Analysis of Jewelry

The rise of analytics in the
jewellery industry
For private circulation only
September 2018 Risk Advisory
The rise of analytics in the jewellery industry
Contents
Foreword02
Areas of growth 03
Use of advanced analytics 08
What needs to be measured 09
How analytics help decode insights from data 11
Contact12
01
Foreword
In the last few years, the jewellery industry has witnessed a lot of disruptive innovation with advancements in technology.
Earlier, the jewellery business was restricted to family owned or proprietor-run entities. However, nowadays, the jewellery
industry is transforming by leaps and bounds and aligning itself with the advancing corporate culture. There used to be
lesser number of stores, but with rapid growth and consumerism, there is a proliferation in the retail outlets and franchisee
stores along with an increase in the presence of online players through e-Commerce websites and applications. Besides, the
decision-making by businesses in this sector was purely based on instincts and unverified presumptions. With the availability
of data, businesses can now take decisions based on actionable insights and calculated inferences.
With the shift in operational structure, humongous amounts of data are being generated which include sales data, customer
data, expense data, warehouse data, etc. Analytics tools and methods used earlier such as the MIS are becoming less utile
to handle such enormous amount of data, and are failing to analyse it for generation of insights. In order to overcome
this technological barrier, advanced analytics tools are being used to provide actionable insights to enable more informed
decision-making.
The jewellery industry has a lot to benefit from the potential of data driven insights and advanced analytics, something that
other players in the retail sector are already leveraging. With an increase in sales and customer base on an ongoing basis,
the amount of data being generated is also enormous. It is important for businesses to make sense of this data and generate
information that can empower strategy and operations. Data, when processed and analysed effectively, can act as the fuel
that drives the engine of transformation for businesses.
We are also seeing a sharp rise in predictive analytics techniques that help in anticipating what the customer base is
more likely to get attracted to in times to come. This paper focuses on the important aspects of various analytics and
predictive techniques that can be leveraged by the jewellery industry to scale the business to greater heights and
prevent various risks involved in the business.
02
Areas of growth
The jewellery industry is well-poised for a glittering future. Sales are projected to grow by a huge proportion in the coming
years. However, the fast growing industry is at its dynamic best, and, as such, the jewellery business cannot simply continue
with the status quo and expect more profits. The market has observed major changes in customer behaviour and purchasing
patterns which dictates that businesses have to be proactive and responsive to the changing trends and developments in the
industry. This in turn has given impetus to the adoption and implementation of advanced analytics and highlighted the need
for data driven insights in the sector.
Some of the key areas that the jewellery businesses would need to focus on include:
KPI analysis Inventory Customer Sales Analysis/ ‘What if ’

What are the optimisation profiling Forecasting pricing
key parameters Are the stock- What kind What is the analysis
Key areas which convey

important
outs and
overstocking
of customer
segments are
improvement
in sales year
What is the
effect of
insights? avoided? contributing to on year with changes in the
the growth of respect to factors key parameters
the business like revenue, to sectors
and what is the expenses, like volume of
frequency and promotions, and sales, margins,
recency? etc.? etc.?
Outlet Marketing/ Product Management

performance Branding Analysis Reports for any
Which outlets performance What kind of time-period
are performing Analysing jewellery is highlighting
well and in which customer footfall driving more content such as
areas, and what at the store sales? shopper traffic,
improvement can highlight transactions,
needs to be the yield of returns,
done? marketing conversion,
spends. sales, etc.
03
Analytics is relevant throughout the entire breadth of the present real-time inventory status and the in-store sales-
jewellery industry at different levels of involvement, and related information. Retailers can transfer slow-moving
for a multitude of businesses. All kinds of analysis right items at one store to another that may have a greater
from descriptive to predictive and prescriptive have critical demand. Stock levels at showrooms can be optimised
applications in the jewellery industry. in accordance with the historical trends and real-time
demands.
1. KPI analysis
Key performance indicators are important for any business 3. Customer Profiling
because these help it focus on common goals, and ensure Analysing customer transactions, visits and interactions
those goals stay aligned within the organisation’s efforts will enable businesses to understand customer behaviour,
and expertise. This focus will help a business stay on task, engagement rate with the brand, frequency, recency,
and work on meaningful projects that will assist in reaching product returns, loyalty towards the brand, and repeat
the objectives faster. visitor ratio.
At the heart of any analytics project lie certain key 4. Sales Analysis
performance indicators pertaining to that particular data. A complete sales analytics and expense report derived
KPIs define the key parameters in the data that have a based on two critical parameters (stores and products) can
significant impact on the analytics. Therefore, KPI analysis help analyse sales and expenses according to seasonality,
plays a vital role in analytics. location, product type, etc.
2. Inventory optimization Sales discovery dashboard allows one to measure and monitor
Jewellers maintain high-value inventory of jewelleries and sales performance by product categories, product groups,
accessories. Neither out-of-stock nor overstock is good showrooms, regions, and sales personnel over selected period.
for the business. Reordering and other item requirements Business managers can use filtering and drill-down functions
can be complex to manage. Any delay or negligence in to isolate sales laggers, and identify probable root causes so
restocking may result in loss of business. By integrating that resolution plans can be put forward to move sales laggers
analytics in the in-store point-of-sales system, we can up the charts.
Qualifier Algorithm & Forecasting


Analyzes history 
High moving

Selects algorithm 
Slow moving

Displays which algorithm was selected 
Random demand
Optimization & Rationalization

 System rationalize inventory mix

Lead time
 Sets optimal stocking quantity

Order frequency

Service levels
Inventory Analysis
 System checks inventory position v/s SQ

Active
 Determines items needing replenishment

Excess
 Analyzes excess and inactive stock

Obsolete

Shortage
Replenishment

Creates shortage and excess plans/ reports buys 
New Buy

Returns POs,Transfers,Work orders to Host ERP 
Transfers

Production

Repairs
04
KPI Dashboard Sales Analysis Expenses
Search
2015-16 2016-17 2017-18 Q1 Q2 Q3 Q4 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Sales Overview “What-If” Pricing Analysis Sales Details
Clear Selection 200.00 Monthly Sales & Margin 20.00% 25.00 Store – Differentiated View
Product 20.00
150.00 15.00%
Gold 15.00
Diamond 100.00 10.00%
Coins 10.00
50.00 5.00%
Channels 5.00
Showroom 50.00 0.00% 0.00

Franchise Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00
Corporate
Sales Margin Margin %
Exhibition
E-Commerce
Showrooms Store-Wise Sales Product Profitability
Store 1
Store 2 Product Sales (Cr) Margin (Cr) Margin % Margin % Total No. of Invoices
Store 3 Gold ` 969.14 ` 184.14 0.190 53.39% 88515
Store 4
Diamond ` 152.29 ` 31.98 0.210 9.27% 15374
Store 5
Bullion ` 83.07 ` 17.44 0.210 5.06% 8386
Zone
Coin ` 69.22 ` 13.84 0.200 4.01% 6655
East
West Platinum ` 66.46 ` 13.29 0.200 3.85% 6389
North Silver ` 443.03 ` 84.18 0.190 24.41% 40464
Search

Clear Selection
200.00 Monthly Sales & Margin 20.00% 25.00 Store – Differentiated View
Product
150.00 15.00% 20.00
Gold
100.00 10.00% 15.00
Diamond
Coins 50.00 5.00% 10.00
5.00
50.00 0.00%
Channels Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 0.00
Showroom Sales Margin Margin % 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00
Franchise
Corporate
Store-Wise Sales Product Profitability
Exhibition
E-Commerce Store Sales 2017-18 Sales 2016-17 Variance Sales 2016-17
Showrooms Store 1 ` 180.52 ` 174.63 ` 5.89
Store 1 Store 2 ` 166.96 ` 161.34 ` 5.62
Store 2 Store 3 ` 124.00 ` 113.34 ` 10.66
Store 3
Store 4 Store 4 ` 110.00 ` 103.12 ` 6.88
Store 5 Store 5 ` 101.00 ` 97.34 ` 3.66
Zone Store 6 ` 98.00 ` 95.00 ` 3.00
East Store 7 ` 97.00 ` 93.00 ` 4.00
West Store 8 ` 95.00 ` 92.39 ` 261
North
Store 9 ` 89.00 ` 83.22 ` 5.78
05
5. ‘What if’ pricing analysis corresponding sales, can be used to build dashboards
‘What If’ analysis includes the domains which use predictive with the help of any data visualisation tool. This will help
analysis using innovative technologies such as machine identify the most effective marketing techniques, and
learning in coherence with advanced analytics techniques gain insights for future planning of the marketing and
to depict probable future scenarios based on yesteryear branding strategy.
data and insights.
8. Product analysis
“What If” analysis enables businesses to understand the Product analysis is essentially concerned with the
various scenarios and their probable outcomes, which also insights from the product data that tell the user about
makes them anticipate the future trends and their business what kind of jewellery products are being preferred by
needs as a whole, and take necessary prescriptive steps to get customers, and thereby contributing to the sales more
the desired results. than other products. Supervised and unsupervised
learning can be used to identify hidden trends and
6. Outlet performance patterns in the product sales. Different types of
Businesses having multiple outlets can use the power of classification, clustering and association algorithms can
analytics and advanced analytics to analyse data of various be implemented on the product/sales data and better
outlets to derive useful insights pertaining to performance insights can be derived from these models.
of various outlets, areas that need improvement, etc.
Machine learning algorithms can be implemented on the 9. Management
outlet data using advanced analytics, and multiple models Reports can be generated from the data visualisation
can be built to predict how a particular outlet is going to dashboards and new approaches can be taken by the
perform in future. The results can be selected from the management based on these insights. Time series
model with the best accuracy. predictions can be made for shopper traffic, revenue
distribution, etc. using machine learning and deep learning.
7. Marketing/Branding performance Hence, analytics can help glean crucial information that
Data having information about the funds spent on can help formulate the right strategies that align with
various marketing and branding campaigns, and the organisational goals.
06
Various metrics are used to measure the marketing/branding performance. Some of the metrics are shown in the
infographic below.
Predictive
Leading Indicators LIKELIHOOD OF OUTCOME

Adaption Rates
Rate of Growth : Market
BUSINESS OUTCOME
Outcome based Market Share
Lifetime Value
EFFICIENCY
Operational Campaign ROI
Program : People Ratio
Program : Total Spend
Awareness : Demand Ratio
COUNTING
Preset Hits
Activity based Click-through Rates
Search

Clear Selection
Product
Gold 1 0
What if Price % What if Price %
Diamond
-15 -10 -5 0 5 10 15 Reset -15 -10 -5 0 5 10 15
Coins
Channels
Showroom
Franchise Margin change 5.0% What if Revenue $67.790 What if Margin +$30.249
Corporate
Exhibition
E-Commerce
Product Price What-If Volume What-If Revenue What-If Revenue Margin What-If Margin
Showrooms Price Volume
Store 1 Gold ` 3,636.48 ` 3,672.84 18,70,519.90 18,70,519.90 ` 7,82,24,24,420.12 ` 7,82,24,24,420.12 ` 1,02,03,16,228.71 ` 95,22,95,146.80
Store 2
Store 3 Diamond ` 2,88,173.25 ` 2,91,054.98 12,100.95 12,100.95 ` 4,01,02,46,157.80 ` 4,01,02,46,157.80 ` 52,30,75,585.80 ` 48,82,03,880.08
Store 4
Bullion ` 3,636.48 ` 3,672.84 1,34,454.60 1,34,454.60 ` 56,22,82,683.38 ` 56,22,82,683.38 ` 7,33,41,219.57 ` 6,84,51,804.93
Store 5
Zone Coin ` 3,636.48 ` 3,672.84 1,84,692.94 1,84,692.94 ` 77,23,77,018.18 ` 77,23,77,018.18 ` 10,07,44,828.46 ` 9,40,28,506.56
East Platinum ` 2,923.00 ` 2,952.23 5,618.76 5,618.76 ` 1,88,87,167.36 ` 1,88,87,167.36 ` 24,63,543.57 ` 2,99,307.33
West
Silver ` 41.69 ` 42.11 5,61,565.18 5,61,565.18 ` 2,69,25,337.56 ` 2,69,25,337.56 `35,12,000.55 ` 2,77,867.18
North
07
Use of advanced analytics

Advanced analytics refers to state-of-the-art techniques and modern tools used in the field of data science. Predictive
analytics, data mining, big data analytics, machine learning and deep learning are some of the categories of analytics that fall
under the vast field of advanced analytics. These technologies are widely used in industries such as marketing, healthcare,
risk management and economics.
Advanced Analytics Process
Time-to-Insight
Project Data Model Model

Definition Preparation Development Deployment
Problem Data Access Request Data Data Model Model Deploy

ID & Discovery Transformation Sampling Creation Evaluation Model
Advanced analytics is changing the way patients who might benefit from a in data sets. Based on these, users can
many organisations approach their specific treatment, and cellular network anticipate and forecast future trends;
customer interactions and the very providers use diagnostic analytics to for example, identifying which group of
process of doing business. The ability predict potential network failures, web users is most likely to engage with
for organisations to use their data to enabling them to do preventative an online ad or determining the profit
predict consumer buying behaviours and maintenance. Similarly, the power of growth over the next quarter.
anticipate the activity and requirements advanced analytics can also be leveraged
of their own assets, thus enabling by the jewellery industry in numerous Advanced analytics has become
them to make fact-based decisions, has ways. more common in this era of big data.
become incredibly powerful. Predictive analytics models –and, in
The advanced analytics process particular, machine learning models–
Advanced data analytics is being used involves mathematical approaches require extensive trainings to identify
across industries to predict future to interpreting data. Classical as well patterns and correlations before they
events. Marketing teams use it to predict as modern statistical methods, and can make a prediction. The growing
the likelihood that certain web users machine-driven techniques such as amount of data managed by enterprises
will click on a link, healthcare providers deep learning are being used to identify today opens the door to these advanced
use prescriptive analytics to identify patterns, correlations and groupings analytics techniques.
08
What needs to be
measured?
Sample insights:
The client is a jewellery retail chain in India and was seeking deeper insights into customer purchasing behaviour, and the
effect of campaigns on various products.
It was looking for details around:

• Seasonality effects on each department/product category;
• Effects of discounts and offers on sales.
Search

Clear Selection Monthly Sales & Margin
200.00 20.00% 25.00 Store – Differentiated View
Product
150.00 15.00% 20.00
Gold
15.00
Diamond 100.00 10.00%
Coins 50.00 5.00%
10.00
5.00
Channels 50.00 0.00%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 0.00
Showroom Sales Margin Margin %
0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00
Franchise
Corporate
Store-Wise Sales Product Profitability
Exhibition
E-Commerce Store Sales 2017-18 Sales 2016-17 Variance Sales 2016-17
Showrooms Store 1 ` 180.52 ` 174.63 ` 5.89
Store 1 Store 2 ` 166.96 ` 161.34 ` 5.62
Store 2 Store 3 ` 124.00 ` 113.34 ` 10.66
Store 3
Store 4 Store 4 ` 110.00 ` 103.12 ` 6.88
Store 5 Store 5 ` 101.00 ` 97.34 ` 3.66
Zone Store 6 ` 98.00 ` 95.00 ` 3.00
East Store 7 ` 97.00 ` 93.00 ` 4.00
West Store 8 ` 95.00 ` 92.39 ` 261
North
Store 9 ` 89.00 ` 83.22 ` 5.78
Examples:
• Seasonality is not always a singular effect. Retailers experience both annual and weekly seasonal cycles.
• November brings in the highest revenue as compared to the other months.
• Discount offered during November, December and January, is greater as compared to the other months.
• A leading jewellery retailer in India wanted Deloitte to apply analytics for its expense data and provide an interactive
dashboard with drilldowns.
• Deloitte reported key insights to the retailer’s management pertaining to:
1. Region wise expenses break-up;
2. Month-wise analysis of actual expenses vs. last year’s expenses; and
3. Total break-up of expenses.
• It was observed that a major part of expenses was directed towards infrastructural costs and rentals.
09
KPI Dashboard Sales Analysis Expenses Gold Analyzer
Search
Distribution of Making Charges
Clear Selection
Product
Gold 800 –
Diamond 600 –
Coins 400 –
Channels 200 –
Showroom 0–
n iu
m er de
d
Franchise ai gn d
Corporate Pl em es
i
tu
Pr D S
Exhibition
E-Commerce Sales : Style Type
Margin vs Discount : Month-wise
Showrooms 15.50% 3.00%
Store 1 CO CL ROS CA VE
14.76% 12.01% 9.66% 8.12% 7.70% 15.00% 2.50%
Store 2
Store 3 14.50% 2.00%
Store 4 14.00% 1.50%
Store 5 FC OTHERS CZ MC DRA ECZ
13.50% 0.50%
12.68% 10.25% 8.90% 6.00% 5.76% 4.17%
Zone 0.00%
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
East
West ECZ DRA MC VE CA CZ
North ROS OTHER CL FC CO
Margin Discount
Analytics reporting allows organisations to take control of their operations.
Search
Expenses : Actual vs Last Year Expenses Break-up
Clear Selection 8%
150 11%
Product Staff Cost
Gold 100 Rentals
Diamond 27%
50 28% Material Cost
Coins Infrastructural Cost
0 Other Costs
Channels 26%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Showroom
Franchise Actual Last Year
Corporate
Region Wise : Expenses Breakup
Exhibition
E-Commerce
Region Showroom Expenses Budget Variance Variance % Expenses Variance Variance %
Showrooms Last Year
Store 1 East Store 1 `3.78 `3.90 `0.12 3.08% `4.10 `0.32 7.80%
Store 2 East Store 2 `4.76 `4.80 `0.04 0.83% `4.99 `0.23 4.61%
Store 3
West Store 3 `5.34 `5.30 `-0.04 -0.75% `5.66 `0.32 5.65%
Store 4
Store 5 West Store 4 `5.47 `5.40 `-0.07 -1.30% `5.87 `0.40 6.81%
West Store 5 `8.75 `8.90 `0.15 1.69% `8.40 `-0.35 -4.17%
Zone
West Store 6 `7.87 `8.00 `0.13 1.63% `7.35 `-0.52 -7.07%
East
West South Store 7 `6.13 `5.80 `-0.33 -5.69% `5.99 `-0.14 -2.34%
North
10
How analytics help decode

insights from data
The amalgamation of advanced analytics techniques
coupled with machine learning and creative visualisation has
transformed the jewellery industry and paved the way for
unprecedented growth for businesses in this sector.
Deloitte has always been at the helm of innovation and

delivered world class service to its clientele. Analytics as
a standalone domain has always been thriving at Deloitte
India with successful implementation of creative solutions
for complex problems. Deloitte has extensively used
analytics to create an impact in the jewellery sector as well.
Given below are certain excerpts from the solution that we
have devised.
KPIs recognised and compared with industry standard based

on extensive analytics and insights derived from client data.
Search
Revenue vs Budget Revenue vs Last Year Margin % Expenses vs Target Profit (Rs) #Showrooms with
Positive Growth
107% 83% 14% 100% `19,34,12,378.08 23/29
Sales Expenses Profit

Total `1,384.43 Total `955.95 Total `19,34,12,378.08
Target `1,667.99 Target `955.95 Target `21,25,41,074.81
Variance `283.56 Variance `- Variance `1,91,28,696.73
Trending Revenue & Expenses over time Product Revenue COGS Product
Margin
` 3,000.00
Gold ` 969.10 ` 37.32 14.17%
` 2,500.00
Diamond ` 249.20 ` 49.01 19.67%
` 2,000.00
Coin ` 131.52 ` 19.88 15.12%
` 1,500.00
` 1,000.00 Channel Revenue Expenses % of Sales

` 500.00 Showroom ` 107.54 ` 761.88 68.79%
` Franchise ` 152.29 ` 105.15 69.05%
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Expenses Revenue E-Commerce ` 110.75 ` 76.80 69.34%
11
Contact
From Deloitte Touche Tohmatsu India LLP
Rohit Mahajan
President
Risk Advisory
[email protected]
Johar Batterywala
Partner
Deloitte India
[email protected]
Kedar Sawale
Partner
Deloitte India
[email protected]
Deepa Seshadri
Partner
Deloitte India
[email protected]
12
13
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limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and
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more detailed description of DTTL and its member firms.
This material is prepared by Deloitte Touche Tohmatsu India LLP (DTTILLP). This material
(including any information contained in it) is intended to provide general information on a
particular subject(s) and is not an exhaustive treatment of such subject(s) or a substitute to
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Analysis of Jewelry

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The rise of analytics in the

KPI analysis Inventory Customer Sales Analysis/ ‘What if ’

Key areas which convey

Outlet Marketing/ Product Management

Qualifier Algorithm & Forecasting

Optimization & Rationalization

KPI Dashboard Sales Analysis Expenses

Sales Overview “What-If” Pricing Analysis Sales Details

Showroom 50.00 0.00% 0.00

KPI Dashboard Sales Analysis Expenses

Sales Overview “What-If” Pricing Analysis Sales Details

Leading Indicators LIKELIHOOD OF OUTCOME

KPI Dashboard Sales Analysis Expenses

Sales Overview “What-If” Pricing Analysis Sales Details

Use of advanced analytics

Advanced Analytics Process

Project Data Model Model

Problem Data Access Request Data Data Model Model Deploy

It was looking for details around:

KPI Dashboard Sales Analysis Expenses

Sales Overview “What-If” Pricing Analysis Sales Details

KPI Dashboard Sales Analysis Expenses Gold Analyzer

Distribution of Making Charges

Analytics reporting allows organisations to take control of their operations.

KPI Dashboard Sales Analysis Expenses

Expenses : Actual vs Last Year Expenses Break-up

How analytics help decode

Deloitte has always been at the helm of innovation and

KPIs recognised and compared with industry standard based

KPI Dashboard Sales Analysis Expenses

107% 83% 14% 100% `19,34,12,378.08 23/29

Sales Expenses Profit

` 1,000.00 Channel Revenue Expenses % of Sales

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