NRI’s Earning Trust and Dollars

16 million in 2015! They are Indian, they are non-resident.  Why NRIs represent a golden opportunity for India’s jewellers, how the smartest retailers have gone about winning them over, and what you should know before you too go for gold, overseas.   Rima Das16 million in 2015! They are Indian, they are non-resident.  Why NRIs represent a golden opportunity for India’s jewellers, how the smartest retailers have gone about winning them over, and what you should know before you too go for gold, overseas. Rima Das

Nobody yet knows what the true long-term effects of Prime Minister Narendra Modi’s demonetisation of 8 November 2016 will be, nor at what scale. Analysing the immediate effects, however, it is clear that certain sectors of the economy have been dealt a major blow — and among the most stressed is the jewellery industry.

According to a United Nations survey on international migrant trends, India has the largest diaspora, amounting to 16 million in 2015. Indian-Americans are the single most affluent ethnic group in the USA, earning a median income of $100,547 in 2013 according to data from the US Census Bureau. Compare that to $51,939, the median income for all Americans at the same time.

But the government is unlikely to bend over backwards to help. The authorities were deeply offended by the rush of gold and jewellery sales, legitimate and illegitimate, immediately following the PM’s demonetisation announcement, as Indians sought to turn their Rs500 and Rs1,000 currency notes into a liquid asset.

Some jewellers raked in the cash without restraint. This at a time when the injury to trust between industry and government had not yet healed after the jewellers’ strike against excise duty earlier in 2016. According to the GFMS Gold Survey: Q4 2015 Review and Outlook published by Thomson Reuters, India imported 904.5 tonnes of gold in 2015 (10 percent more than in 2014), of a total global production of 3,000 metric tonnes in fiscal 2015. India’s appetite for gold tends to widen the current account deficit — another reason the government is not in a friendly mood.

The government’s perspective was more than made clear by the gold monetisation scheme it launched in November 2015. The aim was to mobilise the gold holdings of millions of Indian families and institutions (like religious trusts), to turn inert gold into capital that the government could use. Rather than hope for a helping hand, therefore, the industry should take steps to protect itself from future monetary complications.

One fallback market for gold retailers is overseas Indians, who have the foreign exchange that the government is so interested in today. According to a United Nations survey on international migrant trends, India has the largest diaspora, amounting to 16 million in 2015. Many of these are non-resident Indians, or NRIs, a term that technically covers only Indian citizens who are tax-resident in other countries, but that is popularly taken to mean anybody of visibly Indian background who lives overseas and tends to maintain links with the home country.

To select two statistics (United Nations survey on migrant trends) the total income of NRIs alone is equal, by one estimate, to 25 per cent of India’s GDP. One of every nine people of Indian ancestry in the USA is a millionaire. Overseas Indians, particularly NRIs, have disposable income and understand and appreciate Indian products and design. It cannot be wise for the jewellery industry to undervalue these consumers.

“The NRI clientele and season, though very limited, adds to our sales figures,” says Ashutosh Joshi, international business manager, PNG Jewelers. “We look forward to these people coming down and buying from us. Even after demonetisation we haven’t seen NRI buying go down, because the monetary situation in India did not really bother them. All they use is plastic money.” PNG has established several showrooms overseas to absorb the demand from overseas Indians.

NRIs have been a steady customer base for Indian jewellers for a long time now. Over time, the business dynamic has changed, but the NRI market still is one of the most important segments for a jeweller — a situation that demonetisation has reinforced.

“We are a 200-year-old institution, but only after demonetisation did we understand how important it is to have channels that won’t be affected by any monetary situation in India,” says Vinay Gupta, owner, Shri Hari Diagems, Delhi. And what greater alternate segment could we have than the NRIs?”

HOMECOMING

Jeweller Anil Talwar, owner, Talwarsons, Chandigarh, says more than 70 per cent of his NRI clients are from the US and UK. NRIs have a three-phase shopping season in India, he says. “The business community comes either in early November or after mid-January, because during the Christmas season they are busy.” The professionals visit during the Christmas–New Year period. In August, American universities are about to begin the academic year, so another batch of NRIs travels before that.

In some parts of India business practically comes to a halt during Ashad, an inauspicious month of the Hindu calendar that usually falls in June–July, when locals avoid buying jewellery. In this period, NRI customers help make up for the otherwise sluggish business. “Thanks to the timely visit of the NRIs,” says Pratap Kamath, owner, Abaran Timeless Jewellery, Bengaluru, “we manage to sustain the business at 50 per cent of regular monthly sales despite the complete stillness in the local market.

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” NRI inflow in winter similarly sustains jewellery retailers in Gujarat during Kamurta, when business comes to a standstill. Kamurta is an astrologically unfavourable period, this time from December 13 to January 14. But “NRIs do not believe in it,” says Umesh Soni, owner, Shree Kareshwari Jewellers, Bharuch, Gujarat, “and they make substantial purchases for weddings.” He has been catering to this niche segment for more than two decades.

Even though the peak NRI business season is short, of just three or four months’ duration, and comprises a small per cent of the annual total number of clients, says Umesh Soni, “what makes it important is the significant value contribution it makes to the business.” Most of Shree Kareshwari’s customers come from South Africa and the UK; just a few (2–5 per cent) are from North America.

“NRI clients we get only in November and December. Their contribution to sales is 50 per cent,” says Kaushik Kumar, executive director, Shree Jewellers, Hyderabad. “The NRI contribution has been increasing over the last five or six years. There are more Telugu NRIs abroad, marriages happen, and they have started buying big sets.”

“We get a relatively younger lot of NRIs, in the age group of 30–50, from East Asia and the Middle East,” says Sourabh Maheshwari, owner, Vishal Jewels, Delhi, who has catered to NRIs for over 50 years. “These clients from Shanghai, Hong Kong, the Middle East, have huge buying power.”

Maheshwari says that “Millennial customers are few in number, and are more concentrated on spending money on apparel and holidays.” However, “Those who do spend are accompanied by their parents and are mostly looking for wedding jewellery,” says Shri Hari Diagems’ Gupta.

This is because most people who have migrated, in recent years, have moved “with jobs and are usually in their late 20s or early 30s”, points out Pankaj Arora, owner, Khurana Jewellery House, Amritsar, Punjab.

“The mature flock of the 50-plus age group comes from the US and UK,” says Maheshwari. This is also the most coveted group of consumers.

Indian-Americans are the single most affluent ethnic group in the USA, earning a median income of $100,547 in 2013 according to data from the US Census Bureau. Compare that to $51,939, the median income for all Americans at the same time. It is important, however, to note that the majority of Indians settled abroad are salaried employees, whereas “The rock-solid consumer base for Indian jewellers is the bankers, tech professionals and doctors,” as Kamath says.

“There is also the well-established business class,” says Talwar. “Though smaller than the salaried class, it looks for bigger-ticket purchases.”

The variety of designs that they get here is not found anywhere else. In the US there are Indian jewellers, but they have a restricted range of designs, and buying jewellery in India is more comfortable.”

Kaushik Kumar, Executive Director, Shree Jewellers

When it comes to jewellery as consumption, however, UK- and US-based NRIs are more likely to buy jewellery in India, because taxes are higher in those countries and the overall pricing mechanism is very different. These NRIs also value resale policies in India, which “they see as an opportunity for future returns”, says Samir Kavani, owner, Monarch Enterprise, Bardoli, Gujarat.There are regional differences, too. “US-based NRIs do not think of gold as an investment,” says Balaji Viswanathan, VP of Products, Invento Tech and an Indian author, writer, who has recently moved from the US. “They are typically richer, and prefer stocks and shares. The Gulf- or Africa-based NRIs are more inclined to buying gold.”

NRIs, when overseas, hold tight to people of their own community. That way they keep a part of their culture alive in themselves. At social gatherings, obviously, they wear designs intrinsic to their community.” Pankaj Arora, Owner, Khurana Jewellery House, Amritsar, Punjab

Umesh Soni has a more decided take. “The investment perspective does not hold true for NRI customers at all. Of course they want value-for-money and buybacks, but jewellery for them is more about design. It is an indulgence rather than an investment, and this fact reflects in their choices.”

It remains true that the majority of NRI customers come to India to purchase jewellery for weddings and special occasions. “The variety of designs that they get here is not found anywhere else,” Kumar, reminds us. “In the US there are Indian jewellers, but they have a restricted range of designs, and buying jewellery in India is more comfortable,” because retailers here have a more complete understanding of consumer taste.

COMMUNITY TASTES, CUSTOMISED

Most NRIs remain Indian at heart. Being away from the homeland, they celebrate festivals and get-togethers with extra flourish — not excluding personal ornamentation. They know that the best and most exclusive traditional designs are found in India.

The community preference carries over to India. “Most NRIs who come to us are people who have close family living around here,” says Kavani. “Most of the time, we know them by face.”

All this family feeling means that NRIs’ tastes in jewellery are often confined to what they get from jewellers of their own community or who cater to that community. “NRIs, when overseas, hold tight to people of their own community,” points out Arora. “That way they keep a part of their culture alive in themselves. At social gatherings, obviously, they wear designs intrinsic to their community.”

However, it is also true, since they spend only short periods of time in India, NRIs will not travel far to buy jewellery. “A Punjabi NRI whose family lives in Gujarat won’t travel to Punjab to buy jewellery. They will come to us,” says Urmilkumar Soni from K N Diamond, Bilimora who has a Patel NRI customer base.

When it comes to wedding jewellery, in particular, “an NRI is more Indian than most Indian brides,” says Talwar, half-jokingly. “They rely on us to select the right traditional designs.”

“We specialise in catering to Muslim NRI customers,” says Soni of Shree Kareshwari. “They make bridal purchases from here. Hindu Gujaratis like colour, they want lots of rubies and emeralds, but Muslim Gujaratis buy diamond-studded and rhodium-finished intricate designs. That is something they don’t get elsewhere.”

“Many prefer designs similar to what they have seen with their dadis and nanis,” says Vivek Shekhar, owner, Manoharlal Saraf, Meerut, UP. “For the few new-age NRI brides who do not want the cookie-cutter look, the trick is to develop age-old motifs in a new mould,” says Balaji.

An overwhelming majority of NRI weddings take place in summer, because the Northern Hemisphere is too cold in winter. In India, winter is the wedding season, so NRIs treat winter family weddings in India as an opportunity to do their research before buying, Talwar observes.

“These are the people who relocated in the 1960s and 1970s and are now are very well-established,” explains Talwar. “They have lost touch with the markets in India and that is what makes them the most lucrative segment. They have no idea of the local market and rely on friends and relatives for recommendations.” Recent migrants, of the last five to seven years, know the market much better.

“Many of the IT professionals who married in India and moved to the US in the 1990s share a bond with their wedding jeweller and continue to buy from them,” says Kamath.

To build a strong word of mouth, Kavani of Monarch Enterprise holds an annual exhibition timed for just before the NRI flock lands. “The purpose is to influence NRIs by creating top-of-the-mind recall among local people. This is how we get new NRI clients.”

“For an NRI to select a piece of jewellery, there has to be basic trust and understanding of that person’s taste,” says Shekhar of Manoharlal Saraf. “Even if a brand is very big nationwide, its designs and understanding of its customers may not be what an NRI is looking for.”

But the times are a-changing’. With quality standardisation, the trust factor is no longer a strong consideration, it is design.

“Barring wedding purchases, the community specification has lost relevance over time,” says Hardik Shah, owner, BR Designs, Surat, Gujarat. “Since it is all about modern, contemporary and sleek designs, they go to jewellers who have good designs, and they look for better service. That’s enough for them to choose a retailer.”

“These customers are loyal to design,” says Kavani. “They do come with local friends or family members, but they buy only if we satisfy their design requirements. In that case they will not buy elsewhere even if it is slightly cheaper. But if design and service falter, they never come back,”

“NRIs are not into jazzy jewellery, they love minimalist and practical designs,” says Ayushi Dadhich, Dhadda Designer Diamonds, Mumbai. “Our inspiration has always been international brands like Cartier and Tiffany, and so NRI customers get a taste of those international brands in our designs, but at much affordable rates.”

“For a long time we have focused on bespoke diamond jewellery,” says Prajit Soni, Premji Valji & Sons Jewellers, Rajkot, Gujarat. “Our designs are of international standard.” He has been wholesaling to Indian jewellers in Manhattan, New York, for over a decade, and understands NRI tastes. “These customers have travelled the world and have very evolved taste,” he says, and “we offer them the same quality and aesthetic at a much cheaper price.”

Sophisticated NRI customers “do not get into the details of how much metal is used and what the wastage is,” says Dadhich. Jewellers should build a separate range for NRIs, she advises. “Designer pieces for NRIs must reflect foreign trends and the international red carpet.”

NRIs often bring reference designs and ask for customisation. With 13 years of experience, we have understood the demand patterns and keep that sort of jewellery ready. We also have an expert team looking out for such customisations. We manufacture and deliver in 15 days.” – Samir Kavani, Owner, Monarch Enterprise, Bardoli, Gujarat

NRIs often bring reference designs and ask for customisation. With his 13 years of experience, says Kavani, “We have understood the demand patterns and keep that sort of jewellery ready. We also have an expert team looking out for such customisations. We manufacture and deliver in 15 days.”

“Time is a big factor for this segment,” says Talwar. “We have had millennial brides asking us to customize bold designs which they must have come across overseas”, says Umesh Soni.

“In the NRI season, families come to India and weddings are arranged. Then in 24 hours they need wedding rings and jewellery. We have seen bride and groom shop together for a ring for a quick engagement,” says Kamath of Abaran.

Partly due to the time factor, most NRIs “do not have the time or inclination to compare rates”, says Talwar. “They do not even enquire about the exchange rate,” says Umesh Soni. They pay through travelers cheques, international debit cards and seek service in terms of payment mode.

“NRIs, also ask for remodeling of old jewellery and they want us to simplify the designs,” says Siddharth Sawansukha, Director, Sawansukha Jewellers, Kolkata.

Along with ample stock, sales staffers need to be aware what jewellery to market to NRIs. “We have specially trained staff to cater to NRIs,” says Arora of Khurana Jewellery House.

“The sales staff needs to be proficient in the customer’s language. There must be basic agility and a suave presence,” says A Shivaram, proprietor, Retail Gurukul.

“Salespeople should not be pushy about expensive pieces, thinking that an NRI has money to spend. They have to make the customer comfortable. The worst possible thing a salesperson can do is to whisper in code to a colleague in front of an NRI customer. That gives an impression of insecurity and untrustworthiness.”

In short, retailers do need specially trained staff. The fee for training typically depends on staff head count. It approximates Rs35,000–50,000 for a one-day programme, and Rs2,000–5,000 per head for an open programme.

KEEP THEM ROOTED

“There is no way to woo NRI customers,” says Talwar. “They do not read Indian newspapers, and may not watch Indian TV channels.” So the biggest advertisement is your existing customers. In the past an NRI would ask their friends and family in India to recommend a jeweller. Nowadays, a comprehensive search is done online. “One has to understand that with NRIs the only constraint is time,” says Talwar.

Shah of BR Designs advises contacting NRI customers before the season begins. Finalising design elements before the customer even reaches India is a way to serve them effectively. “NRIs give a lot of importance to service quality. They are here for a short span, so the homework should be done beforehand.” Kamath concurs: “Many of our customers reserve designs and send us sample images before coming here.”

So, first and foremost, jewellers looking to influence NRIs must have a strong social media presence. Marketing your collections through Facebook, Instagram and Twitter helps you gain the attention of potential customers. “Making use of large advertising systems, Google ad words, advertising on sites with international ad networks, is something that retailers should focus on,” says Balaji. “Another effective method is to target and post on specific social media groups and pages, for example an Indian mothers’ group.”

“Honestly speaking,” he adds, “the websites of Indian jewellers are near to pathetic. Some are unnecessarily heavy and not mobile-friendly, others do not have adequate content. That needs to be sorted out.” Company policies, discounts, terms and conditions should be laid out very clearly.

“A retailer can also tap existing clients who have relatives abroad. For a first-timer this will not be very successful,” warns Kumar of Shree Jewellers, “but remember that you build familiarity gradually. ‘When my father, Anil Kumar, started his business, a few of his clients who had settled abroad asked him to exhibit. With their help he stepped into overseas exhibitions and achieved tremendous success. It was in the 90s,’ he reminisces.

“After a gap of 10 years we have again started exhibiting outside, but this time not individual shows, but exhibiting at community conventions.”

“We have a database of customers with whom we are thoroughly in touch,” says J Raghunath, general manager–marketing, Vaibhav Jewels, Visakhapatnam, AP, describing a similar approach. “Once in two years we do exhibitions in Houston, New Jersey, and Atlanta, where we have strong community groups. We plan to do our next show in April this year.”

Vaibhav Jewels started by participating in community-specific conventions by the Telugu Association of North America and the North American Telugu Association. “We began with stalls. It costs around Rs12 lakh for the stall; if a team of four or five people is travelling then airfare is Rs9–10 lakh; there is an additional Rs4–5 lakh for transporting the jewellery. The total can be rounded up to Rs30 lakh.”

Alternatively, a jeweller can sponsor some part of the convention in return for visibility in the brochures and ad communications, and booth space. “These community conventions may not yield significant sales,” says Kamath, “but it definitely results in higher brand recall and higher NRI footfall back home.” He has sponsored the community convention of South Indian Brahmins in the USA for the three years in a row. “The footfall is 2,000–3,000 and we get to display our jewellery.”

Now, the recall factor for NRI clients is very tricky, especially for players who want to build relationships. ‘Once NRI customers know you, have visited once or twice, and are comfortable, then they purchase,’ says Kumar. Overseas exhibitions are a superb way to connect, despite the apprehensions. “They give us prominence among overseas clients whom we haven’t yet been able to tap,” says Kumar. “They help us meet more people and also understand how Indians in the US plan to spend on jewellery, what designs they prefer. It is like a market study, and we build our client base in this way.”

It is distressing to observe Indian retailers doing absolutely nothing to market their collections to this very prospective market segment. The market dynamics have changed, so one cannot depend on just word of mouth. A jeweller must make all efforts to draw in more NRI customers.

“One of the easiest ways to grab NRI attention,” says Sabyasachi Ray, executive director, GJEPC, Mumbai “is to advertise where they would notice. And there is no better place than the airport.” “Emphasise the design element and the cultural aspect,” says Balaji. “NRIs want to be culturally connected to India. That has to be the marketing angle.”

There are other challenges besides publicity. The UK, US, and parts of Africa have high import duties. Duties in other countries with lots of NRIs, like the United Arab Emirates and Singapore, are considerably lower.

The GJEPC’s Ray, however, says that avenues for exports are far smoother now, since exports earn foreign currency. “The benefit on jewellery sold abroad is huge. If a retailer takes out 50kg of gold, and sells 30kg gold overseas, the export duty will be charged only on the amount of gold that remains unsold, 20kg. Besides, the profit earned on gold sold overseas is not taxable. For manufacturers who export, the machinery for their manufacturing units is imported duty-free.”

FICCI facilitates temporary export –import document (ATAcarnet) which allows movement of merchandise without paying duties and import taxes on goods that will be re-exported within 12months.

“Jewellers are silent earners of foreign currency,” says Talwar. “If a customer pays me Rs30 lakh via credit card, have I not earned that much foreign currency for the country, and that too without benefits?” The GJEPC is trying to get sales of jewellery to NRI clients, in a shop in India, counted as exports (as “sale to foreign tourists”), so that the retailer gets all export benefits on that, Ray adds.

Benefits aside, there is a dire need to ease the export of jewellery and easily deliver goods overseas,” says Kumar. “A lot of customers make wire transfers and then face a lot of problems obtaining papers to take the jewellery out of the country.”

“There should be a central body to represent the Indian jewellery community,” says Prajit Soni. “It can work year-round to organise and promote exhibitions overseas. It can facilitate us at operational as well as policy level to ensure that shows happen smoothly.”

These days, independents as well as chains (like Malabar Gold and PNG Jewellers) are venturing overseas and running showrooms there successfully. “In Dubai you see big hoardings vying with each other, all big brands,” says Ray. “Earlier, it used to be all about Italian jewellery.” There certainly is demand for Indian jewellery abroad. It is time for retailers to think about the segment more seriously and invest in marketing accordingly. “We established our stores where the Indian diaspora is really strong,” says Joshi of PNG Jewelers. “In Dubai we have a chunk of Maharashtrian customers. Not that we target only this community — we keep in mind communities that like our traditional designs. We will be opening in some parts of the US as well.”

“We are used to selling to a large number of people every day” in India, he says, “which isn’t the case outside. Customers overseas are very selective, and do not buy very frequently. We can’t compare on volume, but the average ticket size is much higher than with Indian customers.”

He highlights the unfortunate herd mentality of some jewellers. “One good brand establishes itself in one city so its competitors also queue up for the same city. That may not work! If a North Indian jeweller finds a strong footing in one city, a jeweller from the far south may not do equally well because the first jeweller established himself on the basis of the community he serves. The market research and survey has to be done very meticulously, and a retailer’s decision should flow from that effort instead of simply stepping in the footprints of another brand.”

Though especially true for a fledgling step into an overseas market, that advice rings true for any business in any competitive market.