Introduction
Dhamani Jewels, a Dubai-based wholesaler of gemstones and retailer of fine jewelry, wants to globalize its luxury jewelry brand Dhamani 1969. Dhamani 1969 is aimed to compete with established fine jewelry lines like Graff, Cartier, DeBeers and Bulgari. Established in 2014, the brand is envisioned as the flagship for the company which has been in operation since 1969. However, the brand is entering a highly competitive luxury jewelry market. Also luxury jewelry brands sell as much on their craftsmanship as on their emotional connection to the buyer. Brand value is paramount and the challenge for the Dhamani 1969 brand is to create a value that is equal to its competitors. The company wants to start placing the Dhamani 1969 brand alongside its competitors but remains unsure of the strategy to follow.
In this paper, it is proposed that the company should tap into the multi billion dollar e-commerce industry to rapidly generate brand identity. It shall create an online brand presence for Dhamani Jewels by creating the online Dhamani store. The online store shall take customers to the Dhamani 1969 gallery from where customers can order the luxury pieces.
Dhamani Jewels has its origins in Jaipur, India where L.N. Dhamani, the company’s chairman, started his wholesale gemstone business in 1969. Jaipur had a long history of emerald jewelry and L.N. Dhamani (“L.N.”) wanted to take advantage of this demand and decided to become a supplier of emeralds . He purchased emeralds imported from Zambia and Brazil, cut and polished them and sold them to the local markets. After over a decade the growing competition and the 1979 oil crisis pushed L.N. to look further afield. Although he had no network in his target countries in Europe and in USA, he started contacting companies via telex and soon had found many buyers for his gemstones. He built up export offices in Los Angeles, London and Hong Kong but by 1985 realized that he couldn’t really control the operations and the precious inventory in such far flung places. He closed the operations and became a traveling salesman until his sons came of age and joined the company business.
Their next expansion was in diamonds. To meet the demand of customers who wanted diamonds in addition to the colored gems, Dhamani Jewels started supplying diamonds to customers. In 1997 when the Asian crisis struck, the company decided to open an office in Dubai, an attractive prospect due to business friendly environment, tax-free and duty-free benefits. By late 2000, the company’s first retail store had been opened. Starting in the souks, the company slowly and steadily opened stores in the various malls that were coming up as tourism witnessed steady growth. Alongside stores in malls, Dhamani Jewels also opened in hotels. The sales strategy was simple. They sourced their gems from their own supply chain, designed the jewelry and then manufactured it all of which made it possible to provide jewelry at a lower price but with considerable profit.
A major point of differentiation came when the company worked with the Dubai government to develop a certification for jewelers in the area. The company opened more stores but the company was keen on creating a unique identity for itself. The opportunity presented itself when they bid for the retail rights for the 99-facet Dubai Cut Diamond and won the bid over serious contenders. They also started working to establish Dhamani as a brand along the line of Bulgari and Cartier. The company called in outside consultants, revamped their corporate offices, launched the Laviere of London brand and created a unique 1,700 square foot showroom for their Dhamani 1969 launch. The next step for the company is to globalize Dhamani 1969 as a luxury brand targeted at high-end customers .
“Dhamani 1969 of Dubai”: One of the methods that the company can employ in its quest for expansion is to create a strong regional identity or branding. The brand should become synonymous with the region. Dubai is already known for its high-end lifestyle and luxury brands. By adding the Dubai brand explicitly to the company brand, Dhamani Jewels can take advantage of the heritage reputation of the region . The other advantage of this approach is that the product can be differentiated by providing a place that easily connects with the customer. Brand recognition is easily created which is of added value to the sales strategy.
Using this identity the company can expand as planned into the GCC countries. Following this, the brand can move to London which has always been the luxury brand destination of the world. Having the regional brand associated with Dhamani 1969 will help create a faster connection for the London consumers to the brand.
The challenges to this type of approach lie within the company culture itself. In a family business such as Dhamani, the personality and values of the founder can persist in the company’s culture . Also the family’s cultures and values can influence the achievements of the business far more than any other consideration. The Dhamani family identifies strongly with its Indian roots and some of their cutting and polishing work is still done in Jaipur although their jewelry has European sensibilities. Giving up their strong sense of identity, and to associate forever with their adopted country may present a cultural conflict for them.
“Expand to Singapore, then to London”: Singapore performed better than many other countries in luxury jewels sales in 2014 . In 2015, sales were slower and the sector saw less growth. Companies like Soo Kee Jewelry had to spend more on marketing compared to the previous year but none of the companies faced significant shifts in market positions. Predictions for the coming year are favorable in that the economy is expected to improve both locally and globally. Opening in Singapore first is also feasible because the company already has procurement presence in nearby regions. Also, mid to high end customers are expected to keep spending on luxury jewelry as a sign of status especially on statement designs. By opening Dhamani 1969 store first in Singapore, the company taps into both the local consumer and the tourist traffic. Tourists spent $916 million on shopping in early 2015 . This approach creates a brand presence that can carry on to London.
The UK market is expected to become more competitive for luxury jewelry as demand for high-end costume jewelry increases. There is a trend in luxury brands segmenting into designing and crafting costume jewelry. Consumers have become keen to experiment with looks and styles in jewelry. Brands need to capture the interest of the young consumer and social media is expected to play a huge part in this. People are also looking for colored gemstones and rarity in material and design. These trends are in favor of Dhamani’s entry into the market.
The challenges to this approach are the cost of set up – which is high both in Singapore and London. Rents in London ranged from £260 per square foot per year in the City to £1,300 per square foot per year in London’s West End . In Singapore rents ranged from S$288 per square foot per year to S$462 per square foot per year . Also Singapore and Hong Kong are dependent on the Chinese consumers for their success. Local consumers are less willing to spend on luxury items. In fact in a 2016 survey, 42% of Mainland Chinese said that were planning to spend more on luxury spending this year compared to only 25% of Hong Kong residents . But like the British and the Americans, the Chinese have become one of the largest consumers of e-commerce in the world. By 2015, the Chinese e-commerce market was worth $615 billion .
Solution
“Dhamani online shop”: This strategy involves using the online presence of Dhamani Jewels to generate business for the Dhamani 1969 brand. There are over 600 million internet users in Europe and over 1.6 billion users in Asia . E-commerce is a multi-billion dollar industry. Luxury brands have started tapping into this market with enthusiasm.
More and more companies are finding loyal consumers and customers in online communities . A case in point is Tiffany & Co. whose store sales accounted for 7% of global sales in luxury jewels but whose online share was 23% of the global online visitors to websites of luxury jewelry brands . E-commerce is attractive to the customer because it gives them better value for money. For companies, the benefits include reduced spending on brick and mortar establishments, easy accessibility to global markets, easy access data on market demand, market behavior, consumer behavior and so forth. This is valuable information that companies use for modifying the strategies and products.
Research is also showing that online consumers are also more likely to visit the physical stores. The more helpful a company’s online presence is, the more likely consumers are to make time for visiting the physical store . Other research has found that while 94% of shopping is still at brick and mortar stores, 72% of shoppers now research online before making purchases . People still shop at physical stores because they want to see the merchandise and try it for fit and suitability. Yet they also spend time researching online . This would be especially true for precious stones and metals. Dhamani’s strategy should be to create a robust online presence that leads people to their physical store.
What’s more consumers can be introduced to the exclusive Dhamani 1969 brand by displaying choice pieces online. They can place orders for the pieces or request for custom jewelry. Dhamani executives will meet the clients at their location which adds a personal touch to the brand resulting in greater brand recognition. As the online market penetration grows, Dhamani can launch the Dhamani 1969 showroom in London.
The challenge in this strategy is that by joining the e-commerce community, the company will have to ensure that a consistent brand message is created . It also opens itself to social media which can be effective both in word-of-mouth marketing and attracting all types of feedback about a company. However, as some of the world’s biggest brands like Starbucks have shown, social media can be used to turn around a company’s sales dramatically .
Luxury jewelry needs to become accessible and appeal to the younger generation of which I am a member. My generation is going to become the spending generation in the next few years. My peers and I prefer faster access anywhere, anytime and customized and personalized services over sitting in a shop no matter how beautifully designed it may be. For my parents’ generation the brick and mortar experience is essential. They would never buy something they cannot touch or see in front of them. But for me, the brand is as good as the product. And online sellers know how quickly they can lose repute if they don’t provide good quality. Therefore I am a confident online buyer for all types of products.
Recommendations
Dhamani Jewels does not have a significant online presence at the moment. Their company website does not showcase all categories of products, neither does it provide an online shopping option for some of their pieces . The company is planning to expand into markets that have multi-billion dollar ecommerce presence. It is therefore recommended that the company hire a turnkey IT solutions provider like Rackspace to develop and maintain their ecommerce platform. As their online presence rapidly grows in target markets, the company will find it easier to launch their Dhamani 1969 store in London and other markets.
Conclusion
Dhamani Jewels wants to compete in the luxury jewel retail segment with its Dhamani 1969 brand alongside Cartier, Bulgari and Graff all of whom have decades of retail presence. Dhamani Jewels needs to create a brand presence worldwide quickly. To this end, it should tap into the multibillion dollar ecommerce industry. By creating a successful online presence with the help of a turnkey IT solutions provider, Dhamani Jewels would have also created a presence and reputation in its target markets following which it can open a store in those markets.
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