Turbulent Times

Watch brands are aggressively redefining their images and products to gain new U.S. markets or widen existing ones.

By William George Shuster, Senior Editor -- JCK-Jewelers Circular Keystone, 2/1/2002

If one word defines the current state of the watch business, especially in the United States, it is "revitalization."

Now, more than any time in recent years, mid- and luxury-priced brands are rejuvenating themselves with revamped products, ads, and marketing; acquisitions; corporate reorganization; and redefined images. The goal is to raise their public profiles, gain new markets, or widen existing ones. And in the process, retail jewelers—and how the brands cater to them—are more important than ever.

Indeed, some changes are so extensive that some brands consider what they're doing more than just renewal. Swiss Army Brands has "relaunched" its watches in America. Dior calls its changes "a revolution." Ebel even held a gala at the 2001 JCK Las Vegas Show to celebrate its "rebirth."

Consolidation. Some of this results from the ongoing mergers and acquisitions of watch companies in upscale segments of the business. New owners with deep pockets and aspirations for bigger slices of the watch market can provide newly acquired brands with the financial, distribution, and manufacturing resources to strengthen or expand their operations, marketing, and products. That is what's happening with such established watches as Wittnauer (bought by Bulova in September), Breguet (owned by The Swatch Group), Bertolucci (bought by a private investment group), Aero (Montres Louis Erard SA), Junghans (EganaGoldpfeil), Ebel (LVMH), Jaeger-LeCoultre (Richemont Group), and Dior (LVMH) as well as more recent brands like Bedat & Co. (Gucci Group).

For example, Aero Watch, known for its luxury pocket watches, has expanded into wristwatches thanks to Montres Louis Erard SA of Le Noirmont, Switzerland, which bought the company last January. Bedat, the Geneva, Switzerland, watchmaker whose luxury timepieces debuted here in 1997, will expand its selective U.S. presence and target major markets in Europe and Asia, using the resources and network of Gucci Group, which bought it in December 2000.

In February 2001, Bertolucci was purchased by investors experienced in management and expansion of international firms. They will provide resources that this small firm—previously undercapitalized and in need of additional managerial expertise—requires to grow. The new owners say they will expand Bertolucci's geographic presence in the United States (already a third of its sales) and elsewhere, enhance its marketing strategy with new products and a reinforced brand identity, and increase annual production to 20,000 watches.

In other cases, new owners provide needed overhauls and course changes. Gerald Genta and Daniel Roth, two top Swiss luxury brands, were bought in June 2000 by Bvlgari, the Italian luxury watch and jewelry maker. The marketing strategy of Gerald Genta has been redefined, and its distribution and production reorganized "to meet market requirements" and achieve "a significant turnaround," says Bvlgari's chief executive officer Francesco Tripani. According to a Bvlgari report, Daniel Roth's problem was that it couldn't keep up with demand for its watches, leading to "scarce market penetration" in the United States and Europe. So, Bvlgari and the watchmaker will reinforce the brand's successful marketing strategy while strengthening production and distribution.

Rejuvenation. Other major brands are seeking to rejuvenate established markets or create new images for themselves.

cK is a fashion line of Calvin Klein, owned by The Swatch Group. "We thought Americans would buy [the brand] because of who we are and because we're a European brand," said a spokesperson recently. "But the rules and distribution here are different. We must adapt and listen to the American market."

In the past 18 months, "listening to the American market" has resulted in more new products (including more watches for men), new price points, and more inclusive distribution. Department stores and watch shops remain clients, but cK is focusing on jewelers, stressing its "Swiss-made quality for the best price from the best-selling fashion designer." cK is sold in 250 stores, but The Swatch Group wants to double that figure.

Dior Watches, the watch line of Christian Dior, owned by LVMH, has undergone what its officials call "a revolution" in operations, affecting its pricing, product, distribution, audience, and even its logo and name. (LVMH is using "Dior" on all formerly "Christian Dior" products—including pens, fashion items, and watches.)

Dior also has a more aggressive price strategy—selling all of its watches for under $1,000—as well as more selective distribution. It has introduced innovative, even edgy, designs in the $500 to $1,000 range to reach a wider market of younger, more fashion-forward watch buyers. Examples include the new red Trailer and the high-tech Chris 47 (its case is also its buckle), which has enjoyed strong sales.

Hamilton, the well-known American brand owned by The Swatch Group, is "refocusing on our past," says Caroline Faivet, Hamilton's third president in two years. Recent efforts to update the brand with new fashion lines like "Marylin" (introduced in 2000) have been dropped.

"The future direction of the new Hamilton is to take our phenomenal past—with its many innovative watches and designs—and build on it," Faivet said recently. The Gramercy and Lloyd watch lines, for example, combine "looks" from Hamilton's golden era of design (1930s through late 1950s) with today's quartz technology. The brand is also highlighting its military history with its Khaki collection (and promotional tie-ins with the recent Pearl Harbor movie) as well as a watch project with the West Point Military Academy. Hamilton also is expanding into military PX stores.

Luxury watchmaker Piaget has unveiled a reinterpretation of its popular signature Piaget Polo, first launched in 1979. The Polo is Piaget's "watch for the 21st century"—a timepiece that will reposition Piaget in the public's view as a leading watchmaker, says Philip Metzger, CEO of Piaget International. The 18k watch keeps the seamless look of its integrated bracelet but has a bolder, more modern face and uses Piaget's own automatic or quartz movements. Piaget rolled out the new Polo last fall in North America and will launch it elsewhere this year.

Piaget also has just introduced another innovative design here—its first steel watch, called Upstream, with a rectangular case that doubles as its buckle.

Longines is aiming at younger well-to-do buyers with its trendy Dolce Vita "Square" and "Oposition" series. "We don't want to become a fashion label, but we do want to rejuvenate the brand," says a spokesperson. "The average age of Longines buyers now is 45 to 50 years of age. We want to attract more younger consumers, aged 30 to 40."
Movado, best known for its Museum Watch, last year unveiled Elliptica, which it calls "a defining watch style." Inspired by its 1912 Polypan (with an elongated case that followed the wrist's curvature), this new watch has ergonomic contours, a comma-shaped case (with crown on top) and a bracelet with links that echo the case. Company officials expect to it to become Movado's new signature line.
Patek Philippe, a world leader in luxury watches and known for its complication and men's timepieces, focused on fashion in 2001. A new ad campaign (backed by a 60% ad budget increase) was aimed at younger affluent women and used more print ads, especially in fashion publications. It capitalizes on the "tremendous increase in awareness of Patek Philippe among women in the past two years" since the watchmaker debuted its stylish Twenty-4 collection for women, says spokesperson Tanya Edwards. "There is appreciation for not only how complicated its watches are, but also how beautiful."

The American factor. The U.S. market itself is a reason for heightened activity in the watch business. Southeast Asia's economic crisis in the late 1990s, sluggish national economies in Western Europe, and slumping sales of upscale watches in Asia and Europe have enhanced the importance of the lucrative U.S. market—and foreign watchmakers' dependence on it. In recent years, more mid-priced and luxury brands have sought to enter or expand in the U.S. market to "balance out the business," as one luxury-brand president told JCK.

Swiss watchmakers have increased their marketing and exports to the United States—so much so that, since the late 1990s, it is their largest market. Officials of Japan-based Seiko and Citizen, two of the world's biggest watchmakers, call the United States their "one bright spot" among world markets. And where the big guys go, others follow.

More new and established foreign brands—such as Zenith, Opex, Regnier, Von Burg, Bruno Banani, Japy, and Anonimo last year alone—are coming here, hoping for strong business. Even national industry groups recognize the importance of the American market: The French Watch and Jewelry Association last year took U.S. trade journalists on a tour of French watchmakers to "raise our profile with U.S. retailers and consumers," a spokeswoman told JCK.

There's another side to this "American factor." For many brands, it is necessary not only to succeed in the United States but also to be seen as successful here. "Success in the U.S. market is important for the impression it makes worldwide," says Oliver Ike, president of Ikepod, an innovative luxury watch sold in 42 countries. "To be considered really successful elsewhere, you must be a recognized presence in the U.S."

Changing Times

Audemars Piguet, a 126-year-old luxury brand, "lost 10 years here while we grew around the world," says François Henry Bennahmias, president of Audemars Piguet (US). "We publicized Royal Oak [its top-selling watch], but not the brand, and people didn't know who we were." As a result, three years ago, the United States ranked only ninth in AP markets.

Since then, AP has taken back U.S. distribution from its former agent; bought back $2.5 million of old inventory; trimmed outlets from 77 to 60; improved retail staff training; added a Web site for its retailers; and invested more in customer service. At its La Brassus, Switzerland, headquarters, AP has increased its staff to 290 and annual production to 20,000.

In U.S. ads, there is more emphasis on the brand, and AP recently sponsored a five-month, 10-city tour of its timepieces to show affluent U.S. consumers "who we are and what we do."

This year, AP marks Royal Oak's 30th anniversary with "a completely redesigned concept," says Bennahmias, and broadens its market among affluent young consumers with a new line of women's watches "packaged" in a designer handbag. Part of the proceeds go to breast cancer research, as part of AP's image as "a luxury brand [that] gives back,'" says Bennahmias. This year, he notes, the United States should become Audemars Piguet's number-one market.

Breguet, the 226-year-old Swiss luxury watch firm bought by The Swatch Group in September 1999, is "after many years of immobility, returning quickly to its position as top brand among watches worldwide," said Group chairman Nicholas Hayek recently.

Hayek personally took charge of Breguet in 2000, as president and chief executive officer. He appointed a new management team, revamped design and technical operations, made major investments to upgrade manufacturing, and, "accelerated everything." The company will triple its annual production (now 10,000 watches) in the next few years and focus more on the strong U.S. market.

In 2001, Breguet marked the 200th anniversary of the tourbillon, which it created, and debuted what Hayek called "a few surprises." These included a new line of women's watches (including the smallest automatic chronograph) and women's jewelry—"a new direction and a new market" for Breguet, he notes.

Breguet launched a new ad campaign to "enhance its market profile [by] firmly putting itself in the center of recent European culture and history," says Breguet spokesperson Florence Coltro. One series features famous people—such as Napoleon—who owned a Breguet, while another uses what Coltro calls "famous mentions" of Breguet by writers like Alexandre Dumas.

Bulova Corp., owned and operated by the U.S.-based Loews Corp., marked its 125th birthday in 2000, but 2001 was the year worth celebrating. The company took control of foreign sales to expand business and create a single brand image worldwide. Rather than renew foreign licensees, Bulova is setting up its own distribution and already has distributors in Mexico and Brazil. In China, Hong Kong, Macau, and Taiwan, a new franchisee has just relaunched Bulova.

Domestically, Bulova's biggest coup in 2001 was the purchase of the 121-year-old Wittnauer brand name, including trademarks, from the former owners who were deep in trade debt. The revamped Swiss line debuts this year with its own sales force and marketing campaign. Wittnauer joins Bulova's three other brands—Bulova, Accutron, and Caravelle.

Bulova also added new watch lines in 2001, including the fashionable "Emeritus" for over-50 consumers; the Smithsonian Collection, franchised by the Smithsonian Institution; the Harley-Davidson line (sold only in U.S. Harley-Davidson stores); and two limited editions of the Accutron Spaceview 21, powered by "motion-quartz" technology and based on the original Accutron Spaceview of the 1950s. Bulova also introduced its first celebrity spokesman since the 1980s: astronaut Buzz Aldrin, pilot of the historic Apollo 11 flight, is promoting Accutron watches.

Daniel Mink Switzerland has seen "vast improvement" since its 1998 acquisition by the Montreux Group, says U.S. president Mitchell Caplan. That includes product redesign, new displays and packaging, increased marketing (including co-op), and price changes.

The 23-year-old Swiss brand has increased its focus on mechanical timepieces, which now account for 75% of its watches. It also has expanded its product line. When Montreux acquired Daniel Mink, the brand had two collections. Now, it has seven: the signature 1900 collection, Intrinsic chronometers, Tonneau flybacks and chronos, Titus moon phases and chronos, Skeleton (four models), the ultra-thin Diamanche, and Vevé for women. All are available in 18k or stainless steel.

Daniel Mink has pushed its starting price up to $700. Most sales are between $700 and $5,000, though a few watches sell for as much as $12,500. A new ad campaign with a new slogan ("Redefining the Measure of Time") was launched in 2001, and a new Web site (www.danielmink.com) was due last fall.

The changes have been effective: Daniel Mink has a growing network of jewelry stores—now 100 and aiming for 150.

Ebel began reinventing itself last year—its 90th anniversary—to recapture lost prestige, create a focused global brand image, and reach young affluent adults, particularly men.

"2001 is the year of rebirth and renewal for Ebel," says Guillaume Brochard, managing director of Ebel SA, La Chaux-de-Fonds, Switzerland. Renewal includes a new signature collection called Classic Wave; upgrading prices; revamping global distribution; eliminating Ebel's logo; new corporate colors; and a new global ad campaign and more redesigned watch lines.

Ebel's goals in the U.S. market are to become the luxury-watch equal of Cartier and Rolex and to increase its jewelry store accounts by 10%.

Ikepod, a seven-year-old Swiss luxury brand created by Swiss entrepreneur Oliver Ike and product designer Marc Newson, specializes in uniquely designed, limited-edition mechanical timepieces. Successful in 42 countries but little known in the United States, Ikepod relaunched itself in 2001 in the U.S. market. It took back distribution from its former agent, opened a corporate distribution center in Ringwood, N.J., and has significantly improved after-sales service.

"We're focused on brand-building and raising our profile here," says Ike. The company currently has 20 outlets (including Tourneau and Neiman Marcus) and is aiming for 50. Ike and CEO Diego Talarid will regularly visit Ikepod retailers "to ensure they get the service and support they deserve [and to] strengthen awareness of Ikepod in North America," says Ike.

Ikepod also is working on technical enhancements. In 2001, it introduced the Hemipode Automatic Tourbillon (the first in an annual series of complicated timepieces), the Manatee travel watch (with 24 world time zones), and its first perpetual calendar. The company also has plans to make it own movements.

Jaeger-LeCoultre, the 168-year-old Swiss luxury brand, was bought in mid-2000 by the Richemont Group. In 2001, the U.S. branch moved from Winchester, Va., to New York City. Sales and marketing staffs were revamped, and distribution trimmed to 101 stores. That will grow to 150, says U.S. president Ronald Wolfgang, as the brand refocuses on a few key fine jewelers in major markets.

Two decorators now travel year-round setting up in-store presentations—including a new in-store and window display system—and "seasonalizing" displays. "This is well received by our retailers and maintains excitement about the brand" among staff and customers, says Wolfgang.

To raise the brand's profile among consumers, Jaeger-LeCoultre aired its first-ever TV ads last fall; periodically sponsors events with retailers; annually mounts traveling exhibits; and last spring held its first U.S. press conference for trade and consumer magazines. The goal, says Wolfgang, is to be seen as "the standard in fine watchmaking [and] competitively priced in the luxury market."

Jaeger-LeCoultre expanded its best-selling Reverso line in 2001 with its first Platinum Reversos. New looks for women include a Floral Reverso with diamonds and the Reverso Gran Sport, a feminine version of the Reverso Duo-Time. Last year, sales for Jaeger-LeCoultre USA (15% of the parent company's annual 50,000 units) rose 30%.

Junghans, the 140-year-old German watchmaker that pioneered radio-controlled and solar technology in timepieces, has seen several changes. In summer 2000, it opened its first U.S. office, in New Jersey. In November 2000, Junghans was bought by EganaGoldpfeil Ltd., a global marketer of upscale fashion products. Last summer, Junghans (U.S.) moved to Pompano Beach, Fla., headquarters of Egana of Switzerland (America). A new distribution system was set up, and new promotion materials and displays instituted.

Egana is investing up to $20 million over five years to develop the U.S. for its watches, jewelry, and accessories, while Junghans builds distribution in selected regions. It expects annual U.S. sales to reach 50,000 units in a few years.

Recent U.S. debuts included Junghans' Mega Ceramic solar-powered atomic watches, with six-month power reserve and scratchproof ceramic cases ($990-$1,090), and its Atomic Carbon series ($299 retail) with lightweight carbon fiber cases.

EganaGoldpfeil plans to "turn Junghans into a center for modern timekeeping technology," says chairman Hans-Jörg Seeberger. One step is Junghans's production of the world's first titanium atomic watch, with the antenna integrated into the movement. Another is use of Junghans' radio-controlled technology in Egana of Switzerland's Carrera ($175-$325), a new sports watch that debuted here in June.

Maurice Lacroix, the 26-year-old upscale Swiss brand now in 50 countries and 4,000 outlets, has invested millions to renovate its case production facility in Switzerland, increase production capacity (1999), and open a training center (2000). In 2001, it added a new chairman: Philippe C. Merk, formerly chairman of Feldschlösschen, the Swiss beverage conglomerate. His goal is to make Maurice Lacroix "an agile, creative, and distinctly customer-led brand [to] exploit our full potential in a dynamic market with great opportunities."

Merk aims to double its $59 million in annual international sales over the next five years and boost investments in production, marketing, and sales. New collections will have "advanced technology, high-grade materials, and minimalist but distinctive styling." Examples include Milestone, a compact watch for men and women, and Intuition, a women's cuff watch in steel and rubber. To promote the pair, the brand has a new worldwide ad campaign with the tagline "For those with Instinct."

Maurice Lacroix (USA) has a network of some 400 jewelers. It is official timepiece or sponsor for several U.S. events, including the Miss USA and Miss Universe pageants; horse racing's International Jockey Challenge; and auto racing's Brickyard 500 and (since 2001) Indy Racing league, including the Indianapolis 500 races. Also in 2001, the company launched an in-store program—featuring renowned sales trainer Terry Sisco—to teach jewelers how to maximize sales during key selling periods.

Seiko, the 120-year-old mid-priced Japanese brand, has seen some important changes. On July 1, Tokyo-based Seiko Corp. transferred its watch business to Seiko Corp. of America's new parent, Seiko Watch Corp., which now produces Seiko watches and markets them worldwide. Tsutomu Mitome, formerly president and chief executive officer of SCA, was named head of Seiko Watch Corp., and Toyoji Tadaka, a 20-year Seiko veteran, replaced him at SCA in August.

Tadaka's goal is to "strengthen" SCA by continued emphasis on quality, design, and service to "satisfy both retailers and consumers"—such as its on-time fill-order rate of 97%—and by stressing what sets Seiko apart from competitors.

There is more focus on fashion, too: SCA will add a full-time U.S.-based designer to help Tokyo develop products for U.S. consumers, and Seiko's batteryless kinetic auto relay technology is going into more Seiko fashion collections. In-store displays are more fashion-forward, and ads emphasize fashion lines like Acadia with tags like "Seiko Science. Now Available as a Fashion Accessory." New lines include the upscale European-inspired Premiere, a worldwide fashion collection.

To make younger consumers more aware of the brand, Seiko has expanded distribution of its popular mass-market Spoon and Wired watches and added "by Seiko" to all signage. In addition, its recent ads have focused on the 2002 Olympics, of which Seiko is the official timer.

Sector, the Swiss sports watch, had its flagging U.S. business taken over in 2000 by Rabco Luxury Holding, a leading U.S. distributor of watches. Then in July 2001, Sector Group SA, in Neuchâtel, Switzerland, was bought by The Opera Group, an Italian investment firm with resources for growth and marketing.

"In the United States, we feel Sector [$175-$1,000 retail] is one of the most undervalued brands," says Norm Kushner, Rabco vice president of sales and marketing. "It has a lot going for it—a true sports watch with Italian design and Swiss craftsmanship, an incredible value for consumers and jewelers."

Rabco has repositioned the brand, introduced new collections, and is marketing through traditional channels consistent with its image, rather than catalog houses or the Internet, says Kushner. Last year, Rabco built a network of more than 150 outlets, with a goal of 400-500 in a few years, including independent jewelers, chain stores like Tourneau's Watch Gear shops, and fine department stores like Bloomingdale's.

Rabco has spent $1 million so far to promote "Sector Sport watches," with ads (and retail sales training) focusing on the timepieces rather than extreme sports or sporty fashion, as in years past. "We want people to know Sector is a true sports watch, not a fashion watch," says Kushner. One new collection being spotlighted is the futuristic 880 ($700-$900) stainless-steel domed watches with date, chronograph, and chronograph alarm along with movements made exclusively for Sector by ETA.

Swiss Army Brands has revamped its decade-old operations to re-energize its U.S. watch business and "get back on top" as a watch leader, says Sue Rechner, senior vice president of retail sales. The brand's Fall 2001 collection "relaunched" the line, she says, after leading European designers spent six months redesigning SA's watches into nine stylistically versatile and practical collections, with more women's watches. They include the contemporary SC Collection, with a bezel that flips up to reveal a solar compass; and the New Original SAi (successor to the "Original Swiss Army Watch"), which features multi-layered cases in red, black, and stainless-steel combinations; a redesigned dial; and SA emblem on the crown.

A new management team was formed, and the sales structure was reorganized into three segments: one for jewelers and specialty retailers, another for national accounts, and a third for international sales. The company has also created new visual merchandising, new packaging, and new point-of-sale programs to give SA "a new look and new energy," says Cheri McKenzie, vice president for global marketing.

Now in 2,500 U. S. stores, including a new flagship store in New York, the company aims to add another 1,500. Many will be jewelers, among whom SA is under-represented.

Last summer, Swiss Army Brands Inc. and Victorinox AG formed Victorinox Swiss Army Watch AG, a new international watch company. However, officials say the move won't affect SA's U.S. operations.

Entering America

The U.S. market regularly attracts many new and established brands. Here are some of last year's entries:

Anonimo, four-year-old line of Italian-made large-sized luxury watches with Swiss movements. Anonimo, Via Masaccio 29, 50132 Florence, Italy.
AquaMarin, new line specializing in diamond diving watches with Swiss movements. AquaMarin, 606 S. Hill St., Suite 201, Los Angeles, CA.
Bruno Banani, Italian-designed, Swiss-made luxury fashion watches. Bruno Banani USA c/o Xemex, 620 Congress Ave., Suite 208, Austin, TX 78701.
Carrera, new mid-priced sports watch with Swiss movements in stainless steel or titanium. Egana of Switzerland (America) Corp., 2004 N.W. 25th Ave., Pompano Beach, FL 33069.
Fanini Designs, handcrafted luxury gold watches by a South Dakota jewelry manufacturer and gemstone supplier. Fanini Designs, P.O. Box 926, Sioux Falls, SD.
Glycine, new to the United States, has made fine mechanical watches in Switzerland since 1914. Rabco Luxury Holdings, 444 Madison Ave., New York, NY 10022.
JAPY, venerable French brand bought by new owners in 1996, who created a new line of upscale watches. Exclusive Time International, 203 Main St., #181, Flemington, NJ 08822.
Jean d'Eve, upscale Swiss line with unique dial and time-telling design, returning here under distributorship of Exclusive Time Inc. of Flemington, N.J.
Opex, 10-year-old fashion-forward French brand for women and a wholly owned subsidiary of Timex. Opex Paris, 165 Walter St., Norwalk, CT 06854.
Regnier, 81-year-old mid-priced French brand known as the "official watch of the European watch industry." jWatch Inc., North Miami Beach, FL 33162.
George J Van Burg, new luxury line of Swiss-made automatic chronographs "for people who love watches." Grandi Trading, 12835 Bel Red Road, Suite 100, Bellevue, WA 98005.
Zenith, founded 1865, one of the last Swiss luxury brands making its own mechanical movements. Most famous: El Primero automatic chronograph. LVMH Watch & Jewelry USA, 960 S. Springfield Ave., Springfield, NJ 07081.