Watches! Who Needs ‘Em?

American jewelers have a curious love/hate relationship with watches. According to a new JCK national poll of hundreds of jewelers, 91% sell timepieces, and some make good money doing it. Many of them, however, sell watches only because they have to, not because they want to or because they think they’re profitable.

One-third of jewelers surveyed told JCK they carry watches because, as several put it, it’s “expected” of them as a full-service jeweler or because customers want it. “Your good customers always need the option of purchasing them,” explained one California jeweler. A few do it because they’re old, traditional retail businesses that “have always sold watches,” as one said. Some (8%) admitted frankly, and with some frustration, that they have “no idea why” they continue to sell watches. “No reason, just reality,” said a Michigan jeweler. “Watches round out the jewelry inventory.” A few even find their watch business downright depressing: “I hate them,” declared one jeweler.

Traffic and sales. Many jewelers concede watches are a useful business tool, creating traffic and sales for the store (19%), keeping customers from going to competitors or looking elsewhere for watches (17%), and even enhancing store prestige in the local market (11%). “They’re another reason for people to see what we have and come in for service,” explained Nick Fratto of Anthony Jewelers, Palmyra, N.J. “The image of a store is related to the watch brand” it carries.

Others agree. “If there’s one item in our store that you could term a ‘necessity,’ it would be watches,” declared Scott Louis of Marlen Jewelers, Rocky River, Ohio. “They bring a certain image to our store, and they bring customers in.”

Amazingly, only 17% of watch-selling jewelers—less than one in six—polled by JCK carry watches specifically because they’re profitable and generate business. Those who do, though, generally do well.

“We sell watches because of excellent traffic and good revenue,” says Kelly Newton of Newton’s Jewelers, Fort Smith, Ark., which does 20% of its business in watches, accessories, and repairs. Richard Kern of Churchill’s Jewelers, an 85-year-old company in Santa Barbara, Calif., with 30% of its annual revenues in timepieces, notes that watches have long been “a good profitable area” for his business. Carl Liberman of Liberman’s, a 114-year-old Joliet, Ill., store with 33% of its business in watches, accessories, and repairs, was more succinct. He sells watches, he said, for one simple reason: “Profit.”

A number of jewelers also noted that watches generate a variety of sales, besides self-purchases, as well as business for other departments. They’re “good men’s gifts for Christmas, graduations, and weddings,” said a Connecticut retailer, while Sayville, N.Y., jeweler Kay Cameron noted, “They’re good corporate gifts and bring customers in for batteries and repairs.”

“Watches often lead to the sale of other, more expensive merchandise,” agreed Herb Rubinfield, Fisher Jewelers, Erie, Pa. “They bring guys into the store who buy one and then more, and eventually buy jewelry.”

As David Mazer, Foley Jewelers, Newark, Del., noted, watches are “a reason for someone to cross our threshold, and when they do, I can also show them a diamond.”

The flip side. So, what are the problems that come with carrying watches? Many jewelers (23%) say the biggest disadvantages involve repairs and servicing. The most frequently cited headaches are delays and problems in supplier-provided service, vendor support, and return of timepieces—and complaints from impatient customers. “People don’t want to be without their watches, and they expect miracles,” complained one Pennsylvania jeweler. “They get more upset about their watches than any other jewelry item,” agreed San Antonio, Texas, jeweler Aaron Penaloza.

The low margins of many brands also irk jewelers who sell watches (16%), many of whom also cite slow turnover and minimum inventory requirements.

Competition is a serious problem, according to 13% of the watch-selling jewelers surveyed by JCK—and it can take many forms. There’s competition from less-expensive watches (“Too many cheap, good-looking quartz watches out there that work too well,” said a North Dakota jeweler) as well as from other retailers—including some jewelers—who discount their watches as competitive loss leaders. A number of jewelers are angry, too, at watch brands that supply both jewelers and price-competitive mass merchants. “Manufacturers’ inability to control their products is the biggest problem,” said a New York jeweler. “[Their watches] show up so often in illegal doors and on Web sites, it’s comical.”

Altogether, watches can be “just a real pain” because of the problems and frustration they create, said one Ohio jeweler, echoing others.

Yet, selling watches can’t be all that grim for jewelers: Three out of five now carry four brands or more, and one-third (35%) of those polled by JCK have added brands in the past two years. At least two in five do 10% or more of their business in timepieces (including watch sales, watch accessories, and watch repairs). Almost half (47%) have seen their watch sales grow in the past two years, and more than half (51%) expect them to grow again this year.

“To some extent, the success of a retailer’s watch business depends on his or her attitude toward it,” noted George Reinas Sr., of Bove Jewelers, Kennett Square, Pa. “Anything you do is a nuisance if you look at it that way,” he told JCK. “If you just carry a couple of watch lines and do nothing to promote them, not much will happen. But if you make a commitment [to a product], you support it with personal investment and servicing. I want to sell jewelry and watches, to build new clientele, and make money—and [with watches], we do.”

Percentage of Jewelers That Sell Watches

Source: JCK Retail Panel, November 2003
Yes 91%
No 9%

Top 5 Reasons Jewelers Sell Watches

Source: JCK Retail Panel, November 2003
Customers ask for/expect it 30%
To be a full-service jeweler 22%
Brings traffic/sales 22%
Profitability 17%
Don’t know 8%

Number of Watch Brands Carried by Jewelers

Number of Brands % of Respondents
Source: JCK Retail Panel, November 2003
1 16%
2 15%
3 11%
4 16%
5 18%
6-10 17%
More than 10 7%

Watch Sales

Source: JCK Retail Panel, November 2003
Amount of business in watch sales, accessories, repairs:
1%-9% 60%
10%-19% 20%
More than 20% 20%
Increase vs. decrease in watch sales over last two years
Increased 47%
Decreased 26%
No change 27%

Jewelers’ Watch Customers

Source: JCK Retail Panel, November 2003
Gender
Men Women
65% 35%
Age
Under 25 2%
25 – 35 15%
35 – 50 69%
50 – 65 13%
Over 65 1%
Career
Professional/ Management 51%
Blue Collar 11%
White Collar 27%
Unsure 11%
Income
Under $25,000 3%
$25,000-$50,000 32%
$50,000-$100,000 39%
$100,000-$150,000 16%
Over $150,000 10%

Top 5 Problems in Selling Watches

Source: JCK Retail Panel, November 2003
Problems with repairs/servicing (including delays and customer complaints) 23%
Low margins 16%
Competition from discounters 13%
Problems with suppliers (including lack of support, warranty problems, and selling to discounters) 7%
Low turnover 6%