Before TS Kalyanaraman opened his first jewellery store in Thrissur in 1993, he owned a textile business inherited from his father. As he stepped into the jewellery business, his sons Rajesh and Ramesh – with only a couple of years between them – were just about finishing school. Their memories of the textile business are from their school days. “We used to go out and play, and enjoy with our friends. But what we also enjoyed was going to the store. I still remember displaying lungis and sarees to customers,” says Rajesh Kalyanaraman with a childlike smile, as we sit at his large office at the company HQ in Thrissur.
What the young impressionable minds learned very early in their business career, as kids, was that every customer’s taste differs, and they have to understand that intuitively and give them what they want. That subconscious understanding of the customer however became clear as a business strategy when the family opened their second jewellery store in Palakkad in 1998. “The store was just 50-60 kilometres away from our first store, but we saw how the tastes differed. The same designs did not work there, we had to change our designs. We learned how complicated the business was,” says the younger son, Ramesh Kalyanaraman.
What the family learned then laid the foundation for their success as they forayed into different parts of India, taking local players head-on in their own territory, and yet not diluting their national brand or quality. Kalyan Jewellers now operates 89 stores in India and 28 in the Middle-East, and notched up a revenue of over Rs 9800 crore in FY2016. Their phenomenal success, which has even a brand like Tanishq rattled, is perhaps founded on this simple and yet immensely difficult strategy – being the local player in every location across the country. With an IPO in sight, the family doesn’t think the Rs 15,000-crore turnover milestone is too far.
All about legacy
In many ways, Kalyan Jewellers is all about legacy, from their business acumen to branding strategy.
The Kalayanaraman family traces its lineage to Thanjavur. A few generations ago, their forefathers shifted to what is Kerala today. One of them was the Dewan to Maharaja of Kochi. At the turn of twentieth century, the family got into trading, because the Dewan apparently believed that ‘enterprise and business was necessary to create job opportunities and to make India self-dependent.’ The shift from being courtiers to businessmen, carrying the family’s pride and privilege along, benefitted the family immensely.
About a 100 years ago, the family was in the textile mills business. In fact, Kalyanaraman’s father was a working partner in Thrissur’s famous Sitaram Mills, which still stands next to where the present-day HQ of Kalyan is housed. When the Communists came for the mills, the family moved to trading in textiles and opened up Kalyan Textiles. While the next generations carried on with the same business, TS Kalayanaraman took the bold step to diversify into jewellery, paving his way into the Forbes list of richest men India in 2014. His net worth is pegged at $1.3 billion by Forbes.
The sons are aware of this legacy, and put it to use every day.
Rajesh Kalyanaraman, ED (Purchase and Finance)
“The legacy helps in decision-making. Some things are set, we don’t have to waste time in taking a decision. Our legacy has taught us to do what we should, and we will continue to do it the same way,” says Ramesh.
His brother Rajesh agrees. “Most of our ideals, both personal and professional, are from our family. Most of our business practices and value systems have come through the lineage. If not for my legacy, I would have done what is normally done in the market. We would not have been able to achieve what we have so far,” says Rajesh.
‘Legacy’ is also the foundation of their branding strategy.
Kalayan Jewellers is perhaps the only brand in the country which has a so many film stars on its brand payroll. From Amitabh Bachchan for the Hindi belt to Prabhu for Tamil Nadu, Nagarjuna for Telangana and Andhra and Shiva Rajkumar for Karnataka, their focus was on signing up ambassadors who could reflect legacy.
“We have not gone for superstars, but those who are either legends by themselves or are sons or daughters of legends. Only with those celebrities have we associated,” says Ramesh, adding that when it comes to product endorsements, however, they have gone with stars known for their beauty.
The Kalyan Brand Family.
Hyperlocalizing the legacy
While the branding as a legacy jeweller and popular star endorsements plays their magic in the market, what was crucial to the success of Kalyan was their hyperlocal business strategy. And their three prongs to the strategy: design, language and procurement.
Every Kalyan store is different, and yet it has options from across the country. “We have a chameleon approach, we change to become the winner in every local market – that is one of the greatest advantages,” Rajesh explains.
Ramesh lays it out more clearly. “Take Mumbai as an example. We have a store each in Thane, Vashi and Borivali. In Borivali, our designs cater to the Gujarati population. In Vashi, we showcase what South Indians like, and in Thane, jewellery is designed to the taste of Maharashtrians.”
Ramesh Kalyanaraman, ED (Marketing and HR)
“We become local when we go to a market. That is why our product is local, our campaign is local and that is why we have local brand faces,” says Ramesh.
They hyperlocal strategy isn’t just about the front end, you need a supply chain of designs and materials to support that, and you also have to provide customers with choice from other parts of the country. That’s where Rajesh comes in.
“We have 23 procurement offices across the country, and we source different designs and material from different parts of the country,” Rajesh says. And with some intelligent tinkering with the product, their procurement strategy can improve their profit margins. “For example, we have Temple Jewellery in Kerala. When we take it to Kolkata, it is oxidised a bit more to make it darker and we have some Kali designs on it, because that’s what Bengalis like,” Rajesh says.
“Jewellery brands tend to cater to one regional group, or have a corporate outlook creating vanilla designs for all. But we create designs for everybody, but not the same design,” Rajesh says. Ramesh hastens to add, “But ultimately, Kalyan is known for trust. When we entered the business, there was no standard for quality. But right from the beginning, we maintained high quality. We only look at lifetime customers – jewellery is about repeat business. We never forget that.”
“People like 20-20 cricket more than a 50 over match, but we only know to play a 50 over match so we will stick to it,” he says.
Family of professionals
Being a family of businessmen, getting into the business was never a matter of choice for the sons. “We were never forced, but business was a way of life for us,” Ramesh says. But both the sons are heavily inspired by their father, who has been careful about how he should pass on the family’s legacy.
“My father is a very professional person to work with, even if we are family. After a few years of observing me and my brother, he knew what each of our strengths were. My strength was marketing and operations, and my elder brother is into inventory and finance,” Ramesh says. Both of them are Executive Directors in the company.
“Right from the beginning I am in-charge of purchase. Ramesh was good at marketing, so that is his corner,” Rajesh says.
“When it comes to business, it is an open discussion. Father is not father, brother is not brother. All of us can say what we want and majority wins,” Rajesh says, “But the character of my father has been followed by us in our business. We all do our business in a traditional manner.”
Apple of Indian jewellery
With the PE firm Warburg Pincus as its investor, Kalyan Jewellers is staring at an IPO. “The decision has not been taken yet, but we do have plans for it. Nothing is set yet, so I cannot give you more details,” Ramesh says.
An IPO is sure to catapult the company to being a multi-billion-dollar enterprise. “With yellow gold market growing at 4-5% every year and the studded jewellery business growing at more than 15%, the charm of the business is going nowhere,” Ramesh points out, adding that Kalyan’s revenue is growing at a rapid pace of 20-30% a year. “Even now in India, jewellery is not just an investment, it is a tradition. Jewellery is a partner in weddings and important life events, so people are still buying.”
So then, what is their dream when the business is naturally going so well? Rajesh has one, of becoming the Apple for India’s jewellery business.
“Jewellery as a product has evolved from when we started. Jewellery was once an investment or saving, now the number of people who see it as an accessory or fashion is increasing. With globalisation, tastes are changing. A lot more cultural mix is happening and design is becoming a very important part of the business, and people want choice,” Rajesh explains.
“My dream is that we should be able to excel in designing. We should be able to understand what the customer will want and cater to them with expertise – even before they know it,” Rajesh says, echoing Steve Jobs’ controversial quote, “A lot of times, people don't know what they want until you show it to them.”
“People should come to us knowing that we have the latest designs and pick it up – they should respect our products so much that they should feel we know better than them,” Rajesh says.
And the company is working towards it with a personalised designs division, and educating their employees more about what lies ahead.
Kalyan has also recently bought out an online jewellery store Candere. “We don’t think jewellery will ever be sold majorly online, but we need visibility there,” Ramesh says. But the message both the brothers will keep hammering on – trust and legacy.