The Titan Companys watch business was at an all-time low during 2015/16. Despite an over 50 per cent market share, it grew in low single-digits. That had nothing to do with watch-making skills, but analog watches were becoming passe and the company had not been able to react to the change. Titans biggest competitor was not another watchmaker, but Apple and Samsung, which sold close to 80 million smartwatches, while Titan managed to sell only 15 million watches.
Bhaskar Bhat, the then MD of The Titan Company, had admitted Titan watches had lost their attractiveness. The senior management realised the team lacked agility to adapt to the changing times. Thats when Titan decided to rebuild the company on four pillars - agility, accountability, innovation, and anticipating and adapting to change. "We realised we were reacting to situations rather than being proactive. That's when we brought in the four pillars," remembers Subbu Subramaniam, Chief Financial Officer, The Titan Company.
Also, consumers wanted good looking smart watches. The available ones were smart, but consumers were looking for a higher style quotient. Therefore, Titan partnered with Intel and launched a range of fully touch-screen hybrid smartwatches with a strong design element.
It also made corrections in its cash-cow, the jewellery business (Tanishq), by launching new collections and introduced a gold jewellery exchange offer. These strategies worked and in 2017/18, it reported a 20.75 per cent growth in revenue after years of low growth. The watch business reported its highest-ever profits and Titans market cap doubled from Rs 41,082 crore in 2016/17 to Rs 83,656 crore in 2017/18, making it the third-most valuable Tata company after TCS and Tata Motors. Five years hence, the company still abides by the four growth pillars. "Even during the peak of lockdown there was no room for excuses. We found new ways of reaching out to consumers," says Subramaniam.
The lockdown brought business to a halt in April and May. However, these ups and downs have seldom impacted the Rs 20,010-crore company's spirit to bounce back.
Titan has managed to be among Indias top wealth creators for shareholders. In the last five years the stock rose 138.43 per cent, while revenue and PAT grew 67.35 per cent and 84.39 per cent, respectively. Subramaniam attributes the growth in wealth for its shareholders to its DNA of caring for multiple stakeholders. "It's not just about shareholder perspective, but also employees, channel partners, business partners and customers."
Much of Titan's wealth creation is due to the way it built brands and made lifestyle affordable. From affordable watches - Titan and Sonata - to launching high-end perfumes (Skinn) in 20 ml bottles and branded spectacle frames at Rs 300, it always believed in democratising fashion.
Be it watches, jewellery, eyewear or saris, Titan has consistently made a successful brand story out of unorganised businesses. "In jewellery, our focus was to organise the manufacturing process, make buying gold jewellery fair as well as help the karigars," explains Subramaniam.
Titan in Q1FY21 reported a loss of Rs 297 crore against a profit of Rs 364 crore during the same period last year. With consumers locked down in homes, the last thing they are thinking about is to buy a watch or jewellery. The lifestyle major continued to be restless for growth even during the pandemic, claims Subramaniam.
Jewellery arm Tanishq is looking at digital as an important engine of growth in the Covid era, as consumers are increasingly opting for online shopping. It serviced over 2,000 customers in the last five weeks through video calls. It has been averaging 10,000 live chats a month and gets 90-100 requests daily for store appointments on its website or through GoogleMyBusiness. While a digital first strategy was on the cards prior to the lockdown, Ajoy Chawla, CEO, Jewellery Division, says Covid forced them to accelerate digital plans. "Digital from now on will be an important engine of growth along with Golden Harvest, wedding jewellery, gold exchange and growing our share in low market share markets."
The branded jewellery market de-grew over 70 per cent during the lockdown. Tanishq has also rolled out the endless aisle concept, which shows consumers the inventory it has across the country. The video calling and endless aisle facility have already been rolled out in 230 of its 335 stores.
Subramaniam says: "We invested substantially in the last few years on ecommerce, CRM, online assistance and omni-channel. The good news is that we started at the right time and that is giving us dividends now. The way we are using our digital infrastructure is helping us connect with consumers far better."
Digital at Titan is a separate profit centre. "We said a portion of the revenue will be given to them as cost for that initiative. By the second year, we got the entire cost from the division. The extra revenue generated is Rs 500-600 crore. This came after the analytics team identified the right customers and targeted them for specific products," he adds.
Bhat had set a target of making Titan a Rs 53,000-crore company by 2023. The slowdown and the pandemic have made that target unviable. Subramaniam says the target has got extended by a couple of years. "Next year, I assume we will get back to normalcy in sales. We should grow well and all that we are doing in the cost side will bolster our margins." The company, has started a rigourous cost-saving exercise across functions. "This has nothing to do with Covid. When we started the planning for FY21 in November 2019, we decided to look into costs. The idea is to make the business more sustainable." But won't growth in the 'new normal' get increasingly difficult for a lifestyle company? "Discretionary companies do well when the economy is de-growing as people want to buy good branded products. This year is bad because of the lockdown and the fear factor, otherwise, I don't believe there will be an issue. Of course, we have to make products which are relevant and connect with the consumer," says Subramaniam.
It will be interesting to see how The Titan Company manages to attract consumers to its discretionary products. It certainly won't be easy.