Natural state of industry allows for both big and small jewelers to remain in business
San Francisco, CA -- (SBWIRE) -- 01/29/2013 -- While concerns are certainly be raised in regards to the large format stores consuming small businesses and shops in many industries, some might find it surprising that one sector is bucking the trend. It apparent that small jewelers are claiming they have found their secure niches, and that business is bustling along, despite the fact that the larger jewelers are continuing to expand and grow.
The change may sound counterintuitive to some, but when one looks into the logistics of the matter, small jewelers thriving stands to reason.
While the government is doing its best to check buying gold by increasing the import duty, jewelry malls and competing jewelers are likely to continue to be on the up-tick. That said, mom-and-pop stores are now finding quality opportunities in the competition, and thereby are finding success in taking from the chain stores.
The large-scale operations, multiple outlets, and necessity of high-volume inventory have made larger jewelery shops outsource. Small shops thus are able to snatch up production and profit through this weakness in the larger store's makeup.
"We have our manufacturing units anyway, and products are all the same, so we enter into contracts with large stores and supply to them, along with our own retailing" a city-based jeweler said. Small jewelers supply standard products like plain gold chains, anklets or nose-pins that don't require elaborate design innovation, to large stores.
"Due to their huge volumes and purchasing capability, large stores manage to get ornaments at cheaper rates from wholesalers. Small stores, which can't afford to pay as much to wholesalers as large shops, are hence turning into manufacturers themselves. And since they manufacture anyway, they also supply to the large chains," said N Ananthapadmanabhan, regional chairman of All India Gems and Jewelry Trade Federation.
And while that solves one side of the problem, smaller jewelers are also forced to have an ace up their sleeve in order to avoid cannibalism via larger chains.
"As the larger ones open more retail outlets, their overheads will increase and this might be passed on to the customer, but we won't have to increase prices" says one of the owners of Chennai-based T B Jewelry, a standalone jeweler in Mylapore. Smaller shops have their own goldsmiths and this helps them minimize costs like 'wastage' or 'making charges', jewelers say.
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