Tag Heuer: Betting on 2000

Are Tag Heuer watches too expensive? Many retailers and consumers say yes. But for whom are Tag Heuer prices supposedly too steep? Plenty of people are buying Tags at $2,000 and above with little resistance, according to Susan Nicholas, president of Tag Heuer USA. But some retailers say that, despite the brand’s popularity, it can be a hard sale. “It’s about $1,995 for a quartz Kirium chronograph,” says one retailer. “Where’s the value in that? You can get an automatic Breitling on a bracelet for $2,200.”

Tag Heuer successfully moved upscale in recent years, in both price and cachet. However, as the brand’s popularity rose, so did its prices. It then became less affordable for many young people who might otherwise desire it. (The higher prices also help subsidize the brand’s $45 million advertising campaign.) Today, Tag Heuer even competes in certain segments with major luxury sport watch players such as Breitling and Omega.

With price points reaching $4,850, perhaps Tag Heuer is becoming self-conscious about its prices. Now the brand, which went public in 1996, is gunning for a broader range of consumers who can’t afford its finer product. Enter the 2000 series.

Tag Heuer has knocked out its 1500 and 4000 line and launched a redesigned 2000 line. The revamped 2000 series showcases sport watches from $650 to more exclusive models up to $1,450. The 2000 Sport watches feature flatter and colorful bezels, while the 2000 Exclusive versions have rose gold or all-steel bezels. The brand anticipates increased volume with this line.

Tag Heuer hit a few roadblocks in 1998. The brand’s stock didn’t perform as expected, falling from 19 1/2 since its initial public offering to as low as 7 1/2. The Asian economic depression is taking a bite from the company’s worldwide sales, placing added pressure on its U.S. business.

The brand also faced U.S. discounting problems, a dilemma some retailers attribute to retail prices they consider too high. To address the discounting, Tag Heuer issued a controversial letter to retailers that discouraged discounting more than 15%.

Tag Heuer’s worldwide sales grew 13% to $325 million in 1997, while profits climbed 13.2% to $180 million. However, worldwide sales for the first half of 1998 were expected to decline 5% to 10% because of weak overseas markets. Business in the United States, though, remains strong.

Phillips Heads to Ebel

Dennis Phillips has left Rado Watch USA, the big pro-tennis sponsor, to become president and CEO of Ebel USA. Andreas Kessler, marketing and sales manager for Rado, was named that brand’s interim president.

“I was approached and became very interested in the Ebel brand, even though I was happy at Rado,” says Phillips. “[Former Ebel president] Ronnie Wolfgang did a great job with the brand. I feel it has great potential. I wouldn’t have been interested in the job if it weren’t for him building the strong consumer perception of the brand. And Switzerland is very proactive in wanting this brand to succeed on a worldwide basis.”

A permanent Rado president is to be named by year’s end, says Kessler. Kessler himself is among the candidates.

In other Rado news, there were rumblings that the company may end its relationship with professional tennis. “That’s not quite right,” Kessler says. “What may have created some turmoil is when we analyzed our heavy involvement in tennis and in-flight magazines. From time to time, you have to analyze where you are and where you can improve. So far, no decision has been made about Rado and tennis.”

In fact, Rado strengthened its tennis ties by signing a two-year commitment as sponsor of the Orange Bowl, a Florida junior tennis championship. Rado is already the official watch of the Association of Tennis Professionals tour. The company also sponsors more than 40 tennis tournaments worldwide, including the French Open, Australian Open, and Lipton Championships.

Bracelets Entering Winner’s Circle

Watch companies are jockeying to grow their business – moving upscale or down market, or merely launching new designer lines. A few companies are now capitalizing on the resurgent bracelet market by introducing bracelets that don’t tell time.

Hirsh-Speidel, a premier watch bracelet company based in Providence, R.I., recently topped $1 million in sales with its My First ID bracelet line. The line’s love-theme packaging, including a photo frame, enhanced its gift-giving potential and boosted sales in the more than 6,600 stores where it is sold. The My First ID line has eight styles and a variety of finishes.

Meanwhile, Hirsh-Speidel and Sun Time Enterprises, based in Clearwater, Fla., together are capitalizing on America’s fastest-growing sport by introducing NASCAR sports bracelets for men, women, and children. With blazing colors and sharp designs, these bracelets are as flamboyant as the actual race cars. NASCAR sports bracelets are styled after the cars of NASCAR greats Jeff Gordon, Bill Elliot, Rusty Wallace, and Dale Jarret. The bracelets also bear the NASCAR logo.

Seiko Gets Institutionalized

You know you’ve made it when the Smithsonian comes calling. Seiko’s Astron 35SQ will join the original “Stars and Stripes” flag, Archie Bunker’s favorite chair, and Thomas Edison’s light bulbs in the Smithsonian Institution’s National Museum of American History in Washington, D.C. A still-working movement and a replica watch of the Astron 35SQ – the first commercial quartz watch from 1969 – will be among the highlights of a Smithsonian exhibition called “On Time.”

Swiss Primetime, Girard-Perregaux Renew Pact

Swiss Primetime, the Rutherford, N.J.-based distributor of Girard-Perregaux, has retained the rights to distribute the luxury watch brand for four more years. There was speculation that other distributors were vying for the brand, but Swiss Primetime signed the long-term deal with Girard-Perregaux owner Luigi “Gino” Macaluso in October. Swiss Primetime is also the distributor for Bertolucci and Daniel Jean Richard, a newcomer to the U.S. market.

The fact that the United States became Girard-Perregaux’s top market (out of 50 countries) in 1997 makes the new agreement significant. Girard-Perregaux USA, led by its president, Ronald R. Jackson, received the coveted “GP Trophy,” which the brand awards to the market with the best results in sales, marketing, and distribution.

In recent years, Girard-Perregaux has seen double-digit annual sales increases, according to the company. Unlike past years, however, the recent success extends beyond its successful Pour Ferrari line to other categories, including the Vintage, Sports Elegant, and Classic collections.

Panerai Hits the Big Time

Retailers are preparing for what is likely the biggest watch ever to hit the United States – not in terms of sales, but in sheer size: up to 45 mm. After much anticipation, Officine Panerai watches are finally arriving in fine jewelry stores nationwide. The specialized luxury sport-watch collection will be marketed heavily.

Panerai watches originally were created for commandos of the Italian Navy, and they still meet military-quality standards. They feature easy dial legibility under all conditions and an exclusive winding crown lock device.

The highlight of the collection is the 45-mm Radiomir, a limited series of 60 platinum watches featuring Rolex movements from the 1930s, which sat undisturbed in a warehouse for more than half a century.

Panerai Luminor models are direct descendants of the Radiomir, Panerai’s first wristwatch. The 44-mm Panerai Luminor models – GMT, power reserve, and submersible in steel or titanium – are water-resistant to 300 meters, but each watch is tested to withstand pressure of 400 meters.

The Panerai Luminor Marina is a certified chronometer and includes a model for left-handers. That makes it a natural for left-handed Panerai collector Sylvester Stallone. Panerai’s Mare Nostrum watches are hand-wound mechanical chronographs with slightly smaller 42-mm cases. Panerai watches retail from $2,300 to $3,300, except for the special-edition Radiomir, which retails for $26,000.

Trade Winds Is A-Blowin’

Angelo Zappala, former director of national accounts and vice president of original equipment for Hirsch-Speidel, has formed Trade Winds LLC. The Mahwah, N.J.-based company will serve the jewelry industry as an agent, distributor, and marketing consultant. Zappala also has more than 12 years’ experience with Seiko as a manager of operations and after-sales service.

Patek Philippe Getting Younger?

When Patek Philippe unveiled its Aquanaut collection in 1997, many retailers balked at the avant-garde timepieces. What a difference a year makes, as a new generation of Patek Philippe consumers – and many Patek Philippe collectors – are demanding these unusual watches. That interest has inspired an extended Aquanaut collection, which continues to buck the company’s tradition of conservative styling.

Featuring the rounded octagonal “porthole” bezel of the brand’s Nautilus series, the Aquanaut has a “tropical” black composite strap that matches the modern black dial. It retails from $4,500 to $12,500 and now comes in large, medium, and small as well as 18k yellow gold or steel bracelet versions. It’s available with a self-winding mechanical or a quartz movement.

Rolex Moves to Improve Service

U.S. jewelers and consumers will soon see improved service from Rolex. Rolex Watch USA, which has service centers in New York and Dallas, opened its third American facility in October – this one in Beverly Hills, Calif.

The four-story, 21,000-sq.-ft.building, designed by renowned architect Richard Keating, is staffed by Rolex-trained technicians and customer service representatives who provide service for Rolex and Tudor timepieces. It’s open to Rolex consumers and offers technical support for all official Rolex jewelers in the western United States.

Guide to Watch Distributors

Looking for a watch company and don’t know where to find it? The Watchmakers of Switzerland Information Center’s 1998/1999 guide of watch distributors in the United States is just what you need. The “Complete Guide to Watch Distribution and Service” offers an A-to-Z listing of U.S. distributors and service facilities for most Swiss and non-Swiss watch brands.

The guide includes directories for supply houses, antique watch/clock resources and associations, auction houses, watchmaking schools, Swiss consulates, trade publications, and industry associations. It also presents a history of the Swiss watch industry in the United States and a glossary – as well as other sections such as tips for fine watches, information on mechanical vs. quartz watches, and interesting tidbits about time measurement.

For information on ordering the guide, contact WOSIC, 201 W. Passaic St., Suite 103, Rochelle Park, NJ 07662; (201) 291-8811.