Time On Your Side

On an otherwise slow Monday in the second week of November, watch retailers and manufacturers were laying the groundwork for what they expected to be a strong holiday season. By page seven in the day’s Wall Street Journal, readers saw ads for Blancpain, Longines, Breitling and Bulgari watches. One day earlier, Sunday New York Times readers saw enough ads to create an entire catalog of brand name watches

This was just the tip of the iceberg in an advertising and promotional blitz that has made retailers and manufacturers confident of strong sales this year. The blitz involves everything from magazines and billboards to Hollywood films, sport events and radio and TV.

Sport, fashion and dress lines each have their reasons for the optimism. John Kroeger, national sales manager at Gucci Timepieces, points to the success of Gucci clothing at fashion shows. “We have the watches to go with the clothes,” he says. “We expect terrific growth in 1996.” Paul Sayegh, chief operating officer at Bulova Corp., says 14k gold lines were popular throughout 1995, and he expects the primarily women’s lines to continue to attract consumers this year.

Robert Drew, vice president of sales at Swiss Watch Corp., says even the “casual Friday” dress pattern at many offices has had an impact. “It increases the desire for more accessories to go with the casual appearance,” he says. This trend reinforces the already growing desire to own more than one watch and should help to boost sales of watches that sell for $100-$300, he says.

At middle to higher prices, most retailers still report strong interest in sport watches, but some variations have emerged for the new year. “I see a lot of women wearing men’s sport watches for a larger look,” says William Smith, manager of watches at the Diamond Cellar, a retailer in Columbus, Ohio. “Part of the interest also may be because fewer women’s watches have chronograph features.” David Lampert of Lester Lampert, a retailer in Chicago, Ill,, says steel watches will be popular this year. “It’s because of the style, not the price,” he says. Men tend to prefer the steel bracelet and case, while women are likely to choose a steel and gold timepiece.

And at the high end, business should be good because wealthy customers are in a good mood. “Our customers seem to be more confident and are spending easier,” says Everett McCarver of McCarver & Moser, a retailer in Sarasota, Fla. “The stock market is good, and the hope of tax cuts is promising to more people.”

Any price increases are expected to be minimal, barring a jump in the value of the Swiss franc like the one that boosted prices last year. Peter Laetsch, president of the Federation of Swiss Watch Industry, New York, N.Y., says the franc has stabilized but that it’s still overvalued against the dollar. Another round of price increases could hurt sales. “Even at the higher prices, there is a psychological effect among buyers,” says Laetsch. “Higher prices limit the pool of buyers at all price ranges.”

Consumer savvy: Retailers can expect consumers to become increasingly educated and selective when buying watches. Today’s consumers are far more likely than their predecessors to want mechanical and sport watches and to ask about screw-down crowns, water resistance, strap durability and sapphire crystals.

When these savvy consumers shop for a watch this year, they’ll be able to choose from perhaps the widest variety available in years. Among Swiss brands that entered the U.S. market in the past year are Revue Thommen, Clydia, Ventura, Mondaine, MHR Montres, Paul Picot, Buler Swiss, Universal Geneve, Andre Le Marquand, Perrelet and Kelek. Also new to showcases are Gevril, Luger Swiss, Nice and Michele Timepieces. Among new brands bearing fashion or accessory brand names are Timberland and Joe Boxer watches from Timex, as well as watches carrying the well-known names of Nicole Miller, Robert Lee Morris, Liz Claiborne and Wolverine Wilderness.

Retailers would do well to investigate the new brands, says Steve Holtzman, president of Chelsea Marketing and Sales in San Diego, Cal. “Uniformity is out. Individuality is in,” he says. “Consumers are hesitant to pay top dollar for a watch everybody else may be wearing.”

Other industry observers add that the challenge this year will be to tap into the rising consumer awareness of fine watches. A 1995 poll of the JCK Retail Jewelers Panel highlighted the growing success of independents who nurture their watch departments. These jewelers have generated greater profits through careful product choices combined with better service and substantive advertising (see “Watch Sales: How are Jewelers Doing,” JCK, October 1995, pp. 84-87.)

Some other trends to look for this year:

  • Growing acceptance of automatics at the high and low ends (new at the low end because technology now allows automatic movements in watches that retail for less than $250).

  • Continued sales increases and new styles in karat gold watches, particularly women’s models.

  • Greater advertising of fashion watches in all price ranges.

  • More “gadgets” such as time reserve indicators and light-up dials.

  • Introduction in the U.S. of radio-controlled watches.

  • Titanium as a selling point in dress and sport watches beyond the diver watch market, where it is already accepted.

  • Marketing that emphasizes battery-free models or batteries with long life spans.

  • More multibezel and multi-strap /bracelet/bangle sets.

HIGHLIGHTS

  1. An advertising and promotional blitz has made retailers and manufacturers optimistic about watch sales this year.

  2. Variations in design and technology will keep sport watches popular in the middle to higher price range.

  3. A booming stock market has lifted wealthy consumers’ moods in the high-end market.

  4. Prices should be stable, barring an increase in the value of the Swiss franc.

  5. A wealth of new watch brands – in addition to a range of longtime strong sellers – will give increasingly savvy consumers a lot to choose from. All you have to do is stock them.

MORE INSPECTION DELAYS LIKELY

Starting this month, non-precious metal watch imports will be subject to more frequent inspection by the U.S. Customs Service, says Stanley Schwartz, a national import specialist for the Customs Service.

The watch category was placed on a target list because of low compliance with regulations involving classification and conspicuous markings. The category just missed the required 85% compliance level needed to stay off the list, says Schwartz.

Schwartz advises watch executives to avoid the problem by undergoing an audit. Such an audit would involve his staff visiting and helping a watch company to correct any problems.

Toby Collado, executive director of the American Watch Association, says AWA will work with members on this issue. Other AWA projects this year include:

  • Continued opposition to legislation that would remove all watches from the list of import-sensitive products normally denied duty-free treatment.

  • Continued opposition to legislation that would eliminate the Production Incentive Certificate program for watch companies in the Virgin Islands.

  • Continued support of the proposed Anti-Counterfeiting Consumer Protection Act, which would give law enforcement officials power to fight counterfeiters, increase fines and penalties and prohibit reexport of counterfeit goods.