The SET-listed Jubilee Enterprise Plc (JUBILE), a leading retailer of diamond jewellery in Thailand with nearly 100 outlets, has delivered average net profit growth of 40% per year from 2009-12, and it continued to impress shareholders with 30% year-on-year growth in this year’s first quarter. Chief financial officer Unyarat Pornprakit discusses the strategies behind the company’s success and how it plans to maintain its growth in the future.
Your growth in the past three years has been impressive. How did you achieve that?
We’ve been trying our best to deliver the performance we promised investors during our IPO in 2009. That was the same time that we introduced a new diamond jewellery collection, The Excellence, to reinforce our Jubilee brand value. We have refreshed our brand positioning, strengthened product designs and lineups, rebalanced product mix to optimise margins and introduced a loyalty programme. All of these have led to a higher level of brand awareness and customer base expansion. As a result, they have been reflected in our bottom-line growth.
Thai consumers have become more sophisticated, says Ms Unyarat.
What is your growth target going forward, and what is your plan to achieve it?
We still intend to achieve 20% annual revenue growth in the next 3-5 years. This should derive from both store expansion and same-store sales (SSS) growth. We plan to add 12 locations this year for 108 including a new flagship store in the fourth quarter that is believed to be the largest jewellery store in Asia. New outlets always capture new customers, as people tend to return to the same store they trust. So cannibalisation is not really an issue. In terms of SSS, we saw more than 20% growth annually in the past three years. That was not just Jeweller jubilee aims to sparkle for all stakeholders from higher prices, but we have gained more traffic as well.
Is the market growing larger or are you getting a bigger piece of the pie?
Both. We believe the industry has expanded in the high-single-digit levels in the past three years. The fact that we’ve outgrown the benchmark implies we have gained share significantly. To leap ahead of our competitors, we conducted market research to understand the needs of Thai consumers. As they have become more sophisticated, we are focusing more on the excellence of our products with modern designs and high quality. To ensure that, all of our diamonds carry either GIA or HRD certificates or our own papers for smaller ones.
How big is your customer base?
We have more than 110,000 customers in our database. As many as 45% are repeat customers with a tendency to upgrade their accessories as their income grows. Therefore, there is room for us to expand even further.
Jewellery is not a necessity. Isn’t it vulnerable to economic conditions?
The unknowns are of course our risks. However, our target customers are in the upper-income (B+) segment. Hence, they are not that sensitive to downturns. Our strong brand also helps attract new customers.
How do you differentiate Jubilee from competitors to bring them to your stores?
It all comes down to trust in our brand and establishment. We want our stores to be accessible. Unlike other smaller shops, customers know where to find us if they need anything. In terms of product designs and pricing, we try to offer the “best deal” to them. The introduction of the loyalty programme should also lift our brand awareness. In addition, our well-trained staff provide professional advice while building relationships with customers. Again, trust is crucial in this business.
How do you retain staff?
We make sure they live well. To do that, we have to make our products sell so that our staff will earn more. That is why we have been investing in brand building and product development.
Do you see any pressure on costs?
Not really. We’ve adopted an “asset-light” strategy. All production is outsourced to our partners where costs are predetermined. We also do not own the stores. Therefore, our investment is relatively small, as are rents. Our biggest cost component is the diamond. However, our demand is relatively strong, as the economies in the US and the EU are slow. As a result, we have already gained bargaining power against our suppliers and have no problem with procurement. We also hedge against our payables in US dollars to minimise foreign-exchange risk.
Are you looking to expand abroad?
We definitely see opportunities, especially with the upcoming Asean Economic Community in 2015. So the plan is under study. However, our neighbouring markets are not as developed, so we need time to educate their consumers about the significance of quality which is our strength.
What is your goal for five years from today?
We plan to become the top diamond jewellery brand in consumers’ minds while leaving competitors behind by a wide gap. We want to transform ourselves into a 100% professionally run company. Those will be our biggest challenges as well as delivering the growth we promise.
Source: Bangkok Post