CHENNAI: Chennai-based Vummidi Bangaru Jewellers to expand into the US market targeting the large South Indian diaspora, with its plans to open at least four stores in the country next two years.
The company will open its first showroom in Dallas, Texas later this month with a capex of Rs 150 crore with a mix of equity and bank debt. It hopes to open new stores every six months, in places like Chicago, California and Virginia.
VBJ expects 100 million USD in revenue from the US operations in a year and contributes at least 30% of the overall business in 3 years, its Managing Partner Amarendran Vummidi told TNIE. Though the market is small, the buying power is huge and there is a dearth of South Indian jewellery, he said.
The century-old jewellery maker, who was in the news recently for the Sengol issue, is also planning to establish three stores in Chennai and five more in other parts of Tamil Nadu including Madurai, Thiruchy, Tiruppur and Tirunelveli.
It also sees expansion into Andhra Pradesh and Telangana markets. The culture of jewellery on the East Coast is very similar and we always collaborate with artists from Telugu-speaking states, he added.
"People don't want to travel like they used to unless it is a large purchase, so we feel we need to go and reach out to our clients," he said, explaining the thinking behind the expansion.
Amarendran Vummidi agreed that there would be a shift and the consumption of gold among youngsters with increased access to share markets but he said it the penetration was marginal. 98% of the Indian population buy gold as an investment as its value appreciates, could be liquidated and as an ornament. The rising number of middle-class will be the key group driving the gold demand in the coming years, according to him. Though few spend on luxury goods, and holidays, they come back to gold, he added.
The online jewellery sale is limited to small ticket purchases from Rs 5,000 to 15,000 and people tend to buy higher-value purchases in-person for customisation and touch and feel, Amarendran said.