Seiko expands to higher-priced watches; trims hundreds of outlets

Seiko Corporation of America, one of the country’s major watch vendors, is actively expanding its Seiko watch market upward into the $500 to $800 range, reducing the large retailer base for its Seiko and Pulsar watches and Seiko clocks by more than 10% each, and focusing more attention on “key retail partnerships.”

Details of the changes and how they willl affect jewelers were discussed in company statements and a JCK interview with by Les Perry, SCA executive vice president for sales and marketing.

Since 2003, Seiko has been repositioning its Seiko brand, putting more emphasis on innovation, refinement, and distinctive styling, in addition to its expertise in technology. In the U.S. market, SCA in the past year has been expanding its market beyond its traditional core—under $350, where it denominates the men’s market—into $500 to $800 range.

“We’re not ignoring the under-$300 category,” says Perry, “but the industry has seen tremendous growth in the $500-$800 price range. There’s real opportunity there, and Seiko wants to be a strong player in that category.”

Since late last year, SCA has introduced Seiko’s Arctura collection ($400-$700) and Sportura ($600-$1,000, with a special model priced at $3,500). Thanks to their success—the Arctura Kinetic Chronograph is a top seller for many accounts—Seiko already has about 13% of the $500-$800 niche, says Perry. Building on that with “plenty of products to support the category,” he expects Seiko to have 25% of that market—now dominated by Movado—within a couple years. Overall, Arctura represents about 8% of SCA’s total business, but could also reach 25% within a couple years, he says.

Further down the road, SCA may introduce watch lines priced “north of $1,000,” says Perry. Seiko has been selling luxury-priced watches in Asian markets, including Japan, for a number of years, and all 400 pieces of Sportura’s $3,500 U.S. model are sold out. As Seiko has expanded its market and re-positioned its brand in the U.S. market, SCA has looked closely at who its key retail partners are—and where they’re located. The price points on its elite collections are now substantially higher than some retailers were used to, and SCA wants a consistent, active representation of its watches.

“We looked at two year’s worth of purchasing history and determined that some of our accounts did not fit the re-imaging criteria,” says Perry. “We’re marketing watches, not just selling them. So, we want key retailers who are partners with us in that, who understand the differences in looks, prices, and appeal of each of our lines, who give proper space to the brand, whose lines turn well, who have a balanced assortment of our collections, and actively market the brand.”

About mid-way last year, Seiko began reducing doors in its major national accounts. During the first half of 2004—which Perry called “Phase Two”—SCA closed about 1,000 independent retail accounts for Seiko (equaling about 1,250 doors, leaving less than 10,000) and almost 1,000 each for Pulsar (now under 7,000 doors) and for Seiko clocks (now less than 3,000). “A great deal of thought and research went into this decision,” says Perry. “We’d rather be important to a limited number of doors than unimportant in many,” he says.”

The streamlining has cut across SCA’s lines of distribution, but the ratio of distribution remains the same: About a third are chain jewelers, a third independent jewelers, and a third department stores.

“We aren’t abandoning our core retail base,” says Perry. “On the contrary, we’re growing our business with our strongest retail partners, doing more business with fewer accounts.”

SCA is strengthening its relationship with these key retailers, he says, with more national, regional, and local TV and print advertising; more events with them in-store or in key markets; more billboard campaigns; and more case displays, POP, advertising, and retail support programs.

The repositioning also means some changes in the marketing and media Seiko uses to promote its various lines—“more InStyle magazine than People,” as Perry puts it. “With TV, for example, rather take than a shotgun approach, we’re doing more targeted marketing, or what the networks call ‘appointment programming.’ Advertising is directed to specific demographics which view specific shows, or is focused on specific cable channels. For example, we’re advertising actively to women on shows on the Lifetime network.”

Something else SCA may offer its key retailers is Seiko shop-in-shops. Seiko has already tested the idea successfully in some stores in Europe, and they’re “a possible opportunity for our key retailers and us in the future,” says Perry.

SCA, based in Mahwah, N.J., is a wholly owned subsidiary of Seiko Corp., one of the world’s leading watchmakers, headquartered in Tokyo, Japan.