Turbulent Times

If one word defines the current state of the watch business, especially in the United States, it is “revitalization.”

Now, more than any time in recent years, mid- and luxury-priced brands are rejuvenating themselves with revamped products, ads, and marketing; acquisitions; corporate reorganization; and redefined images. The goal is to raise their public profiles, gain new markets, or widen existing ones. And in the process, retail jewelers—and how the brands cater to them—are more important than ever.

Indeed, some changes are so extensive that some brands consider what they’re doing more than just renewal. Swiss Army Brands has “relaunched” its watches in America. Dior calls its changes “a revolution.” Ebel even held a gala at the 2001 JCK Las Vegas Show to celebrate its “rebirth.”

Consolidation. Some of this results from the ongoing mergers and acquisitions of watch companies in upscale segments of the business. New owners with deep pockets and aspirations for bigger slices of the watch market can provide newly acquired brands with the financial, distribution, and manufacturing resources to strengthen or expand their operations, marketing, and products. That is what’s happening with such established watches as Wittnauer (bought by Bulova in September), Breguet (owned by The Swatch Group), Bertolucci (bought by a private investment group), Aero (Montres Louis Erard SA), Junghans (EganaGoldpfeil), Ebel (LVMH), Jaeger-LeCoultre (Richemont Group), and Dior (LVMH) as well as more recent brands like Bedat & Co. (Gucci Group).

For example, Aero Watch, known for its luxury pocket watches, has expanded into wristwatches thanks to Montres Louis Erard SA of Le Noirmont, Switzerland, which bought the company last January. Bedat, the Geneva, Switzerland, watchmaker whose luxury timepieces debuted here in 1997, will expand its selective U.S. presence and target major markets in Europe and Asia, using the resources and network of Gucci Group, which bought it in December 2000.

In February 2001, Bertolucci was purchased by investors experienced in management and expansion of international firms. They will provide resources that this small firm—previously undercapitalized and in need of additional managerial expertise—requires to grow. The new owners say they will expand Bertolucci’s geographic presence in the United States (already a third of its sales) and elsewhere, enhance its marketing strategy with new products and a reinforced brand identity, and increase annual production to 20,000 watches.

In other cases, new owners provide needed overhauls and course changes. Gerald Genta and Daniel Roth, two top Swiss luxury brands, were bought in June 2000 by Bvlgari, the Italian luxury watch and jewelry maker. The marketing strategy of Gerald Genta has been redefined, and its distribution and production reorganized “to meet market requirements” and achieve “a significant turnaround,” says Bvlgari’s chief executive officer Francesco Tripani. According to a Bvlgari report, Daniel Roth’s problem was that it couldn’t keep up with demand for its watches, leading to “scarce market penetration” in the United States and Europe. So, Bvlgari and the watchmaker will reinforce the brand’s successful marketing strategy while strengthening production and distribution.

Rejuvenation. Other major brands are seeking to rejuvenate established markets or create new images for themselves.

  • cK is a fashion line of Calvin Klein, owned by The Swatch Group. “We thought Americans would buy [the brand] because of who we are and because we’re a European brand,” said a spokesperson recently. “But the rules and distribution here are different. We must adapt and listen to the American market.”

In the past 18 months, “listening to the American market” has resulted in more new products (including more watches for men), new price points, and more inclusive distribution. Department stores and watch shops remain clients, but cK is focusing on jewelers, stressing its “Swiss-made quality for the best price from the best-selling fashion designer.” cK is sold in 250 stores, but The Swatch Group wants to double that figure.

  • Dior Watches, the watch line of Christian Dior, owned by LVMH, has undergone what its officials call “a revolution” in operations, affecting its pricing, product, distribution, audience, and even its logo and name. (LVMH is using “Dior” on all formerly “Christian Dior” products—including pens, fashion items, and watches.)

Dior also has a more aggressive price strategy—selling all of its watches for under $1,000—as well as more selective distribution. It has introduced innovative, even edgy, designs in the $500 to $1,000 range to reach a wider market of younger, more fashion-forward watch buyers. Examples include the new red Trailer and the high-tech Chris 47 (its case is also its buckle), which has enjoyed strong sales.

  • Hamilton, the well-known American brand owned by The Swatch Group, is “refocusing on our past,” says Caroline Faivet, Hamilton’s third president in two years. Recent efforts to update the brand with new fashion lines like “Marylin” (introduced in 2000) have been dropped.

“The future direction of the new Hamilton is to take our phenomenal past—with its many innovative watches and designs—and build on it,” Faivet said recently. The Gramercy and Lloyd watch lines, for example, combine “looks” from Hamilton’s golden era of design (1930s through late 1950s) with today’s quartz technology. The brand is also highlighting its military history with its Khaki collection (and promotional tie-ins with the recent Pearl Harbor movie) as well as a watch project with the West Point Military Academy. Hamilton also is expanding into military PX stores.

  • Luxury watchmaker Piaget has unveiled a reinterpretation of its popular signature Piaget Polo, first launched in 1979. The Polo is Piaget’s “watch for the 21st century”—a timepiece that will reposition Piaget in the public’s view as a leading watchmaker, says Philip Metzger, CEO of Piaget International. The 18k watch keeps the seamless look of its integrated bracelet but has a bolder, more modern face and uses Piaget’s own automatic or quartz movements. Piaget rolled out the new Polo last fall in North America and will launch it elsewhere this year.

Piaget also has just introduced another innovative design here—its first steel watch, called Upstream, with a rectangular case that doubles as its buckle.

  • Longines is aiming at younger well-to-do buyers with its trendy Dolce Vita “Square” and “Oposition” series. “We don’t want to become a fashion label, but we do want to rejuvenate the brand,” says a spokesperson. “The average age of Longines buyers now is 45 to 50 years of age. We want to attract more younger consumers, aged 30 to 40.”

  • Movado, best known for its Museum Watch, last year unveiled Elliptica, which it calls “a defining watch style.” Inspired by its 1912 Polypan (with an elongated case that followed the wrist’s curvature), this new watch has ergonomic contours, a comma-shaped case (with crown on top) and a bracelet with links that echo the case. Company officials expect to it to become Movado’s new signature line.

  • Patek Philippe, a world leader in luxury watches and known for its complication and men’s timepieces, focused on fashion in 2001. A new ad campaign (backed by a 60% ad budget increase) was aimed at younger affluent women and used more print ads, especially in fashion publications. It capitalizes on the “tremendous increase in awareness of Patek Philippe among women in the past two years” since the watchmaker debuted its stylish Twenty-4 collection for women, says spokesperson Tanya Edwards. “There is appreciation for not only how complicated its watches are, but also how beautiful.”

The American factor. The U.S. market itself is a reason for heightened activity in the watch business. Southeast Asia’s economic crisis in the late 1990s, sluggish national economies in Western Europe, and slumping sales of upscale watches in Asia and Europe have enhanced the importance of the lucrative U.S. market—and foreign watchmakers’ dependence on it. In recent years, more mid-priced and luxury brands have sought to enter or expand in the U.S. market to “balance out the business,” as one luxury-brand president told JCK.

Swiss watchmakers have increased their marketing and exports to the United States—so much so that, since the late 1990s, it is their largest market. Officials of Japan-based Seiko and Citizen, two of the world’s biggest watchmakers, call the United States their “one bright spot” among world markets. And where the big guys go, others follow.

More new and established foreign brands—such as Zenith, Opex, Regnier, Von Burg, Bruno Banani, Japy, and Anonimo last year alone—are coming here, hoping for strong business. Even national industry groups recognize the importance of the American market: The French Watch and Jewelry Association last year took U.S. trade journalists on a tour of French watchmakers to “raise our profile with U.S. retailers and consumers,” a spokeswoman told JCK.

There’s another side to this “American factor.” For many brands, it is necessary not only to succeed in the United States but also to be seen as successful here. “Success in the U.S. market is important for the impression it makes worldwide,” says Oliver Ike, president of Ikepod, an innovative luxury watch sold in 42 countries. “To be considered really successful elsewhere, you must be a recognized presence in the U.S.”