Make Room For Watches

‘We want consumers to link watches with our name.’

­ Arthur Sockolof, Simms Jewelers

A South Carolina jeweler adds a new watch line for the first time in five years. A Louisiana retailer finds several midpriced lines to fill the gaps in his inventory. A New Jersey jeweler creates a watch “room” and beefs up sales training.

These are just some of the ways jewelers have found to build their watch business. In fact, members of the JCK Retail Jewelers Panel boosted their watch sales an average 7% in 1995. On the other hand, the number of panel members who don’t carry watches rose from 8% of the total in 1994 to 12% in 1995.

The increase in jewelers who boosted watch sales agrees with the increases seen by many major watch manufacturers. And while strong holiday sales provided much of the growth, other factors helped. Many retailers realize they’ve overlooked watch sales for too long. So they’ve taken the initiative to stimulate business.

For example, Arthur Sockolof of Simms Jewelers, a destination guild operation in Bedminster, N.J., displayed watches in a 7-ft.-long case in the main showroom for years. Last year, however, he found that watches weren’t meeting sales goals so he took action. He secured two new lines ­ a high-end, high-recognition prestige brand (Patek Philippe) and a high-end house brand (Waldan International). Then he placed each brand ­ the new ones plus Tiffany, Rolex and Cyma ­ in its own 2-ft. showcase flanked by a chair for customers. “The chair seems to create a more active interest,” he explains. “Customers don’t just browse. They sit and discuss the watches in that case.”

In addition to the new brands and new display tactic, Sockolof increased inventory to represent each brand fully. He also invested in storewide sales training seminars and bolstered advertising that features his store name and his well-known watch brands. “We want consumers to link watches with our name,” he says. “They may know us as a jeweler, but it’s necessary to make that link with watches, too. We also talk a lot more about watches in the store.”

The results were beyond impressive: gross watch sales soared 273% in 1995. Watches still represent only about 10% of total sales, up from about 7% a year earlier. But Sockolof expects jewelry and watch sales to continue rising this year. “I’d like to keep watches at about 10% of a growing total business,” he says.

Sales on the rise: Watches were a growing business for more than half (54%) of the JCK Retail Jewelers Panel in 1995. (The JCK panel includes a cross-section of retail jewelers nationwide.) More than a quarter reported increases of 10% or more, with 16% up 20% or more (see chart). And while 41% of jewelers said last summer that sales had been flat during the preceding 12 months, only 21% now say full-year 1995 sales were unchanged from ’94.

Jewelers whose sales grew at least 20% last year were more likely to have midsized guild stores than other types. Among them were a two-store operation in the San Francisco area (up 44%), a 140-year-old store in South Carolina (up 30%) and a single-store operation in Indianapolis (up 30%).

High-profile stores start with an advantage. A well-known name in the community helps them to attract today’s savvy watch consumers and prestige watch brands. But strong names don’t automatically boost watch sales.

Most stores reporting double-digit increases actively monitor sales, create interest with new or unique brands, improve in-store display, use co-op dollars to place more advertising and expand services. They also keep an eye on competition from department stores or mass merchants and consciously avoid carrying the same brands. This raises the controversial issue of exclusivity agreements and limiting distribution.

“We have four major lines, and none is carried in the department stores,” says Heyward Sullivan, co-owner of Hale’s Jewelers, a 140-year-old fine jeweler in Greenville, S.C. “Department stores are, of course, competition in the sense that they sell watches, but for us these are not the same lines.” Sullivan deals only with watch companies that he feels offer support to jewelers. “I applaud manufacturers that have made an effort to limit distribution and concentrate on more items with fewer dealers,” he says. “That’s why we have been picky about choosing watches.” Sullivan is so choosy that he hadn’t added a new watch line in five years until he put in Maurice Lacroix last fall.

Retailers who are unable to sell certain brands as registered dealers or have been dropped by a manufacturer often consider such agreements biased in favor of larger stores or those in bigger cities. Several independent retailers also say they agreed to exclusivity programs only to find the same watches offered to nearby chain stores, which sold them at a discount. Indeed, distribution restrictions have done little to stem the rampant discounting and transshipping of some higher-end brands.

Manufacturers themselves know the problems won’t vanish overnight, but they call vigilant distribution a valuable step in the right direction. Toward that end, some are careful to sell newer, higher-end or slightly different models to jewelers than they do to department stores. And a number of new entries in the U.S. market choose their retail partners for their reputation and willingness to work diligently to create interest in the brand more than for their size.

Finding a niche: “We like watches,” says Charles Zerbe, owner of Zerbe Jewelers Inc., Colorado Springs, Colo. It’s no wonder ­ they account for about 35% of total sales (almost four times the national average of 9%). Zerbe’s focus on watches began several years ago based on instinct and a look at his market. Downtown Colorado Springs draws a very different shopper than suburban malls, he says. “They want something different and a higher quality,” he says. “But there wasn’t a store here that sold good watches.”

Today, Zerbe carefully balances his stock in all categories: men’s and women’s dress and sports, sporty dress, luxury and outdoors. As an independent with a strong track record, he can secure many nationally advertised brands. And he doesn’t keep his stock a secret: all brands are listed in his telephone directory ads under “watches” and “jewelers.” He takes advantage of co-op ads, and plans to do so even more often and more consistently this year. “It’s important to keep our name visible even at non-peak selling periods,” he says.

Despite his success, Zerbe is unhappy with some supplier policies he says inhibit further marketing and sales. He conducts in-house training for his staff, but has trouble getting help for it from watch manufacturers. He’s had similar difficulties bringing in watch company representatives for store events. “They tell me I am too close to Denver, and they would prefer to do these things at stores in the larger market with larger sales volumes,” he says. He also would like to see watch companies more readily include small stores in sales incentive programs. “We sell a lot of watches, but the volume the manufacturers request for their sales incentive programs is unrealistic.”

Testing the waters: Tom Scho-maker is a master watchmaker for William Effler Jewelers in Cincinnati, a 75-year-old American Gem Society operation that opened a second store eight years ago. Effler Jewelers used to make little effort to build a balanced watch inventory or clientele. But two years ago, Scho-maker urged owner Mark Andrus to see what watches might offer. “We wanted to see if there really was a market that we were missing,” says Schomaker.

In mid-1995, he directed an expansion of the watch department. First, all watches were moved from a poorly lighted area on a back wall to a front showcase next to the fine jewelry. Watches were draped over white leather displays under new lights that made them sparkle. (Halogen lights are scheduled to be installed this month.) Several lines were dropped and six Swiss brands were added, including two (Wittnauer and Belair) that are U.S.-made from Swiss parts. Retail prices range from $60 to $2,200.

Results were evident quickly. “We were way up in sales after two months,” he says. “In fact, we did more watch business in one month than we did the entire year in 1994.”

The new approach attracted several types of business:

  • Older customers who trust the store bought watches based on recommendation rather than brand name.

  • Younger buyers knew about the brands but hadn’t seen them before at Effler Jewelers. “We always had a healthy repair service, but customers had to make an extra effort to see any of the watches,” says Schomaker. “Now we sell a number of watches purely because the customer sees them while waiting for a battery.”

Nearby department stores where many Effler customers previously bought watches couldn’t match the store’s level of service. “I change a battery and rewaterproof without charge,” says Schomaker. “One customer said he waited two months for a waterproofing and had to pay for it at a department store. He was instantly impressed with our service.”

Schomaker’s boss has taken note of the changes, too. “He now wears a watch he wouldn’t have worn in a million years before we started this department,” says Scho-maker. “It’s a thick automatic chronograph.”

Last year jewelers reported a 7% average increase in watch sales.

WATCH APPEAL STARTS IN-STORE

Some jewelers hope a watch brand’s national advertising muscle will bring in customers. Others depend on their own ability to attract and influence customers. Such retailers are successful with store brands. They’re also perfect targets for companies seeking to introduce brands new to the U.S. but well-known elsewhere. A jeweler can present these watches as unique to the store and not available in nearby chain or department stores or even from other local jewelers.

Many brands new to the U.S. are from Swiss-based companies that are expanding distribution. They often sell mid- to high-end watches to guild or other strong independent stores. They look for jewelers who will represent the line fully and will not discount or transship it.

We asked Robert Sears Siragusa, president of Maurice Lacroix USA in Los Angeles, what makes a retailer attractive to his company. The brand, which is among the top sellers in Europe and the Far East, entered the U.S. about two years ago. Roughly 100 U.S. jewelers now distribute it. Sears Siragusa looks for a well-established retailer with a respected reputation. It should:

  • Place a high value on the integrity of its products.

  • Have a clear “pride of business” quickly evident to a visitor.

  • Include progressive thinkers who also remember the past.

  • Be willing to cosponsor local events, from sports to arts.

  • Use drawings and raffles as marketing tools.

  • Offer warranties extended beyond manufacturer limits.

  • Offer gift certificates for future purchases instead of discounts.

  • Use sales incentives for the staff.

  • Be willing to conduct special sales training for a brand.

  • Stress customer service.

  • Never hang watches on a wall case.

WATCHING WATCHES

Store #1: Destination for high-end jewelry.

Challenge: Create destination for watches also.

Solution: Put each watch line in a separate showcase then place all showcases in one “watch room.” Add another prestige line and advertise it. Talk to customers more often about watches.

Results: Watch sales nearly tripled in less than one year.

Store #2: AGS, family owned, 75 years in business, two locations, one full-time watchmaker.

Challenge: Update low-turnover, low-end watch department.

Solution: Place new watch showcases near the watch service department; install new lighting. Scrap old lines and add six new ones that cover men’s sport and dress, women’s gold and other categories. Retail prices range from $60 to $2,200. Free services for watch buyers.

Results: More watch sales in one month than in the entire previous year.

Store #3: Downtown, 145 years old, independent.

Challenge: Compete with department stores and chain stores.

Solution: Carry full representations of only five lines. None of these lines is carried by nearby department stores under an agreement with watch companies.

Results: Continued strong watch sales and reputation.