Steeped in tradition, India’s luxury jewellery market is fragmented with small, independent retailers still dominating the landscape. Since the last decade, however, favourable government policies and changes in consumer behaviour are driving the industry to organize itself. Chain store jewellery retailers are expanding their presence across tier-2 and tier-3 cities, with value and demographic diversity taking center stage.

Chain stores that operate across the country are dominating the market in daily wear and fast-moving jewellery products such as chains, rings and earrings accounting for 50-60% of their business. While organized jewellery retail is gaining more market share, problems persist. Many luxury jewelry retailers have 5,000 SKUs or more per store. They also suffer from the lack of freshness. A significant portion of the inventory is aged more than six months, resulting in slower inventory turns. As a result, jewellery retailers must manage high working capital as deadstocking is an industry norm.

This is counterproductive to customer demand and profitability. Today, customers have more choices than ever before. They expect to see brand-new collections. Maintaining freshness in the stores while handling non-moving items creates constant tension. The biggest challenge: Determining which items out of a universe of thousands of variants should go to each store, and how much to keep from each one.

Smarter inventory management

Retailers need to meet growing customer demands for fresh products and wide assortments without tying up capital in deadstock. Technology simplifies this complexity, helping retailers respond to the ever-changing reality. Chain store retailers must improve efficiency by making “fast moving” items available at stores at the right time, and refreshing slow moving items. 

On a broad level, it translates to having the right inventory in the right store at the right time. To do so, retailers need a platform that segments and classifies products based on their contribution to sales, differentiating how each product is treated. How can retailers achieve it?

Smart segmentation: Smart segmentation ensures that category fast movers and slow movers are treated differently in different stores.. Since the store assortment is large and the sales rate of a typical product is relatively low, retailers fail to identify fast movers in real time and leverage their sales potential through replenishment. The same goes for slow movers, which are usually identified too late, by the time the product is already aged. Using advanced demand-driven analytics, retailers can always allocate the right products to the right store where it has the highest sales potential.

Smart liquidation: Research shows that 15-20% of deadstocked products in a certain store may be fast sellers in others. Whether it is due to demand for different categories of products, complete sets, seasonality, or variability in SKU sales per store, smart inventory management enables real-time, store-to-store transfers, ensuring every SKU is where it performs best, minimizing deadstocking and maximizing profitability.. It considers the impact on sales, margins, and costs to apply the optimal store transfer automation. This prevents deadstocking as retailers can intelligently rotate the right products at the right time to the right stores based on real data.

Smart assortment: If there’s one constant in jewellery retail, it’s the vagaries in demand for different product categories across different stores. For example, studded jewellery also known as Polki, Kundan or Jadau, has a market share of 15-20% overall and a large portion of it comes from northern India. In the South, consumers are more inclined towards plain gold products either studded with diamonds or semi-precious gems. However, seasonality and occasions for purchase make it necessary for businesses to have a range of options across stores. An AI-powered inventory management platform is great at creating customized store-specific assortments based on real-time demand. It monitors the performance of each category in every store and adjusts each store’s assortment to reflect actual consumer demand.

Embracing AI in jewellery retail holds tremendous potential for transforming inventory management and profitability. Leading jeweller Tanishq leveraged smart inventory management systems that led to 22% greater inventory turns, drove up sales by 12%, and reduced the inventory age from 125 days to 75 days. Traditional inventory management methods don’t cut it anymore. By breaking free from these limitations, jewellers can embrace a future where AI takes the reins to unlock new levels of efficiency, productivity, growth and customer satisfaction.