Electronics, watches: friends not foes at retail

August 06, 2008

Vertu phones like this one from the "Vertu Coloured Diamonds Collection" set in 18-karat rose gold and featuring pink diamonds, rubies and sapphires, are blurring the line between jewelry and electronics. Suggested retail, $85,000.

By Joseph Dobrian

New York—When cell phones started hitting the mass market back in the early 1990s, it was clear that they would become more and more sophisticated, more laden with bells, whistles and conveniences, even as they got smaller and lighter.

It also became apparent as time went on that they would blend with personal computers, stereos and other electronics, to the point where consumers could carry the world around in a purse or shirt pocket.

At first, this explosion of small portable electronics made watch and jewelry retailers a little nervous: After all, if the phone serves as a pocket watch, why would you wear an additional timepiece on your wrist?

But as cell phones got fancier and more complicated, so did watches—to the point where now, some 20 years after cell phones emerged, the role of both items in the luxury market has changed.

Cell phones were once a status symbol, and it was considered the height of cool to take a phone call mid-meal at a hip restaurant. Today, it takes a little more than that to impress a client or a potential girlfriend.

At the same time, it has become a mark of taste and discernment to collect high-end mechanical watches. It seems that phones haven't squeezed watches out of the luxury market so much as they've forced watchmakers to take their product to the next level. The result? Phones, other electronics and watches are all getting along just fine: often placed side-by-side in the same store, one category helping to sell the other.

"Our watch business is not at all threatened by cell phones," says Andrew Block, the executive vice president of Tourneau, where Vertu phones have been available for the past five years. "We're the biggest Vertu retailer in the country, and Vertu has a good chance to edge into our top 10 brands. The phones sell at an average price point of $5,000. They have some amazing features—global reach, an unbelievably strong signal, concierge services—but mainly, Vertu is an image thing. You don't wear a Vertu on your belt. You walk into a room and put it on the table and say, 'Here's my Vertu.'"

Block expects more and more jewelers will carry high-end phones, and certainly watch companies will become more involved in electronics.

In fact, popular watch brand TAG Heuer plans to introduce a cell phone later this year (brand representatives would not provide further details until later this summer).

When the phone does hit showcases, Tourneau intends to carry it.

"Phones are great incremental business," Block says. "They don't take a lot of space, and a customer who will pay $5,000 for a phone won't hesitate to buy a high-end, high-tech watch. I don't expect people to collect phones the way they collect watches."

Abt Electronics in Glenview, Ill., has opened the Abt Time Boutique and hopes to move further into the watch market.

From electronics to watches Meanwhile, at least one high-end electronics retailer is crossing over into watches. Abt Electronics in Glenview, Ill., the country's largest single independent consumer electronics and appliance store—and arguably the fanciest—has opened the Abt Time Boutique, a store within a store that carries watches ranging from a $100 Skagen to a $12,000 Chronoswiss. Abt also carries one set of Omega's "Moon Mission" collection—for $150,000.

"Watches were the No. 1 request in our customer surveys," says Michael Abt, president of Abt Electronics. "We added the watch boutique last Thanksgiving, and we've found that in a lot of ways, watches are easier to sell than appliances: no delivery, no installation, no dealing with wiring."

The company also does sell a lot of phones, and the average consumer, male or female, uses the phone as a watch, he says.

"But watches are more of a jewelry item—especially for men, since they can't collect shoes or handbags the way that a woman does," Abt says. "Seventy percent of our watch customers are men."

A near-term goal for the retailer is to attract the highest-end watch brands, including Patek Philippe and Rolex.

"We're maybe five years away from that," Abt says. "It took us a long time to get the highest-end audio lines, and it'll be a similar process: courting the manufacturers, getting them into our store to show them that we're a luxury store, not an appliance dealer. We'll have a watchmaker on premises by next year, once we've sold about 5,000 watches. We already offer basic services such as sizing and battery replacement."

Meanwhile, Breil Milano, the Italian watch and jewelry manufacturer, has started using electronic gadgets as promotional devices: most notably a limited-edition MP3 player in the shape of a USB key.

The item was created to celebrate the opening of the first Breil Milano store in the United States, which opened in New York City this past April. But Fabrizio Cattaneo, the company's U.S. marketing director, cautions watch manufacturers against allying themselves too closely with electronic goods.

"This MP3 player is not something we're going to sell," he says. "It was the perfect promotional gift, but we don't want Breil to be perceived as a high-tech brand because that's not who we are. We don't promote technology, but we do emphasize innovation and new materials in our watches and jewelry, as well as new chemical treatments."

—E-mail: jdobrian@aol.com

Editor's note: This story first appeared in the July 2008 print edition of National Jeweler.