Titan Company isn’t just India’s biggest watchmaker. It’s actually the world’s fifth largest maker of time-pieces (pdf). But apparently, that’s not enough anymore.
After 30 years of selling quartz watches and gold jewellery under brands such as Sonata, Titan, and Tanishq, the company now wants to move to women’s ethnic wear.
Owned by the Tata Group through a joint venture with Tamil Nadu Industrial Development Corporation (TIDCO), Titan first began selling fashionable quartz watches back in the 1980s, eventually edging out the once-dominant government-owned enterprise HMT.
Today, its business spans watches, eyewear, and jewellery—this last category is Titan’s largest revenue earner—which it retails under multiple brands through its 1,200 stores. For the year ended March 31, 2016, it posted a 5.2% decline in income at Rs11,176 crore from Rs11,791 crore in the previous year.
The retailer, which makes over 15 million watches every year, is exploring “opportunities in personal lifestyle categories,” it said in a filing with the Bombay Stock Exchange on Oct. 12. “One such category is special occasion ethnic wear for women,” the company added.
So, Titan will pilot a few such stores over the next 12 months before deciding its future course in the business. It remains unclear whether it will launch a separate brand or sell ethnic wear under existing brands. An email sent to a company spokeswoman remained unanswered.
Titan’s decision to diversify isn’t entirely unexpected.
Consumers in Asia’s third-largest economy are slowly moving away from quartz timepieces to smartwatches. Also, demand for gold in India, the world’s second-largest consumer of the yellow metal, remains tepid, thanks to low consumer confidence and price volatility, Titan said in a quarterly update (pdf) earlier this month.
Last year, the Indian government also made it mandatory to use PAN cards for cash transactions over Rs2 lakh, impacting 10% of the company’s jewellery business, Titan said in December 2015. There is also growing competition from local retailers such as Kalyan Jewellers and Joyalukkas that offer better deals to shoppers and enjoy stronger brand loyalty. Hence, its business has suffered. Income from jewellery, for instance, slumped 7.6% to Rs8717.40 crore in fiscal 2016.
Titan’s problems, though, run deeper than just weak consumer demand.
Over the last decade, foreign brands such as Timex, Swatch, and Fossil have taken over India’s watch market, jolting Titan’s once solid dominance. More recently, even technology companies such as Apple and Samsung have eaten into its share, launching a slew of wearable devices and breaking the monopoly of watch-makers.
With revenue declining over consecutive quarters, Titan tried some damage control. In January 2016, it tied up with US technology company HP to launch smart watches. In May, it acquired a majority stake in jewellery retailer Caratlane to boost its online business.
Now, Titan is hoping that selling clothes will help grow its revenue. It’s not that the numbers don’t look promising. The women’s ethnic wear market in India is estimated at Rs54,425 crore ($10.26 billion) according to consulting firm Technopak (pdf). However, it is dominated by regional companies that sell clothes suited to local tastes, traditions, fabrics, and weaves.
Will the gamble pay off? Only time will tell.