After betting highly on the US market in the pre-recession era, Gitanjali Gems, an integrated diamond jewellery manufacturer and retailer, has planned to cut its presence there in rural retail locations.
On the other hand, it also proposes to expand presence at premium locations. The US is the world’s largest consumer market for gold and diamond jewellery. It accounts for 40 per cent of global jewellery consumption.
Gitanjali owns 130 retail stores in the US, which contribute 13-15 per cent of its annual turnover. However, this year the jewellery maker is expecting a loss of $15 million from US operations, due to lower sales in rural retail points.
Around 18-20 rural retail stores are currently underperforming, said Mehul Choksi, managing director. US sales are estimated this year at $130 million.
The company is planning to cut store size from these locations, by reducing the quantity of display items. A couple of non-performing stores are also likely to be closed.
Earlier in 2007, when Gitanjali acquired a 97 per cent stake in Samuels Jewelers Inc, a Texas-based jewellery retain chain with 97 stores in the US and a turnover of $100 million, Choksi had evinced interest in increasing US operations through continuous expansion. The company had acquired another US retail jewellery chain, Rogers, for $18.5 million to boost retail presence. He, however, said US jewellery demand, which had fallen drastically between September 2008 and June 2009, started suddenly recovering in July 2009. Today, orders for Mother’s Day, falling in the first week of May, are full and the last shipment from India for the occasion is estimated to be complete by mid-April.
Gitanjali is also planning to add at least three new jewellery stores every month in the US for the next few months to expand visibility in premium locations.