Presentation by SHRENUJ Heritage Innovation Passion.

Presentation by SHRENUJHeritage Innovation Passion

AGENDAHeritage Innovation Passion

Brief introduction to SHRENUJ.

Distribution channels in United States.

Profile and strategies of each distribution channel

BRANDS VIRTUAL LARGE RETAILERS INDEPENDENTS

Consumer preferences while buying.

GROUP HIGHLIGHTSHeritage Innovation Passion

SINCE 1906… Over a century of trust and relationships.

MINE TO MARKET Presence across diamond, jewelry and retail

verticals. Direct rough supply from mines. 8 diamond and jewelry manufacturing facilities. Global service thru 13 distribution offices.

PUBLIC LISTED CORPORATION

2011 revenue in excess of half a billion $

Our philosophy of collaborative working and personalized service has been the key to our

success.

Direct Sourcing

DTC – India and Botswana

Alrosa – Russia

Aber & BHP – Canada

Rio Tinto – Australia

Manufacturing

• Factories in Mumbai , Surat and Botswana

• Mumbai and Botswana manufactures the high value pointers.

• Surat manufactures the small sizes.

Distribution

•Offices in •Hong Kong-

Shanghai•Dubai •Antwerp – Italy

•We specialize in large sizes from 0.20pts upto 3ct size.

DIAMOND VERTICALHeritage Innovation Passion

ManufacturingFactories in India, Botswana and China.

Distribution offices in Germany France Dubai USA

Private Labels• 10 well established and distributed private labels.

• Several patented multi-faceted diamond cuts.

• Patented ‘EMBRACE’ setting.

• Unique alloy program for Infinite ROI

Retailing• 180 shop in shop in India under the name ‘DITI’ which means BRILLIANCE in Sanskrit

• 6 ‘JOLIESSE’ stores in Hong Kong

JEWELRY VERTICALHeritage Innovation Passion

JEWELRY VERTICALHeritage Innovation Passion

POSITIONING

VISION

To be recognized as a merchandiser and marketer of customized ‘private labels solutions*’.

* Private labels are innovative merchandising and marketing solutions with emphasis on creating perceived value.

JEWELRY VERTICALHeritage Innovation Passion

DISTRIBUTION CHANNEL IN US

Distribution channels in the US

BRANDS

LARGE RETAILERS VIRTUAL

INDEPENDENTS

Jewelry brands Lifestyle brands

Specialty Jewelers National chains Regional chains

Multi-product retailers Department stores Clubs Discounters

TV Internet jewelers Internet resellers Mail-order houses Catalogues houses

Progressive Buying group members Mom and Pop

Comparison of the different distribution channels in the US

Comparison

Brands Virtual Large retailers

Independents

Point of sales

(Approx)

1,000 Not applicable

8,000 22,000

% of US retail

market

13% 7% 45% 35%

Retail market in Billion $

8 billion $ 4 billion $ 25 billion $ 19 billion $

10 x retail margins

0.2 x retail margins

FASHIONCLASSIC

Brands

TV

Jewelry chain

stores

Internet

Independents

Discounters

Comparison of the different distribution channels in the US

Clubs 2 x retail margins

Dept.Stores

BRANDS

Comparing some of the BRANDS

Brands Margins

Type of jewelry

Jewelry Brands

Harry Winston Van Cleef & Arpels

6 x Exclusive pieces.

Jewelry Brands

David Yurman 7 x Fashionable

Jewelry Brands

Pandora 10x Silver (Latest Emerging brand)

Jewelry Brands

DeBeers in collaboration with LVMH

10x Fashionable and classics

Lifestyle Brands

Cartier 10 x Classics

Lifestyle Brands

Bulgari / LVMH/Chopard 10 x Fashionable

Lifestyle Brands

Tiffany 10 x Classics, fashionable

Many lifestyle brands developing jewelry collections over the last few years.• MontBlanc• Hugo Boss• Omega • Rolex

VIRTUAL RETAILERS

Comparing the different VIRTUAL channels

Channels

Margins

Consumer

profile

Product Costs of

operation

Status

TV 3 x 55 yrs + Unique, linked to a story. Mainly for Colored stones jewelry, Difficult to sell diamond jewelry

High, TV time

Stable

Internet Resellers

1.5 x 25 – 45 yrs Closeouts Low Not doing well in jewelry

Internet Jewelers

1.5 x 25 – 45 yrs Basics, closeouts, Fashion

Low Good growth but long gestation period

Mail order

2.5 x 55 yrs + Fashionable Print and mail costs high

Dying distribution channel

Catalogue

2.5 x 55 yrs + Fashionable Print and mail costs high

Dying distribution channel

Few of the top VIRTUAL retailers

TV Internet resellers

Internet Jewelers

Mail order - Catalogue

QVCQvc.com

Amazon.com Blue Nile

bluenile.com

MBI

HSNHsn.com

Overstock.com Gemvara

Gemvara.com

Shop NBC James Allen

ww.jamesallen.com

VIRTUAL – InternetOpportunities and Challenges

Opportunities Maximize inventory turn as same item on several virtual stores at one time.

Can use manufacturer’s inventory without owning it -> Infinite ROI Lowest operating costs amongst all virtual channels. Can provide a customized experience.

Challenges Cannot provide the branding experience or the touch/feel. Lack of personalized service. Product quality maybe questionable. Predominantly limited to closeouts, basic jewelry and loose diamonds.

Price is one of the main motivators for the consumer. No consumer loyalty.

VIRTUAL – InternetCustomization features

Provides an experience to the consumer to design their product – gives them a feeling of having something DIFFERENT.

LARGERETAILERS

Comparing the different LARGE RETAILERS

Channels Margins Stores Product Service

National jewelry chains

2 x Free standing and in malls

Large variety, several private labels

Trained jewelry staff

Regional jewelry chains

2 x Free standing and in malls

Large variety, beginning to add private labels

Trained jewelry staff

Department stores

2.5 x Shop in Shop Private labels, less generic product

Good

Clubs 1.25 x Showcase in free standing stores

Generic classical styles Low

Discounteers 1.7 x Showcase in free standing stores

Generic promotional product

Low

Few of the top LARGE RETAILERS

National

Jewelry

chains

Regional

jewelry chains

Department Stores

Fine jewelry

Department Stores

Clubs Discounteers

Zales

1000 stores

Riddles

50 stores

Macys

850 stores

Saks Fifth Avenue

61 stores

Sams Club 602 stores

Walmart8920 worldwide stores

Sterling Jewelers1200 stores

Meijers

180 stores

J C Penney

700 stores

Neiman Marcus

42 stores

Costco

592 stores

Nordstorm Rack

110 stores

Fred Meyer

550 stores

Rogers and Holland50 stores

Nordstorm

117 stores

Bloomingdales

41 stores

Ross Dress for Less1037 stores

LARGE RETAILERSOpportunities and Challenges

Opportunities Grow internet sales as the customer can also see the product in the store.

Expansion of private labels especially in branded/specialty diamonds. Buying direct from the manufacturers. Capturing market share from independents as they provide a better value proposition.

Challenges Lack of personalized service. Inflexibility in changing retail prices as gold/diamond prices remain volatile.

Margins under pressure. Slow to catch the design trends. Mostly located in shopping malls, where consumer traffic seems to be dropping.

Strategies ofLARGE RETAILERS

Channels

Strategies to grow

National jewelry chains

Developing their own internet websites. Provide the customer with the ability to go to stores to see the product.Expanding designer and private label assortments.

Regional jewelry chains

Expanding designer and private label assortments.

Department stores

Remodeling stores, reducing lower price points and tying up with fashion celebrities to create a branded experience for the shopper.

Clubs Flat, no growth. Struggling to provide a value proposition as diamond/gold prices are climbing

Discounters

Flat, no growth. Struggling to provide a value proposition as diamond/gold prices are climbing

INDEPENDENTRETAILERS

Classification of INDEPENDENT RETAILERS

CLASSIFICATION

by Revenue

Revenue per store

Location Product Status

PROGRESSIVE – GUILD STORES

4m$ + Urban cities Top brands, private labels

Growing, ability to buy direct at shows. Attracting the best brands

LARGE 2m – 4m$ Smaller urban and Private labels and large assortment of fashion product.

Growing with having private labels.

MEDIUM 1m – 2m$ Small urban and rural towns. Members of buying groups

Private labels, less generic product

Losing sales to large independents.

SMALL Below 1m$

Rural towns Generic product, mainly rely on service

Struggling

INDEPENDENT RETAILERSOpportunities and Challenges

Opportunities Alloy programs: Achieve same sales revenue with lower inventory.

Buying direct at shows from manufacturers. Customization especially in bridal jewelry. Joining buying groups to have access to large vendors, despite their individual buying maybe small.

Private label expansion.Challenges

Succession. Mom and Pop stores are family run. Drawing consumer traffic as their marketing budgets are small. Prices will always be higher than large retailers. Have lost their loose diamond sales to the internet.

Strategy of INDEPENDENT RETAILERS

Strategies to grow

Developing their websites with the help of wholesalers to attract younger shoppers

Expanding designer and private label assortments. Providing customization.

REDUCING PURCHASE PRICE BY: Joining buying groups to have access to large vendors. Going to jewelry shows to buy direct

REDUCING INVENTORY: Alloy programs giving them access to large variety of product with minimal inventory commitment.

CONSUMERPREFENCES

Consumer preference and how the distribution channels rank

Purchase indicators

How they select

% Large retailers

Independents

Virtual retailer

s

Product relateD

Differentiation - Variety

40%

2 1 3

Product related

Ability to customize

20%

3 1 2

Value proposition

Price and terms 20%

2 3 1

Service related

Personalized service

10%

2 1 3

Product related

Product quality 5% 2 1 3

Service related

Sales staff knowledge

5% 2 1 3