Product Releases
|
|
|
As watch sales slide, brands cling to basics
By Teresa Novellino
June 04, 2009
|
| Concord's "C1 Quantum Gravity," featuring a neon-green gel that rises and falls to indicate power reserve, retails for $430,000. |
|
|
Basel, Switzerland--Just a few years ago, the buzz at BaselWorld revolved around million-dollar watches, head-spinning complications that left watch enthusiasts weak-kneed, and a large, ambitious expansion plan for the exhibition center that is home to the world's largest watch and jewelry show.
The luxury watch business seemed to be rising fast on a trajectory that had no ceiling. But that changed this year, as companies talked of aggressive pricing and increased competition. Even the planned expansion of BaselWorld's exhibition space, though approved in a local referendum, has been downscaled, with revised blueprints calling--literally--for a lower ceiling.
Blame the burst bubble on export numbers. Swiss watch exports ultimately increased 6.7 percent to about $15.1 billion for 2008, but the uptick came despite an abrupt downturn in the second half of 2008 as the U.S. economic crisis that went on to become a worldwide recession took hold. In the Americas, Swiss watch exports plummeted 40 percent for January to February 2009, compared with the same two-month period in 2008.
Francois Thiebaud, president of Tissot and chairman of the Swiss Exhibitors' Committee, points out that the slowdown comes after several years of impressive growth, and he predicts that Swiss watch exports could still reach upwards of $14 billion this year--not too shabby when you consider that a few years ago, those figures would have set records.
"If you go back to 2006-2007, we're not doing too bad," Thiebaud told reporters during the show's annual press day.
Adjusting gamely to the new realities, BaselWorld 2009 brands were putting an emphasis on new movements rather than what Thiebaud described as "flamboyant finishing," going for less extravagance in design and revamping old movements and legendary models to meet current tastes.
The industry's mindset must shift toward after-sale service, and the way products are created and communicated to consumers, Thiebaud said in an interview at Tissot's booth, where the brand unveiled its new exclusive movement, the Tissot Automatic Chronograph ETA C01.211.
"There are two products that generate emotion: the car and the watch," Thieubaud said. "Watches are something we keep, something we never throw away."
The price is right
Brands say they are heeding the call for conservatism, with some even welcoming it.
"The watch industry has been crazy for the last few years, thinking they could sell whatever watch, at whatever price," said Ebel President and Creative Director Marc Michael Amadry. "We have priced smartly and aggressively. We have to listen to our retailers."
Through its popular "Classic" and "Brasilia" collections, for which prices are in the $5,000 to $8,000 range, the Ebel brand will be aggressive about reaching price points that are palatable to retailers. But the focus will remain on the quality of design and what Amadry describes as defending a "certain value of luxury."
At TAG Heuer, hitting the right price point is a priority too, with the brand promoting quality and affordability. The "Aquaracer Calibre 5" automatic watch, for instance, retails for $2,450, with comparable watches from competitors starting at $3,500, says Rachel Branch, the brand's North American marketing director.
The brand's "Grand Carrera," launched in January in solid rose gold, retails for $18,000, but a less expensive version in steel and rose gold just came out at $7,900.
"We're being sensitive to the market and pricing aggressively," Branch said. "This year, we're reinforcing the $1,000 to $3,000 part of the $1,000 to $5,000 price point range."
Just two weeks before BaselWorld, and after a tough fourth quarter that ultimately saw a 32 percent drop in sales, Movado Group addressed the price issue by linking the Movado name to its ESQ brand, which offers entry-level price points.
"We made a bold decision to introduce ESQ by Movado," said Movado Group Worldwide President Jeffrey Cohen. "It is what we call attainable luxury, with price points from $200 to $600, and it's sold where Movado is sold."
Last fall, Movado Group reduced its number of retail partners by 30 percent to focus on those retailers who are top performers for the brand.
"The one that has the best productivity wins at the end of the day," Cohen said. "We're not going to be in 20,000 points of sale. We want people to feel smart for buying Movado."
Similarly mindful of the economy's impact, but taking a different approach is Philip Stein, which is promoting a series of trendy interchangeable luxury straps to sweeten the deal for consumers who want to feel like they've got something brand new without spending the money.
With a variety of fashion-focused choices for ladies, including hand-painted alligator skin or two-tone python, the straps retail for $70 to $225, while the watches themselves range from $800 to about $4,000.
The brand is also hoping to increase its business by offering its watches for sale online, through authorized retailers in the buyers' geographic regions. Philip Stein will actually sell the watches, while the retail partners, who will share in the brand's profits, provide servicing.
Movements and marketing
Another change this year in terms of production involves movements.
Breitling is now manufacturing its own movements, making 30,000-plus COSC-certified movements per year, a production level that only a few other brands, including Rolex, are currently doing, said Lisa Roman, marketing director for Breitling USA.
Initially, the cost of manufacturing in-house movements is high because of the time and expense involved in developing them, but down the road, it is expected to save the company money, she said.
Corum is another brand that has grabbed a seat at the watchmaker's bench to cut costs and take greater control of the brand. Its new "Ti-Bridge" line houses Corum's second mechanical movement, the new Caliber CO 007, designed, developed and assembled in-house.
In terms of marketing, numerous brands at BaselWorld were releasing updates of past top-sellers and aligning product with anniversaries, celebrities and milestones.
Omega, for instance, will be celebrating the 40th anniversary of the July 21, 1969 moon landing with the "Speedmaster Professional Moonwatch Apollo 11 40th Anniversary Limited Edition."
"We've gotten the rights to use JFK in our ads," said Theresa Kuiken, marketing director for Omega Watches, adding that the former president, who wore an Omega to his inaugural ball, represents hope in worrisome times. The photo in the ad appears beside a famous John F. Kennedy quote about the nation's ambitions in space: "We choose to go to the moon."
The platinum timepiece with a solid gold case is limited to 69 pieces total and retails for $125,000, while a more affordable stainless steel and sterling silver version, limited to 7,969 pieces, retails for $5,800.
Movado Group is honing in on the younger consumer for its Movado brand, bringing into its ad campaigns Amanda Seyfried, who starred in the 2008 film Mamma Mia! and appears in HBO's Big Love series.
The star ties in with the brand's efforts to capture a younger demographic by targeting milestone events such as graduations and 25th birthdays, and pursuing consumers who are starting their first jobs and want to buy a watch as an investment, Movado Group Chief Marketing Officer Mary Leach said.
"We want consumers to think that this isn't a frivolous spend," Leach said. "This is something they're going to have forever."
TAG Heuer signed on Leonardo DiCaprio as its latest ambassador, and unlike Brad Pitt, whose TAG contract just expired, this A-lister is willing to appear in ads in the United States, though he will be promoting environmental charities he supports within the ads as part of the deal.
For its part in the celebrity game, Oris is going after music fans through its limited-edition Bob Dylan watch, offering just 3,000 watches, retailing for $2,150 each worldwide.
Niche brands power on
Even amid all of the adjustments at Basel this year, brands were still discussing craftsmanship and design as the ultimate symbols of value.
Ernst Benz, founded by a Swiss engineer and inventor who wanted to make precise timekeeping instruments with great legibility for himself and fellow aviators, has a bit of a cult following.
Executives at the small brand, loath to pour salt in the wounds of some of their peers, have kept quiet about it, but admitted they enjoyed a record year in 2008. With price points ranging from $2,500 to $10,000, the brand's oversized cases and large, simple dials are a hit, with 300 percent sell-through, but they are produced in limited quantities for consumers in 130 doors in North America.
"Bespoke isn't dead," said Ernst Benz Managing and Creative Director Leonid Khankin. "It's the individual attention to detail. I know if we continue to make beautiful watches, we seem to do really well."
At Concord, which manufactures about 2,000 watches per year, the focus also remains on making unique product--and that includes six-figure watches. Early in the show, customers from the United Arab Emirates and Singapore had already placed orders for one of its latest innovations, the "C1 Quantum Gravity," which resembles a watch-lover's science project, complete with a neon-green gel that rises and falls to indicate power reserve, retailing for $430,000.
"It's all about making unique product," said Alex Grinberg, U.S. president for Concord. "We're trying to be conservative. We're not going to sacrifice the quality of the product."
Editor's note: This story first appeared in the May 16 print edition of National Jeweler.
|
|
More Product Releases
A night out at the New York City Ballet or Jazz at Lincoln Center is bound to be memorable, but Movado hopes to help make it more so with a new version of its iconic "Museum" watch. Read More
|
Small multi video player located on right rail of NJN site
|
Save
E-mail
Print
Most Popular
RSS
Reprints
