, Maxima, from the pa Group, has expanded its product range and announced plans to enhance its retail presence. Elsewhere, overseas brands such as Timex, Citizen and Casio have announced plans to expand in India. Citizen already has 40 stores in India and expects its business to grow by 30 per cent annually, according to the company's Managing Director, Hideaki Nakazaki. Adds Omega's Stephen Urquhart: "We believe that India can be among Omega's top 10 markets globally, given the increase in disposable incomes and the affinity for global brands."
For Tanishq too, competition is expected to intensify significantly as the country's largest gold manufacturer, Rajesh Exports steps into jewellery marketing with its Laabh outlets across the country. "We want to be a much more mass market brand and we believe that we understand the mid-market much better than our competitors," says Rajesh Mehta, Chairman, Rajesh Exports. Incidentally, Tanishq sees regional jewellers such as a Krishniah Chetty or TBZ in Mumbai as stronger competition than newer labels such as Carbon, Orra or Sangini. "Upscale jewellery we sell is not an impulse purchase, so we don't see cheaper players as serious competition," he argues. While Tanishq has grown by 40 per cent over the last three years, it is estimated that over 1.5 million people shopped at its outlets last year. "The urban market accounts for around 38-40 per cent of the market; a key factor in this market will be mining the rural market," says Venkataraman.
Although Titan has a commanding lead over its rivals in key markets, its continued growth will depend on its ability to ramp up its retail presence. "Retail is critical to all our main businesses and despite rising rentals, we've managed to sustain our growth in the market," says Bhaskar Bhat. While retailing accounted for around Rs 1,800 crore of Titan's revenues, the company has planned aggressive expansion to keep pace with its own growth. This year, the company plans to set up 61 more World of Titan outlets, add 10 more Sonata stores, 30 new Fastrack kiosks, 16 Tanishq and Gold Plus outlets and double its Eye+ stores. "Finding cost-effective retail remains an issue. We have been lucky with some of our franchisees, since they often hold space in important malls or high-street locations. Given the flow of brands into the Indian market, branding and marketing are going to be key differentiators," says Venkataraman.
Despite the challenges of operating in a fast-growing (and fast-changing) market, Bhat remains confident of continuing Titan's dominance. "We want to be a billion-dollar company in three years," says Bhat. "We want to have 450 stores in India and an international presence in 37 countries." In the same time frame, it used a Rs 127-crore rights issue to help fund its expansion and, in the past six months, added 6 lakh sq. ft of retail space to meet the goals Bhat has set for the company.
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