Rajesh Exports plans big retail biz expansion

It earns 95 per cent of its revenue from exports. But now the company has taken a strategic decision to become the largest retailer of gold jewellery in the country by increasing the revenue from domestic retail sales of jewellery to 50 per cent of total sales within the next three years.

“Our plan is to sell Rs 20,000 crore worth of gold jewellery in a year by 2012-13, occupying around 20 per cent of the retail market in India. We shall achieve this by setting up 400 ‘Subh’ retail outlets in the country,” CMD Rajesh Mehta said.

To achieve this target the company will follow a two-pronged strategy: sell jewellery at ‘real rate per gram’ and set up its ‘Subh’ branded retail outlets using ‘Associates’, he explained.

From May this year, Rajesh Exports started selling gold jewellery from its Subh outlets at the actual rate per gram. The company termed this effort ‘Gold Revolution’ because contrary to general practice of jewellery stores in the country, the price of jewelleries in Subh outlets did not include additional charges like wastage, making charge, value addition charge, etc.

Rajesh sells 22 carat gold jewellery and coins with Hallmark of 100 per cent guaranteed purity, where customers pay only at current rate of gold per gram displayed at the outlet.

The second strategy is to rope in present jewellery store owners to become an Associate of Rajesh and sell jewellery under Subh brand name. Rajesh has designed an unique franchisee model where the entire inventory of jewellery is manufactured, supplied and owned by Rajesh.

An Associate who runs a Subh outlet only has to spend for day-to-day running of the store and earn a commission on the turnover, which will range between 2.5 to 3 per cent, Mehta said. Under Subh brand, Rajesh Exports has already opened 14 outlets in Bangalore — 4 are company owned, and 10 by Associates.

 “By March 2011 we will have total of 60 Subh outlets in Bangalore” said Mehta. Rajesh Exports has embarked on the aggressive retail strategy because this will help company grow its top line by 25 per cent and bottom line by 100 per cent every year for the next five years, he added.