PC Jewellers – Competing with Titan

PC Jewellers - Kicking Titan OutPC Jewellers average store is approximately 5,000 sq. ft in size, the capital required to set up such a store is approximately Rs 5,000/ sqft or a capex/store close to Rs 25 mn. In addition, the average store carries inventory close to 200 days of sales. Smaller format stores break even in less than a year, whereas larger format stores take about a year and a half to break even.

Franchisee versus company-owned stores. Almost all PCJ stores are company-owned barring one in Gwalior (franchisee). The company plans to open three more stores (Gorakhpur, Aligarh and Meerut) in the current fiscal through the franchisee route as this would help the company grow faster with lower capital requirements. The company also plans to open 12-15 new owned stores in FY2017.

Small sized stores (<5,000 sq. ft) typically carry about Rs 200 mn of inventory while larger format stores (>7,000 sq. ft) carry about RS 500 mn. At a company level, in-store inventory is close to 200 days of sales. The company adopts this strategy in order to provide a variety of options to consumers, and believes this is a key feature prevalent across the industry.

PAN Card Impact – Management highlighted that mandatory PAN card for 0.2 Mn + transactions has impacted the jewelry business to an extent as consumers are taking time to adjust to this requirement; PCJ gets ~30% of its sales from transactions in the Rs 0.2-0.5 mn bracket.

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