Selling Time

Watch companies are doing things right, says Robert Dietz, owner of Dee’s Jewelers in Salisbury, N.C. Their increased promotion, advertising and marketing are creating educated consumers interested in better watches.

In fact with only minimal marketing, his store notched a clear uptick about two years ago. “We began to see much greater interest in higher-priced goods at about that time,” he says. “Now these outsell our less- expensive items.” Two or three years ago, his typical sale was about $100. Now it’s $300 to $400.

That’s not by accident. Deitz saw what customers wanted and made it available. “We reacted by stocking the better watches with each of our brands and have offered the range of styles now in demand,” he says.

This experience is being replayed nationwide as retailers continue to upgrade their watch selections. This upgrade has helped to buoy a somewhat listless market for independent jewelers. This spring, for example, members of the JCK Retail Jewelers Panel report average 4% sales increases, compared with 7% the previous spring. But watches gained steam as a product to market and sell. The panel members report watch sales averaged 10% of store sales, up 1% from the previous spring.

At the same time, jewelers say they’re giving watches more space in showcases and are taking more time and effort to buy smart. In addition, demand for highly skilled watchmakers is strong for the first time in years (see “Demand for Watchmakers Reaches a New High,” JCK, March 1997, p. 78).

Service a key issue

At first glance, the sales formula for watches appears to be straightforward. Consumers are interested in buying better watches, they’re more educated about them and they appear to be willing to spend more for them. But they demand knowledgeable sales associates, good selection and good service.

In return, Dietz, like many high-performing watch retailers, provides buyers with an ample selection of watches in price ranges reflecting his customer base. He emphasizes service with on-site and off-site watchmakers. And he uses co-op advertising and other marketing programs offered by watch manufacturers to tell consumers what he offers.

As the results of the JCK poll indicate, retailers such as Dietz are among those who increased their watch sales in the past year. Another is Joint Venture Jewelry, a Charleston, S.C., company that recently added two watchmakers (one from a closed shop nearby) and bolstered its supply of restored “vintage” watches. Watch sales have jumped more than 50% from the previous spring.

In Fayetteville, N.C., Rhudy Phillips, owner of Rhudy’s Jewelry Showroom, says watch sales increased 12% to become 15% of his company’s multimillion-dollar annual sales. He vows he has no real secret beyond what he calls old-fashioned business sense. “If you are honest with your customers and treat them decently, word will spread,” he says. At his location – a high-traffic store with hundreds of visitors per day – warm customer relations, above all else, are responsible for his strong watch sales, he says. He has kept pace with demand and offers a wide variety of styles in most price ranges, showing 300 to 400 watches in his cases.

But he and Dietz agree that above all else, service is what jewelers need to sell watches. Service differentiates jewelers from mass merchants. “If you lose customers to mass merchants with watches, you’ll lose to them with jewelry as well,” says Dietz. “If you’re not going to be a full-service retailer, get out of the business.”

Another view

Some retailers offer a differing view, saying they don’t see the wisdom in expending the effort and expense needed to generate a healthy watch business when one sour repair can lose a customer for life. If customers don’t have the problems often associated with watches – repair delays and costs – they won’t be lost to mass merchants, according to this view.

However, there is evidence that this attitude is abating among independent jewelers. Fewer panel members say they’ve recently stopped selling watches (8%) than in the previous year (12%).

But that doesn’t mean the challenges to selling watches don’t continue. Nearly half the panel members say pressure to discount watch prices increased in the past year. While many say discount concerns are not isolated to watches, they tend to look for greater support from watch manufacturers than from jewelry manufacturers to help reduce the pressure from consumers who have seen the same brands at mass merchants and discounters.

Manufacturer support

For their part, watch manufacturers have tried to stem discount pressures through more selective distribution and closer ties with their retail clients in the past few years. But many retailers say they have seen few results. “The large name brands in discount houses are a measurable problem,” says Eleanor Agnelli of J.H. Anderson Jewelers in East Hartford, Conn. “When are they going to wise up? Small jewelers will always do a better job for them.” While watches comprise about 20% of her store’s overall sales, Agnelli plans to reduce the number of watch lines she offers this year. She’ll start by trimming brands she sees at discount stores.

M. Krasner of B.F. Krasner Co. Jewelers in Flint, Mich., understands Agnelli’s concern: “The idea that watch companies can distribute through all means possible has chilled the enthusiasm and loyalty of jewelers.”

Retailers also are concerned about a lack of local assistance. Thirty percent of the respondents say watch companies don’t provide enough in-store and advertising support. Though most jewelry stores appear to take advantage of the co-op advertising opportunities watch manufacturers offer, several say they cannot always do so. “Sometimes we’d rather spend co-op-type dollars on a new crystal or a new band to retain a disgruntled customer,” says Randy Wimmer of Wimmers Jewelry in Fargo, N.D.

Consumer awareness

Whatever their concerns about watch retailing, jewelers nearly universally agree that the much- increased watch advertising and marketing campaigns that watch manufacturers have aimed at consumers have paid off. They say the public at large is clearly more aware of watches and is better educated about brands and watch features.

Bill Robinson, president of Jessops & Sons in San Diego, Cal., says he’s reaping the results of watch company advertising (with which he regularly co-ops) that has created a larger group of serious watch buyers.

He also has done his part, offering more products and services than ever before. “We started increasing our watch inventory in 1994,” he says. Robinson’s store, which occupies 6,000 square feet, carries 30 watch lines that are largely absent at nearby department and chain stores. “I believe you must carry a wide range of brands that appeal to a wide range of shoppers,” he says.

“We’ve also have a no-discount policy and stick to it.”

And he has trained and hired knowledgeable employees who can explain watches to consumers even before price becomes an issue. These newly educated consumers are showing their appreciation: watch sales now account for nearly 30% of the company’s total sales.

Watchmakers on-site

There are other critical factors in making a watch business tick, say jewelers, including a good watchmaker on site. “Customers like the fact they can receive an estimate for a repair quickly,” says Robinson. “They also like the fact that their watch never leaves the store.”

In addition to effective advertising, he says, watch suppliers have enhanced their retailer incentive programs. “They are strong-er than ever and they are quite effective in motivating sales staff,” he says.

Watchmakers and sales

More retailers than not say on-site watchmakers benefit overall business. In fact, 40% of those polled say they have at least one watchmaker on-site. As Robinson says, a good watchmaker can offer fast repair estimates and often guarantees watches are returned to the customer quickly. The value of this service cannot be underestimated – more panel members who have a watchmaker saw their business increase than those who do not.

Though good watchmakers are a rare commodity today, retailers praise their ability to provide the sort of customer satisfaction that brings about repeat business. Like competent jewelry benchworkers, a watchmaker’s personal contact with a customer often generates a positive feeling about the whole store, which creates more business through repeat buys and referrals.

While many jewelers praise their own watchmakers (40%) and may be searching for additional help, many (66%) leave the repairs to a contract service. A smaller number rely mostly on watch company service centers (29%). (The figures add to more than 100% because some jewelers use more than one option.)

Though it seems full-time watchmakers have a positive effect on sales, that may not be enough, say most jewelers. Watch sales volume in many stores does not warrant full-time help, despite the increase in repair traffic an on-site person typically brings into a store. And more than a few jewelers say they have been stung in the past by less-than-efficient watchmakers who had minimal positive effect on sales or were clearly unable to cope with repair volume or technical hurdles.

Finding good watchmakers

Good watchmakers are hard to find, say many of the jewelers polled. Watch manufacturers and retailers regularly relay these concerns to watch repair schools, which only recently have seen increases in enrollment. This swell can be attributed to two factors. Rising sales of finer watches and the retirement of aging watchmakers have combined to create a demand that is only now being recognized.

Graduates and apprentices of watchmaker schools, particularly those from the schools with high standing in the industry, are entering the work force slowly. There aren’t enough to meet demand. Even the small number of retailers seeking watchmakers exceeds the number of qualified craftsmen available for the positions.

In addition, service centers operated by watch manufacturers also seek watchmakers, throwing them into competition with retailers for the small pool of talent available.

Continue sales?

Of course, many of the staffing concerns will be rendered moot if watch sales begin to wither. To guard against that, however, watch manufacturers plan to continue and/or boost their marketing and promotional efforts. And many say they are focusing on sales through retail jewelry stores after years of multisourcing their sales to a wide variety of retail outlets.

Watch companies such as Rolex and TAG Heuer have carefully crafted their distribution strategies to assuage many of the concerns voiced by retailers.

Many of these same retailers are encouraged by the introduction of new brands, including watch lines from Mont Blanc and A.T. Cross, well-known manufacturers of writing instruments.

The sales strategy of these companies focuses on the retail jewelers. This trend is good news to the retailers who are working toward strengthening their watch sales, selection and service.