Did you know Titan, which is now the largest watch maker and jeweller in India, was in fact conceived in a printing press? This weird origin of Titan shaped up a rather inherent culture of innovation, which it was able to leverage in order to expand into multiple businesses, and successfully so.
Tata Press was an ailing venture of the Tata’s, which needed fixing up. Xerxes Desai was chosen as the man to turn this around. However, it was with the intent of turning it around, getting it listed on to the markets, and then using the proceeds to do something much bigger and more interesting.
Eventually, after sieving through several ideas from shipping containers to gelatin, the top-men decided on watches. Whereas the decision was made in 1977, it was seven years later, in 1984 that Titan was incorporated as a joint venture between Tata and TIDCO (Tamil Nadu Industrial Development Corporation).
The idea of venturing into watches was an audacious move at the time, given several problems - from regulatory hurdles to manufacturing snags. Titan has since come a long way to become the largest watchmaker in India, and the fifth largest globally. Born with the spirit of radical diversification, Titan is still high on innovation.
It has expanded into and conquered various other sectors. The company completely disrupted Indian jewellery retailing to become the largest Indian gold and diamond jewellery retailer in India. It has also become a major player in the eyewear and perfume market.
Everything it touches seems to turn to gold - including the markets! The stock has materially outperformed the Nifty, and has consistently been a strong compounder over the last 10 years.
Titan’s success in watches can be attributed to several factors:
1. Popularising quartz
When Titan started out, the watch market in India was entirely mechanical. Whilst HMT had introduced quartz, Titan popularised it by taking it to the masses. Through new distribution models, a tie-up with Timex, and a uniform price point, Titan was able to become a market leader.
In a highly fragmented market like India, Titan realised a one-size-fits-all approach won’t work. It was able to successfully build out an array of brands and master its positioning across different strata. It has 11 watch brands covering everything from kids to luxury.
3. New markets
Another success point was its ability to create markets. Titan's research, for example, revealed that as little as 20% of Indian females had watches. The female consumer was not very attracted to wearing the current style of watches and much rather preferred bracelets, rings and chains. Titan's designers questioned what would happen if they transformed a timepiece into an attractive piece of jewellery that a woman would gladly wear. And then Titan launched Raga, which reimagined watches, and became extremely popular in the market.
After nailing the watch markets, Titan decided to enter the jewellery business in India. While it started this business in 1996, today, nearly 90% of Titan’s revenue come from here.
The highly unorganised market was tapped into strategically by Titan, using similar fundamentals of market research, innovation, and branding.
1. Highlighting problem
Buying gold and diamond jewellery is a very personal affair in India. Most preferred to buy only from their trusted local jewellers due to fear of getting impure gold. To tackle this, Titan introduced a major innovation that changed its fortunes forever. They imported Karatmeters from Germany to all stores. These Rs. 10 lakh devices were free for all to bring their old jewellery and get tested for purity. Almost 60% of the jewellery examined in the Karatmeters turned out to be less pure than what the customers had been told by the local jewellers.
2. Gaining trust
Tanishq's 'Impure to Pure plan' presented an in-house solution to the problem as well. If a buyer presented jewellery that was less than 22 carats pure but greater than 19 carats pure, they could exchange it for Tanishq's 22-carat jewellery by just paying the making charge. If the purity was less than 19 carats, the buyer also paid the difference. Tanishq benefited greatly from this strategy.
Having gained trust, Tanishq was quick in running ad campaigns to scale the image of trust and purity to the masses. There has been no stopping Tanishq since then, which has now become the largest jewellery retailer in the country, and is still exhibiting high-growth, capturing an increasing share of the unorganised market.
Titan has applied the same fundamentals of innovation, branding, and distribution to venture into even newer businesses.
It has ventured into eyewear, fragrances, accessories, etc. Titan Eyeplus is already India's largest optical retail chain.
Although these businesses are small at the moment, they have been fast-growing, and Titan has been gaining share.
🚀 Superior performance
Historically, because of aggressive growth in existing businesses, and scaling up of new businesses.
However, the potential for growth to be maintained/etched up at high rates continues. Continued leveraging of Titan’s capabilities, and a shift from unorganised to organised pose large opportunities for Titan in all the segments that it is present in.
🍞 Bread & Butter
Titan is a great example of a household name has performed well on the stock markets. This has been a great fit in our Bread & Butter portfolio, which invests in companies that we use on an everyday basis.
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