Building a Successful Watch Business

"Watches are an anathema. You must have them but they kill the bottom line," grouses an East Coast jeweler. Another agrees: "We only carry them as an accommodation to our customers."

Such sentiments are held by many retail jewelers, and perhaps for good reason: One in three jewelers in a recent national JCK survey say watch sales represent only 5% or less of their business.

But many other jewelers tell a different story: Two-thirds of the respondents said their watch sales rose (by a median of 10%) in the preceding 12 months. More significantly, one in five polled by JCK said watches provide 15% or more of their annual business, with many doing most of their watch sales in retail categories of $500 and up. For some, watches provide 25% to 40% of their business.

So, what's the secret? Why do some jewelers' watch businesses soar, while others can't get off the ground? We solicited tips from jewelers who are successful at selling watches and found some valuable advice.

Have knowledgeable salespeople. A trained sales staff, well informed about their store's watch products, is essential to a successful watch business. At Seidlers in Framingham, Mass., which does almost 40% of its annual business in watches, co-owner David Kaster says, "All our salespeople must know about the lines we carry—the watch's features, how it works and how to work it, and how it looks on the wrist. We make sure all [staff members] are comfortable with taking out a watch and showing it."

Such information comes from sales reps, trade shows, the brands' promotional materials and Web sites, and in-store training by brand representatives. Robert L. Dietz, owner of Dee's Jewelers in Salisbury, N.C., arranges for representatives of each of "four or five brands we carry extensively to come in once a year to give 30-40 minute talks on all models we are purchasing [for the year ahead], after I place my order." The sales reps also regularly "update our salespeople." The result? Watch sales at the store grew 20% in the past year and now make up 15% of Dee's annual business.

Many successful watch retailers also require specific staffers to be resident "experts" on specific brands and their models. Dee's always has two people available who are "very knowledgeable about watches," says Dietz. Galperin Jewelry Co., Charleston, W.Va., divides its stores into product sections—such as watches, crystal, and silver—and assigns one section to each of its six full-time staff members, who are expected "to know it well," says assistant manager Scott Petit.

At Seidlers, each staff person, including the co-owners, is assigned a line and is responsible for "knowing it thoroughly," says Kaster. This means understanding its technical information, staying up-to-date on new models and features, meeting with the brand's sales reps when they visit the store, and being what Kaster calls the store's "master person" on that brand, able to help staff and customers.

But even deep product knowledge isn't enough. "A good watch salesperson needs personality, a passion for watches, and the ability to convey a comfortable feeling to the customer about those watches," says Kaster, whose partner Larry Schwartz is an enthusiastic watch aficionado. Petit agrees: "I love watches, and when we get a new line, I try to find out as much as I can about it." Galperin's also tries to have "at least two staff members who love to sell watches on the floor at all times," he says.

Focus on specific groups. What you carry depends on who your watch customer is. "A lot of jewelers throw out watches because they say they can't sell them," says Dietz, "but watches are a good market for jewelers if you get into the right niche and carry the brands that people want." That niche could be stylish fashion watches for young professionals, children's watches in a market with many young families, or conservative timepieces for an older clientele.

Many successful watch sellers focus their watch business on upper-income clientele. Most of Seidlers' watch sales, for example, are in the $1,500-and-up category. Bruce Watters Inc., St. Petersburg, Fla., caters to upscale consumers in the 40-to-mid-50s age range, and 90% of the store's watch sales are timepieces retailing for many thousands of dollars. Sissy's Log Cabin Inc. in Pine Bluff, Ark., which does 12% of its business in watches, also goes after upper-income clientele: Most of the company's watch sales are in the $5,000 to $10,000 retail range.

Be selective and exclusive. For many successful watch sellers, less produces more. "Unless you're selling to a wide [client base], you can't carry 25 brands and expect to successfully sell all of them," says David Kaster of Seidlers. "Look at Tiffany. It does very well with just three brands—Patek Philippe, Baume & Mercier, and its own." Carrying fewer brands lets both customers and salespeople concentrate on those and "see the trees instead of the forest," he says. Others agree. Bruce Watters Inc., which does 20% of its annual business in watches, focuses on just six or seven brands. Hale's Jewelers in Greenville, S.C., whose watch sales account for 19% of its yearly total, "just sells three or four" upscale Swiss brands, says company president Lucian Lee.

Following its own advice, Seidlers in the past 18 months has reduced the number of brands it carries, from 18 to 10. One reason for the move toward "less is more" is the ongoing consolidation in the luxury watch trade, which has seen a number of well-known brands purchased by a few large European luxury-goods or watch conglomerates. Having such large parent firms "can open more doors now for those brands and makes them more available—too available—to more retailers," says Kaster. "So we've removed them. We don't want to accumulate brands. We prefer to carry exclusive or lesser-known lines and are careful in what we select. We're committed to brands that customers can't find elsewhere."

Other watch-selling jewelers agree that exclusivity in watch marketing is a good way to maintain one's profit edge—and not just for luxury timepieces. "Keeping lines exclusive to our market" is effective in marketing against competing retailers and discounters, says one Texas jeweler, who declined to be identified. He does almost 20% of his business in watches, most of them in the $500 to $999 price range. And by limiting the number of brands his store carries, "our volume will be high enough then with each supplier."

Carry inventory in depth. Carrying a select number of watch brands—and a careful blend of styles and price points—enables the jeweler to carry inventory in depth for each, offering customers "representation of the brand," as Kaster puts it. Dee's Jewelers in Salisbury, N.C., for example, carries about 10 brands and about 800 watches, says Dietz. He attributes the growth in his store's watch business—20% in the past year—to that in-depth inventory.

"If you carry a brand, you should stand behind it and carry a full selection in your store," says Kaster. I know everyone says they can order what they want [from their suppliers], but if you carry fine brands, you need to have those items there to show to customers."

Spotlight your watches. Successful watch sellers direct customers' attention to their watches by setting them apart in separate areas of their stores. Dee's building is L-shaped, and one leg of the L—an alcove—is set up just for watches and some clocks. A sign directs customers to the watch section as soon as they enter the store. Seidlers is divided into two halves: Customers entering the store's foyer can turn right into the jewelry section or left into the watch area. Each of the store's 10 brands has its own section in the area.

Market your watches. Whatever type and brand of watches you carry, let your market know. "It's not enough to carry fine upscale watches, even exclusively," says Lucian Lee of Hale's Jewelers. "We must promote them so people know they are available and that we have them."

Inside the store, displays and signage should be visible, and salespeople should be allowed to wear the watches the store sells. Some jewelers let staff members buy the watches at special prices, encouraging them to personally "display" the product.

Outside the store, it means a strong, consistent commitment to year-round watch advertising. "We make a pretty concerted effort, using ads in everything—local newspapers, the visitors' [tourism] magazine, the regional and state magazines," says Lee. "About 20% to 25% of our ad dollars are devoted to watch advertising, proportionate to our watch sales."

Other successful watch sellers follow a similar strategy. Sissy's Log Cabin uses a statewide magazine with "a high demographic of upper-income subscribers" to promote its well-known higher-end watches retailing for $5,000 and up. Store owners Sissy and Bill Jones report that the company's watch sales rose 10% in the last year. I.W. Marks Jewelers in Houston, Texas, which does a third of its business in watches, also aims advertising at upper-income consumers. Last year, its watch sales—most in the $1,000 to $10,000 retail range—rose 15%.

Harland Jewelers in Modesto, Calif., which does 25% of its business in watches—most in the $500 to $1,000 and $5,000 retail ranges—uses billboards, mailers, and phone calls to market its mid- to high-priced watches. Its watch sales grew 10% in the past year. On the other hand, Susan's Jewelers of Corpus Christi, Texas, which does 20% of its business in watches, considers TV advertising its most effective tool for selling watches, most of which fall in the $2,500 to $5,000 retail range. "By the time they come to the store, they're pretty much pre-sold," says a store spokesperson.

There are plenty of other ways to market oneself as a leading watch retailer, notes Petit. "We have a minor league baseball team here in Charleston, W.Va.—the Charleston Alley Cats—and we give an upscale watch to the Player of the Year," he says. "The presentation is announced at every home game and in newspaper ads weeks in advance. We also donate a fine watch to the auction at the Charleston Symphony's annual ball."

Provide service and support. The after-sale support a store offers its watch customers can be useful in closing watch sales. Post-purchase services such as resizing, explaining the new watch's features, and extended warranties are effective in selling mid- and high-priced watches, says John Ballew, of Ballew Jewelers in Freehold, N.J., which does a quarter of its annual business in prestigious watches.

Little things count, too. Hoover's Jewelry in North Pratt, Neb., which sells most of its watches in the $100 to $499 retail range, finds that one of its most effective marketing tools is offering "a lifetime battery with every watch we sell," says owner Michael Jurado, adding, "Our knowledgeable sales assistants are able to change batteries, too."

According to JCK's national survey, one in three jewelers (35%) say that having an on-site watchmaker to provide servicing and repair is essential to a strong watch business.

But not everyone is convinced. After-sale repair service is important, agrees Kaster, because "the customer needs to know he has a cushion to fall back on." However, it isn't necessary to provide that in the store, he says. Seidlers uses a watch shop in Boston to do repair work other than that covered by the manufacturer. "We are the intermediary for the customer with the watch company, and our customers understand that. We keep them informed on the status and progress of the repairs or servicing."

Good service for watch customers involves more than providing repairs. It means taking extra measures to satisfy—and even delight—those customers. Galperin will set up special appointments at its store with representatives of upscale brands for customers interested in learning more about specific models of that brand. And at Seidlers, "when people come in, regardless of what we sell, they always get to see [co-owner] Larry Schwartz and I, so we can say hello to them," says Kaster. "If a regular customer is looking for a brand we don't carry, and they can't find a watch they want among those we have, we recommend where they can go to get one at a good price.

"Even if a customer who comes in for a watch doesn't buy one," he adds, "we make sure everyone leaves the store with a catalog and any other materials of the brand they were looking at, along with a World of Watches catalog and our business card." Such attentive service encourages customers to return when they want to buy another watch or jewelry or when they need services such as ring sizing. It also encourages them to tell others about the service they received at Seidlers.

"Our reputation is built on image, on providing a welcoming environment for customers," says Kaster.

No secrets. Building a successful watch business isn't reserved just for big-city jewelers. "We are in an average town, of about 28,000 people," says Dietz. "But you can't operate a jewelry business like it was 20 years ago. Consumers today want more variety in watches. And they're more knowledgeable. They read a lot of magazines, including trade magazines. They'll tear out those articles or ads and come in with them asking for the product. You have to be ready for that."

Kaster agrees. While 40% of Seidlers' business is in upscale watches, "nothing we do to achieve that is extraordinary," he insists. "What we do is come to work every day, present ourselves to customers in the most honest and friendly environment we can create, have a knowledgeable staff, and offer unique brands that don't try to run with the masses. That's our 'secret.' "