WatchWorld

2000 Mania: The Price Is Right

In watches, 2000 is the magic number – signifying not the calendar change but the price point. While the year 2000 likely will witness many new-age surprises in timepieces, watches hovering around $2,000 are growing more popular. So if you’re a fine jeweler, keep an eye on this profitable, entry-level luxury segment.

“I’m finding that watches just under the $2,000 price range are selling the best,” says Jeffrey Kramer of New York’s William Barthman Jewelers. “We’re doing very well with the Breitling Super Ocean on a bracelet at $1,825. Watches above $2,000 are also selling well – like Ebel’s Discovery automatic on a stainless-steel bracelet at $2,425 and Cartier’s Tank Française automatic at $2,700. I haven’t seen a watch as hot as the Tank Française in years – even two years after its introduction.”

Why the interest in watches retailing from $1,500 to $3,000? The answer is simple: Watch companies created a market by tying watches to image and by upgrading features with such additions as sapphire crystals, crocodile straps, and unique functions. There are other reasons. Young, fashion-conscious professionals see these watches as status symbols, while older executives and managers consider them inexpensive. As one distributor puts it: “A guy driving a Range Rover isn’t going to spend $700 on a Tag Heuer watch, so why not spend $2,000?”

“This is a hot segment because watch companies are creating a new market and demand, just like Nike did when it created the market for a $100 sneaker,” says Ira Kriëger, president of Kriëger Watches in Miami. “It’s a strategic decision by bigger companies to broaden their horizons. After all, how many watches can you sell at $10,000 or $20,000 today? Watch companies noticed the bulk of the sales fell between $2,000 and $3,600, and sales were also good between $1,000 and $1,500. It’s a smart move because the big-spending customer is getting older. They rarely spend $12,000 on watches anymore.”

Most of these lifestyle-enhancing watches are luxury sport models with unique “status” styling – some even call them trendy. They inspire emotional attachment with celebrity endorsements, exotic names, fast-car themes, rugged bracelets, colorful straps, and special functions such as chronographs.

These profitable watches are why many retailers have been trading up in recent years. Products such as Breitling’s Super Ocean, Omega’s Speedmaster and Constellation, Gucci’s upscale G watches, and the Tiger Tudor have been hot sellers. Their popularity is the reason many brands, new and established – Panerai, Bonneville, Tutima, Karbon, and others – are angling for these coveted price points, usually with upscale sporty models. Dress watches are not excluded from this popular price range. For instance, Fendi, whose starting price point is $195, now offers its steel Stella watch with diamonds at about $2,000.

Consumers are getting more value for their money. Breitling’s B-1 watch, for example, has a backlight on the dial, two alarms, and a perpetual calendar on a bracelet for just $2,550. But this industry strategy is not necessarily for the benefit of consumers. It’s more the result of intense competition and diversification among watch companies.

How long will these price points continue to ring retailers’ registers? Until the economy hiccups or until competition brings prices down even further. If so, watches from $500 to $1,200 could experience a similar revival in the near future, at least among price-conscious, mainstream consumers.

Swiss Watches Set to Shine

The Swiss watch fairs are like a box of that country’s famous chocolates. You never know what you’re going to get. That’s the case once again as three spring shows – the Basel fair, the Salon International de la Haute Horlogerie (SIHH), and the World Presentation of Haute Horlogerie (WPHH) – keep a lid on their new products until buyers arrive to sample the assorted surprises.

Basel fair organizers expect 75,000 visitors from 40 countries to shop their newly configured show (April 29-May 6), while officials of Geneva’s SIHH (April 23-29) look for 4,600 visitors from more than 150 countries to welcome the show’s new format. There’s no word on expected attendance at WPHH in Geneva (April 21-29).

Basel officials have upgraded the exhibition’s fairgrounds, including a modern Building 1. The improvements, costing about $420 million, added some 36,000 square meters of exhibition space. The Basel fair will house more than 2,500 exhibitors.

SIHH, the brainchild of Vendôme Luxury Group chairman Alain-Dominique Perrin, encountered skepticism in its first few years. Most considered the idea crazy, and the conflict between Perrin and Basel officials was seen as a colossal clash of egos. Today, the Geneva show is formidable competition for the far larger Basel fair. SIHH has generated a reputation as a first-class, glamorous, and respected venue. Those who didn’t take the largest Geneva watch fair seriously now must – especially upscale retailers.

The ninth annual SIHH features 17 luxury watch exhibitors, including eight new brands. The show has lured luxury exhibitors from Basel, bolstering the credibility of a fair once dominated by Vendôme Luxury Group brands. This year SIHH welcomes Audemars Piguet, Breguet, Girard-Perregaux, Bovet, Roger Dubuis, Daniel Jean Richard, Perrelet, and Officine Panerai, a brand that retailers got a sneak peak at last year. These brands join Cartier, Vacheron Constantin, Piaget, Baume & Mercier, Gérald Genta, Parmigiani Fleurier, Daniel Roth, Alfred Dunhill, and Montblanc.

The salon’s exhibition space has grown from 12,000 to 18,000 square meters. The show also features an exhibition devoted to fine watchmaking, from its origins to the founding of the Poinçon de Genève, the highest distinction awarded to master watchmakers.

WPHH debuted last year, after master watchmaker Franck Muller pulled out of SIHH to launch his own upscale show. Many in the trade likewise considered that an ill-advised move. Ironically, Muller left SIHH in a dispute regarding the overall quality of its exhibitors, and yet SIHH’s exhibitor list is now stronger than ever.

WPHH, which premiered the new and improved Versace watches at last year’s inaugural exhibition, has an unnamed “surprise” in store for visitors, according to one source. Whether it’s a new watch or a new licensed brand is anyone’s guess. Versace watches are no longer part of WPHH, exhibiting in Basel instead.

Karbon, the spin-off lifestyle brand that was previewed last year, will get its formal launch at WPHH. Special Franck Muller editions will be unveiled. A source says Watch Land (the Geneva timepiece museum) and the Franck Muller line of accessories are slated for a year 2000 launch.

Charriol International, formerly known as Philippe Charriol, also left the Basel fair this year to spin off its own private reception/show – much like Franck Muller. The show runs April 25-29 at the Chateau du Parc Eaux-Vives in Geneva.

Precision Business

Precise International of Orangeburg, N.Y., has ended its four-year representation of the Swiss-made Revue Thommen brand to focus instead on its Wenger watch line.

Precise International’s Donovan Larsen acknowledges Revue Thommen’s rich heritage but notes that several of its models competed directly with the distributor’s higher-end Wenger GST collection. That posed a conflict. “The decision was made in the best interest of both brands,” says Larsen. The split reportedly was amicable, and Precise International will cooperate with the new Revue Thommen distributor during the transition period. At press time, Revue Thommen was close to naming a new U.S. distributor.

“It relates to the direction our new shareholders want to take,” says Precise International’s Mark Eskeridge. “They want us to concentrate on Wenger, which is the core brand. So we comfortably moved away from Revue Thommen.”

Precise International bolstered its marketing investment with a $40 million, five-year plan to unify and strengthen Wenger on a global basis. The brand includes Wenger Genuine and Wenger Swiss Military timepieces as well as Wenger Genuine Swiss Army Knives.

No mention was made of Precise International’s monetary commitment to Mondaine, but the company still distributes the Mondaine brand, contrary to earlier reports that stated otherwise. That speculation was likely fueled by what one Precise International executive called “unspecified issues” surrounding Mondaine. Precise International and Mondaine are working jointly to resolve those issues.