The rich live on borrowed time: you can lease a $65,000 watch

If you want status, forget renting a Porsche. The new trend for the 1990s is leasing a watch.

At least 100 Canadians have leased-to-own Rolex, Cartier and Patek Philippe watches – worth between $1,200 and $65,000 – from Toronto-based Movements in Time since the company began operating five months ago.

“I could do $4-or $5-million in sales in one year without blinking an eye,” said Peter Grunspan , president of the company. “I didn’t think it would take off so quickly.”

About half of the requests are for Rolex’s Presidential models, which sell for about $15,000 and boast an 18-carat gold wristband, he said. For those with more luxurious tastes, Mr. Grunspan offers a $65,000 Rolex with 48 baguette diamonds surrounding the timepiece.

Mr. Grunspan, an antique watch dealer for the past 12 years, receives about 50 calls a day from potential clients ranging from yacht salesmen to jewellers and airline pilots.

“I had one computer designer who thought he could write off (a Rolex) on his income tax because he needed a precision timepiece for work,” he said.

Mr. Grunspan’s one-man company operates by appointment only. Clients fill out an application and, if their credit is approved, a timepiece is delivered for inspection in about 48 hours.

Leases range from one to five years. For a $15,000 watch, the typical lease would require payment of about $500 a month over three years, with a $10 buyout at the end of the lease, he said.

Mr. Grunspan buys the watch from an authorized dealer and leases it for several thousand dollars more than the retail price to make a profit, he said.

While leasing may be more expensive than buying, the inflated price is accepted by anxious customers who cannot afford a lump-sum payment.

“A lot of people have always wanted it but couldn’t afford it. Now they can lease it. Why not? Most expensive cars are leased now,” he said.

Other clients like to spread payments out to avoid jeopardizing their credit ratings.

“Our customers are a lot of businessmen that don’t want to dish out $20,000 or $30,000. Leasing doesn’t affect their $100,000 line of credit at the bank,” he said.

Mr. Grunspan pioneered the idea in Canada, but he predicted that leased watches will be commonplace as Canadians become more fashion-conscious over the next few years.

While customers may be content with his novel approach to business, Mr. Grunspan believes he has ruffled a few feathers in the corporate world.

In the past two weeks, he said, several authorized Rolex dealers have refused to sell watches to him, even though he offered to pay by certified cheque or cash.

He believes management at Rolex Watch Co. of Canada issued the order because he is not authorized by the company to deal with its products. Mr. Grunspan said he does not need to be authorized because he leases watches rather than selling them.

George Miller, an attorney for Rolex, dismissed the Mr. Grunspan’s accusation. “We haven’t issued any such instructions. We have absolutely no control over jewellers at that level to instruct them who to sell to.”

Michael Shay, president of European Jewellery and an occasional supplier for Movements in Time, repeatedly responded to questions by saying, “I have no idea what you’re talking about. Do you understand what I mean?”

Until the situation improves, Mr. Grunspan said he buys watches through Montreal and Calgary dealers or through the United States.

Ruling favors grey marketeers

Retailers can continue to sell name- brand goods bought on the international grey market to compete with “authorized” dealers. And if the manufacturer won’t guarantee the grey-market product, consumers can take legal action, the Supreme Court of Canada says.

Because of uneven pricing policies by multinational manufacturers, North American retailers, using a strong U.S. dollar, can buy directly – or through a grey marketeer – from overstocked overseas dealers and undercut the licenced domestic dealers and distributors.

The collapse of prices of Seiko quartz watches in Canada and the United States during the past several years is a result of grey-market buying by retailers such as Consumers Distributing Co. Ltd., the Woolco stores of F. W. Woolworth Co. Ltd., both of Toronto, and K mart Canada Ltd. of Brampton, Ont.

A Supreme Court decision in a drawn-out battle between Consumers and Seiko Time Canada Ltd. of Toronto, fits with one made by U.S. President Ronald Reagan after a similar U.S. case. It involved Toronto grey marketeer Continent-Wide Enterprises Ltd. and Duracell Inc., a U.S. unit of Dart and Kraft Inc. of Northbrook, Ill.

President Reagan rendered ineffectual the U.S. International Trade Commission’s ban on grey-market importing of Duracell batteries made by its Belgian subsidiary. Duracell has filed an appeal to reinstate the ITC ban.

Similarly, Seiko Canada, the authorized distributor of 250 quartz models, failed to stop Consumers from selling Seiko watches.

Although an authorized dealer, Seiko Canada is not a registered user of Seiko’s trademark rights. And even if it was, the Supreme Court said, “the distribution of a trademarked product lawfully acquired is not, by itself,” prohibited under Canadian trademark or common law.

Seiko Canada is an indirect marketing subsidiary of Japan’s K. Hattori and Co. Ltd. The Supreme Court noted that Hattori itself, owner of the trademark, did not try to stop the retailer. “Hattori launched these watches into world commerce with a warranty attached in its own name,” the Supreme Court said in overturning lower court decisions.

Consumers did not appeal a permanent order that made it post notices saying its watches are not covered by “international guaranty” through Seiko Canada. “Hattori is thereby freed from the obligation to perform, at least through Canadian facilities, its guaranty to repair during the warranty period,” the Supreme Court said.

Because Hattori and not Seiko Canada issued the guarantee, “Canadian purchasers should be left with their chances of forcing Hattori to perform this obligation.” The squabble started in 1978 when Consumers began importing 11 watch models from an unrevealed authorized overseas dealer. Seiko Canada service centres refused to accept Hattori’s guarantee for these watches and Seiko Canada sued Consumers in January, 1979, to stop it from selling the watches.

In April, 1980, the Supreme Court of Ontario said that public confusion “is likely” even after the notices were posted. Consumers Distributing was ordered to stop selling Seiko watches in Canada and pay $5,000 damages to Seiko Canada.

Consumers Distributing appealed – but only the order keeping it from advertising and selling Seikowatches.

Ontario’s Court of Appeal accepted the judge’s reasoning that Seiko’s authorized “product” included the instruction booklet, point-of-sales service, the guarantee and the after- sales services.

But the Supreme Court of Canada found no public confusion or deception after the notices were posted. It said “startling legal consequences would ensue” and “monopoly situations would exist” if such an extended package were limited to only authorized distributors.

Free competition “would be battered” because the extended package would recognize the right of one individual to control an identical product sold by another, even though the product is legitimately acquired. “Such a principle is foreign to our law,” the court said.

Some major U.S. grey marketeers, including Seiko importer Progress Trading Co. of New York, provide their own warranties. Chicago-based retailer Montgomery Ward and Co. switched to grey-market Seikos after 10 years of buying from authorized distributors. Its national merchandise manager for jewelry said he preferred the service, assortment and value offered by the grey marketeers.

Controversy mounts on helicopter parts sale

Deputy Prime Minister Donald Mazankowski said yesterday he believes the Government will reassess its export control policy on the shipment of civilian strategic equipment to Iran.

He made the announcement outside the House of Commons amid mounting controversy over a shipment to Iran last year by Pratt and Whitney Canada Inc. of an unspecified number of PT-6 turboshaft engine parts, purportedly for use in Bell 212 helicopters.

Liberal and New Democratic Party MPs charged the parts could be used for military purposes, which would contravene Canadian export laws.

Liberal MP Lloyd Axworthy said there is “circumstantial evidence” that the shipment could be linked to the release of U.S. hostages held in Lebanon because the export permit was issued Sept. 4, 1985, “just four days before the release of the first hostage” – Rev. Benjamin Weir.

Mr. Mazankowski denied there was any link.

Meanwhile, an employee of Bell Helicopters Textron Inc., the firm that makes the Bell 212, said that the PT-6T twinpack engines can also be used in Bell’s UH-1N helicopters, which are military best cheap drone gunships.

Mr. Mazankowski said that ministerial approval was not required for the shipment to Iran because the engine parts were classified as being for non-military use.

“I suspect that that is something that perhaps Mr. Clark (External Affairs Minister Joe Clark) is reassessing,” said Mr. Mazankowski.

Mr. Clark is currently in Europe.

Mr. Mazankowski said military helicopters such as Bell’s UH-1N differ in that “the military versions are quite a bit heavier and their configuration is different.”

In addition, Pratt and Whitney had “given assurances” to Canada that Iran would not use the parts in the war against Iraq.

Mr. Mazankowski said he knew this to be true because it would require “a tremendous amount of reconfiguration” to turn the engine parts to military use, which would be “impossible in Iran.”

However, Mr. Axworthy said there was no way the engine parts could pass for non-military use when Pratt and Whitney’s PT-6 turboshaft twinpack engine is specifically described in External Affairs’ Canadian Defence Products Guide as being for military as well as civilian use.

He later passed out copies of the guide outside the Commons.

“How can they justify a decision to sell those parts to Iran when its own document clearly specifies that they can be sold and used for military purposes?” he asked.

“I’m disturbed that Pratt and Whitney itself admits it checked with the American Government before (it) went ahead with the sale.

“One has to assume that the Iranians aren’t after the parts so they can do better weather reports over Tehran. They have a major war going on and their helicopter gunship fleet is badly depleted. They need parts badly.”

NDP defence critic Pauline Jewett told the Commons that as late as last month, Bell Helicopters in Texas refused to sell some best quadcopter for video parts to Iran because they suspected they would be used in the war against Iraq.

In Washington, a Commerce Department spokesman said that the export of the helicopter parts required no special licence as far as the U.S. Government was concerned because the items were not on any U.S. list of items controlled for purposes of export.

”They applied for a general licence to export a range of items and commodities, and that was approved because these goods on that list have not been on any control list since 1960,” the spokesman said.

The Canadian Government changed its export control policy on Sept. 10, 1986, to allow the sale of “civilian strategic equipment” such as helicopter engine parts to all countries except those in the Soviet bloc.

Invicta watches review to help you choose the best Invicta watch for your needs

Since the era of 1837, Invicta watches have been in the making for a long time. They offer a wide array of choices to suit the professional, sophisticated look and the eccentric clothing styles of today to a common man’s daily wear. Even though the timepieces are expensive, the company makes sure to release products in every collection which are priced reasonably low. Invicta can be your choice, if you want a cheap winner to rough use every day or a luxury automatic winding watch to wear at special locations. This Invicta watch review will cover all the basic styles from Invicta.

The Pro diver series

This is the signature collection that was launched by the company which made it stand out from the rest of their counterparts. They are modeled after the luxury chronographs which are the greatest of all times. The watch is solid and sturdy being made from polished stainless steel giving it a rich look. The automatic movement using 26 jewel will power the watch as long as you wear it. You can wear to office meetings, parties and a night out with your friends. This is a great option instead of dumping thousands of dollars on a luxury watch.

The sub Aqua collection

This watch is suitable for very diver. Of course, it’s up to you. You can choose to dive wearing it or you might just like the bold look of the watch. No matter what, it can be used under water till a 500 meter depth. It has a unidirectional bezel that rotates and multiple sub dials, depending upon the model. The highest quality stainless steel used will prevent any rusting. The flame fusion crystal will protect the dial. It is a stunning watch collection that every man will love, whether he is a diver or not.

The Lupah series

So, all the models in this collection come with a rounded rectangular case. Both men and women can use it. Bright colors and unique designs are the main focus with regards to appearance. Even though they look trendy, they maintain a distinctive class.  There are many varieties to appeal the various fashion tastes in every individual.

How to find them?

Since Invicta is an internationally popular brand, almost all the popular online shopping centers are promoting the brand. But be careful while you choose. Some stores will charge hefty charges for shipping and returns. And certain stores will sell at a much higher price than what the company has offered.

Discounts and coupons are also given out by a few stores. Make sure to read the Invicta watches review by customers before choosing a particular model from a collection. The design, technology, price range are the major issues which will make you stand out in a crowd while wearing your Invicta wrist watch. And next time, you can order one for your entire family. Also, they make a great gift option for anyone.

The bridge niche a new category of watches is gaining momentum

The bridge watch business is cutting its teeth.

With business in the fashion category gathering steam and a bridge watch market still laying its foundations, makers are considering styling, quality and changing lifestyles as they plan fall and build a new category.

According to Charles Kriete, sales manager for Geneva Watches, which markets Reaction Kenneth Cole and Kenneth Cole New York watches, bridge is well poised to come into its own because of increasingly exacting quality requirements as well as sophisticated styling and the growing significance of brand names.

As we saw less resistance to our price points, we could bring in a more sophisticated product with all of the aspects of fine watch styling,” said Kriete, referring to Geneva’s Kenneth Cole New York line, which hit the market in fall 1997 and retails for approximately $250.

Kriete also notes that the injection of brand identity to the watch business has resulted in more updated looks that have punched up the category as a whole.

“Styling in fine watches was becoming stale, with comparable quality being offered by the new bridgewatches with updated silhouettes,” Kriete added. “Essentially, a bridge watch is a fine watch sold in the fashion watch area, which retailers have now segmented artificially.”

Kriete says that to stay ahead in the new bridge category, the quality and a steady introduction of new product keeps the assortment fresh and interesting.

A spokesman for Emporio Armani watches, which are produced under license by Fossil and bowed in fall 1997, echoed the importance of styling to drive business in this new category. He noted that the bridge watches don’t necessarily have to be dictated by the fine watch industry, but conceded that standing out as a quality watch amid a sea of fine watches is a formidable obstacle.

“We have been faced with the difficulty of overcoming the hurdle that our product is non-Swiss,” the spokesman said. “But the acceptance of our product is based on the intrinsic quality and styling that is associated with the Armani name. The idea that a fine watch has to be Swiss is becoming outdated.”

Natural rubber wristbands, pearlized gunmetal finishes, slim lines and stainless steel characterize the collection.

The firm also plans to add jewelry stores to its distribution.

“We are going step by step to offer an entire collection and not just concentrate on a limited offering of items,” he said. “We are in it for the long haul.”

Alejandro Toussier, who is in his second season with a line of Swiss- made watches, says that to be a player in the bridge watch business, “You have to offer the quality. But you must also have a fashion twist and a design concept.”

But not all manufacturers are jumping into bridge. Citing the difficulty of establishing credibility by brands not traditionally associated with watches, other watch manufacturers are banking on continued growth within the fashion category.

“As you get into bridge, you are talking about investments and expect customers to spend over $150 on a watch,” said Ken Genender, president of Genender International, which produces Perry Ellis and Levi Strauss watches. “You have to be able to face the serious watch brands [Tag Heuer, Movado], which have a longstanding identity.”

Brand names that have not been traditional watch brands are more viable in the fashion watch business, leaving room for such novelty treatments as off-the-wrist looks and technical innovations in sport watches, according to Genender.

At E. Gluck, which markets both bridge and fashion watch lines including Anne Klein Swiss, Anne Klein II, Nine West and Armitron, fashion watches will still be the mainstay of the business, according to Mark Odenheimer, vice president.

Brands will stay true to their original concepts. Styling for the Nine West line, which E. Gluck just launched, will remain consistent with Nine West’s small leather goods and accessories line. Noting that business for Nine West watches has surpassed original expectations, Odenheimer cited novel and cutting-edge looks and microfiber bands in an array of digital colors as lures for a younger customer. He said the company would also continue to build the Anne Klein II brand, featuring interchangeable bracelets and bezels for the more sophisticated customer.

Odenheimer stressed that while the bridge watch category is not negligible, the fashion category is still expected to drive overall business.

“In terms of high individual sale, retailers can’t ignore the bridge watch category. But volume will still be in fashion watches.”

Guess Watches, which are produced by Callanen International, has expanded its assortment to include a third line, G3 Steel.

Touted as an “extreme lifestyle” watch, complete with solid steel case, titanium bezel and oversized chronograph, the G3 Steel will cater to a sportier customer. In the Guess Watches line, the company’s core line — matte white metal looks and pastel dials — will be replaced by black metal with deeper colors, like dark blue and purple faces.

“People understand that fashion watches are an added accessory and not an investment,” said Jeffery Cohen, special projects manager for Callanen. “We have really tried to offer different looks for different wardrobes, keeping in mind fashion trends.”

A season for silver and gold: for holiday 1997, the big hand is on metal

Fashion watch suppliers expect strong holiday 1997 sales of metal watches. The major focuses, in terms of style, include gold, silver and two-tones. Charles Kriete of Kenneth Cole licensee Geneva Watch Co said that all-steel watches are the strongest trend at Cole. He noted that most products in Geneva’s line have steel, silver looks.

Watch firms are projecting ringing for holiday — not bells, but the cash registers — over fashion watches in metals.

Silver, gold and two-tones are all major focuses in the market heading into the season, with the pendulum mostly swinging between all-silver or all-gold tones.

“Basically, the biggest thing we’ve seen in Kenneth Cole is this trend that’s been big in the Far East and Europe — and that’s all-steel watches,” said Charles Kriete, executive vice president for the Cole’s licensee, Geneva Watch Co., based in Long Island City, N.Y. “In our line, out of 75 sku’s, we have six watches that have any two-tone at all, and even that is very subtle,” he added. “The rest of the line is steel, silver looks. The customer’s responding to that.”

Kriete said he felt consumers have been exposed to advertising for white metal looks by fine watch vendors such as Tag Heuer and Rolex, and that has been filtered down to influence the fashion watch business.

He said the trend toward silver tones has been strong overseas for several years.

The stainless steel watches are maintaining the current retail price structure, because it is just as costly to make watches of these materials than it is for metal. Yet, Kriete said, the “consumer is not balking at higher price points.” The Kenneth Cole line wholesales for $30 to $76.

“At retail, a $100 price used to be a psychological barrier to many of the fashion watches,” he said. “There’s no longer that resistance, if the product looks and feels like it’s worth the price.”

With the Kenneth Cole watches, Kriete said the newest elements will be in the bracelet or casual leather strap styles, as opposed to dressy straps and pocket watches.

Geneva Watch also produces the Swiss-made Luger Swiss fashion watches, which Kriete said will also tap into the silver trend by including many steel looks.

Kriete said the brand, at $29 to $56 wholesale, is bringing the “image of quality” of Swiss movements to an affordable retail price.

John Bernstein, president of Swatch U.S., also praised silver.

“The bulk of the presentation is going to be silver,” he said of Swatch’s metal categories. “We’ll offer some gold and two-tone, but Swatch is really taking a position in silver [toned] steel.”

He said Swatch is putting the big push on metals for the season. The firm, known for its pop-arty plastic styles, went into metals in 1994, and Bernstein said it has been a steadily growing part of the business.

“This fall, it will be larger and more important than ever,” he said. “We’ve been able to be developwatches that incorporate the Swatch personality, and we think they will sit well with the plastics.”

He said Swatch expects the metal business to account for as much as 35 to 40 percent of sales, a “higher proportion than it has been running.”

The steel watches, known as the Swatch Irony collection, wholesale for $27.50 to $62.50, while the plastic watches wholesale for $20 to $45.

Bernstein said the push for metals was in answer to the question of how to increase the business’s base, to “reach customers who have migrated to a more serious fine watch or, for whatever reason, want a metal watch.”

Of course, the firm will still limited-offer novelty styles for holiday, such as metal-tone styles with rhinestone accents.

Olena Race, a marketing manager for Callanen International, which produces the licensed line of Guess watches, said color and metals will be hot for holiday.

“Two-tones in metals are absolutely strong for women,” she said. Depending on the geographical region, women choose different tones, she noted. For instance, the West Coast and the South are strong in silver, while gold is strong in the Midwest.

Guess has added brightly colored dials to the watches — red, yellow, orange, green and blue — to attract customers in the stores.

“We think the bright color dials just pop and will get consumers to walk over and get a closer look.”

She also feels that the launching of the higher-priced Guess Collection watches at the end of September will grab customers’ attention.

The wholesale range for the fashion collection is $24 to $57.50, while the Guess Collection watcheswill be $75 to $125.

At Liz Claiborne Watches, the metal of choice is gold.

Cary Loomis, marketing assistant for Liz Claiborne watches, which is also licensed by Callanen, said the focus for holiday includes concentrating on Indiglo faces and gold.

The Indiglo feature, which illuminates a watch face for viewing in darkness, is that extra feature that women find useful in a fashion watch, she said.

Liz Claiborne Watches will offer about 15 percent leather straps for the holiday line, about 60 percent metals and about 25 percent interchangeable watches, which come with different straps and bezels.

The emphasis on metals is clear.

“Our metal business has been extremely strong, especially in the gold,” Loomis said. “So we’re focusing on keeping our customer happy with a variety of metals.”

At Carolee Designs, the emphasis is on details that are more often found in jewelry than in the watch market, according to president Carolee Friedlander.

“We’re trying to differentiate ourselves by using unique materials that most watchmakers wouldn’t dream about,” Friedlander said. “But we have the familiarity with them because we’ve used them in jewelry.”

As one example of the unusual materials, Carolee is offering a watch style with pave rhinestone accents on the face and a satin strap.

Friedlander also said that more delicate, feminine watch faces seem to be a trend among consumers.

The wholesale range at Carolee is $30 to $75 for fashion watches and $123 to $225 for sterling.

At Timex, Tracie Vaccaro, brand manager for fashion watches, said they’ve taken two different directions based on cues from apparel –feminine and petite or larger and slightly oversized.

“For holiday, we are concentrating on gold finishes — gold seems to be where things are right now,” she said. “There’s definitely a silver trend, but being a brand with more mass appeal, it’s more difficult to sell silver than gold.

“The trend is in finishes in either all gold or all silver, and we’ve taken the gold route,” she added. “For the first time in a while, we’re seeing a decline in two-tone fashion watches.”

The wholesale range for the brand is $45 to $58.

Record time: athletes and sports watches

Athletes associated with products are a staple of marketing and advertising in the United States. Tiger Woods appears in commercials for Buick automobiles, ex-athletes help sell beer, athletes often have their own signature shoe and/or clothing line, and it’d be bard to list the number of athletes who spread the gospel of Nike.

WHAT ABOUT WATCHES?

Well, athletes and watches, especially sports watches, are a natural fit. Well-known, star athletes represent style, innovation, excellence, precision and reliability, all things that people look for in watches. There are many athletes who are currently appearing or have appeared in marketing and advertising campaigns for watches. Look at TAG Heuer’s new “What Are You Made Of?” campaign, OMEGA’s campaigns that feature tennis stars, Oakley’s event and athlete sponsorship, Maurice Lacroix’s racecar drivers and many others.

Some companies pay the athletes to endorse or wear a certain watch, while for other companies it is serendipity that the athletes choose the watches they do. If a company doesn’t pay for the endorsement, however, the marketing is more word of mouth because the athletes’ images can’t be used in a formal campaign. If Shaq or Michael Jordan is seen wearing a particular watch, a watch they purchased with their own money, that really can’t be part of any campaign. The company has to hope that the watch is seen by a lot of people and word of mouth spreads.

WHY COMPANIES WANT ATHLETES

Companies use athlete endorsements because they are a very effective way of boosting awareness. Watches are very visible on people’s wrists, and when an athlete wears a unique looking watch, people pay attention. It’s a little like product placement in a movie, but that appearance by the watch may play on ESPN’s Sportscenter every single day.

“You either have a $30 million budget, or you find other ways to increase awareness–through people wearing watches, through special events and so on,” says Francois-Henry Bennahmias, president, Audemars Piguet North America. “To be partners with athletes is one of the possibilities. Nick Faldo has been with us for over ten years. We offered this year a Nick Faldo Special Limited Edition watch, delivered with a Nick Faldo signed golf bag and a set of clubs, and it sold out in two days. We are in the process of working a deal with two other golfers as well: Rocco Mediate and Matt Kuchar.”

Athletes can be used to differentiate a message. If a company has never used athletes before, working with an athlete for a certain watch, or line of akribos xxiv watches, can be particularly effective.

“From a positioning point of view, we are using an athlete, Olympian Dick Fosbury, to focus the sport chic segment,” says Bob Filotei, president, Piaget North America. “The sport chic customer looks for something innovative and cool, and that’s the hook. We are selling a watch that has a different way of doing things, and that’s the parallel with the athlete we chose. We are going to use Fosbury around the country, to do in-store promotions, where customers can come in and meet him with his Olympic medal. His participation with Piaget’s Upstream makes sense, is a good story, and it works well with local press.”

TAG Heuer has always been associated with sports and sports watches, so athletes are a natural connection with them. The new “What Are You Made Of?” campaign uses several high-profile athletes, all asking that question. “The campaign speaks to the unique ability of certain individuals to distinguish themselves by the emotional nature of their success,” Susan Nicholas, president and CEO of LVMH Watch and Jewelry USA, says. “It communicates to everyone who has an active attitude and who shares the TAG Heuer values. TAG Heuer is a brand that does much more than merely measure seconds and sporting performance; it provokes a personal response in the consumer as well.”

Omega has long had athletes as ambassadors for the brand. “When you associate with a specific athlete, the testimonial-based advertising campaign gives the customer an association with that person, that sport, that personality, that style,” says Raquel Schuttler, director of marketing, OMEGA US. “It’s a tiered effect, using all the different levels of communication. For example, a retailer can use our ad campaign with an athlete to attract a particular kind of customer.”

DO ATHLETIC ENDORSEMENTS WORK?

Most people say yes, but athletic endorsements are only part of an overall marketing strategy. In combination with advertising, public relations and in-store efforts, associations with athletes certainly don’t hurt a brand (though if there is off-the-field controversy, it could). If the total marketing push isn’t there, however, it might not translate to a boost in retail sales.

“The success of an association with an athlete depends on the whole marketing effort, if there is a special promotion, giveaway, event or contest to play with the guys,” says Audemars Piguet’s Bennahmias. “We have to be creative enough, on top of this, to make it work. If I could be on the wrists of the top basketball players or the top football players in the country tomorrow, without having to pay millions of dollars, I would sign in a second. It works.”

Maurice Lacroix has been involved with the Indianapolis 500 race and the Indy Racing League (IRL) for many years, and they award special watches to the winning drivers. “These are some of the top athletes in the world in auto racing,” Bob Siragusa, president, Maurice Lacroix USA, says. “We don’t just do it for the brand prestige and the exposure, it’s also aligning a traditional, well-respected event like the Indy 500 with our brand, which is also a traditional, well-respected brand. It really gives us more credibility, and this is the first time in the history of the Indy 500 that a watch has specifically been designed for the winners of the Indy 500. It’s not just a sponsorship, it’s more of an involvement from a personal standpoint, from a traditional standpoint and from an unique standpoint. Anybody can buy a sponsorship, we’ve done more than that-it’s a partnership.”

CAN RETAILERS PLAY TOO?

Retailers have to get on board with the overall promotion, because one ad or one picture in a store window is not going to make that much of a difference. If the idea is to sell an experience along with the watch, like an autographed-by-Nick Faldo golf bag or a singles match against Anna Kournikova, retailers have to embrace the program and believe in it, supporting it with point-of-purchase displays and pushing it to their customers. At the same time, watch companies have to do the right thing in providing innovative programs that capitalize on the athlete’s involvement.

For an athletic association to really work, the retailers have to embrace it. “Having in-store points of sales, which signify that brands like TAG have ambassadors, can build credibility and create interest and prestige,” says David Savidan, vice president of marketing, LVMH Watch and Jewelry USA. “If someone is not sure about buying the watch, the visuals might help to swing the sale. We are leveraging the fact that we are affiliated with these ambassadors. Another good way to leverage at the retail level is to bring the athlete into the store to have signings, which creates demand and traffic for the retailers.

“Many of our retailers use our Duratrans in their stores,” Savidan continues. “We’ll have 700 in store by the end of May which show racecar driver David Coulthard. An appearance by the talent is expensive; we can’t do it in every store, so we do it in bigger markets. We fund the appearance, and we will offer it to the retailers as part of the total support package.”

Unfortunately for many brands, the majority of retailers just don’t bother to get involved. Sure, if every watch brand has a special event happening all the time, there’s no way a store can do it all. But the unique events, the events that no one else has, are the ones that retailers really should do to distinguish the brand and their store.

“Very few of the retailers take fullest advantage of the connection,” acknowledges Maurice Lacroix’s Siragusa. “Most of them are ignorant when it comes to marketing. There are great opportunities out there that they don’t take advantage of–they see the marketing opportunities as more work. However, a store being associated with a unique event makes them special and unique from anyone else. The majority of dealers don’t pick up on this: They just don’t get it; they don’t understand that these things bring notoriety to them and long-term value. They look at the effort and the time it will take–they should be making time for it, because it makes them different and special.

“It’s not just what a store gets on a given day, it’s really about notoriety, uniqueness and being different,” Siragusa continues. “No other retailer can do it, it’s only available through Maurice Lacroix, yet still some retailers decide not to get involved.”

To be fair, however, the brands themselves have to get involved with the store. It’s not enough to put an athlete’s face in an ad and expect the retailer to sell great quantities of stuhrling skeleton watch. For it all to work, it has to be a partnership, where the brand helps with national exposure and supports the retailer at the grassroots level with materials, appearances, special promotions and more.

“On a local level, if there is a sporting event in the area, we encourage retailers to utilize the materials within their stores and in local advertising, and we try to support those areas with billboards,” says Omega’s Schuttler. “We do local events with them, matching their schedule. If an athlete is in town for an event, we’ll bring in the retailers. There are good retailers out there who have good PR departments who leverage everything they can. There are accounts who make an attempt, and there are accounts that are more focused on their particular stores. It makes sense to leverage the connection, to utilize the strength of the brand.”

Athletic endorsements aren’t cheap, and the companies that enter into agreements with athletes are anxious to make the most out of them. For such a program to work, however, retailers have to work together with the brand, getting the word out with signage, local PR and advertising.

More watch suppliers go retail

Watch manufacturers are finding new outlets for their products by opening their own retail stores. Most try to cater to retail sensitivities in order not to anger their retail customers by appearing as competitors. The stores have become a small side business for some companies or are part of the marketing strategies of others. Manufacturers which have opened their retail stores include Bulova, Gruen, Movado, Seiko and Timex.

More and more watch brands are finding new outlets for their wares: their own retail stores.

Several — including Bulova, Gruen, Movado, Seiko and Timex — have opened or added stores in the past 18 months. But most keep the stores low profile for fear of angering their retailer customers. “We soft-pedal it because we don’t want retailers to think we’re in competition with them, which we aren’t,” says one watch company executive.

Most do try to cater to retail sensitivities. Seiko, for example, opens stores only in outlet malls far from its clients. Timex stores sell at full retail and never have a sale, says one official. Most use minimal advertising.

Even so, some retailers resent the suppliers’ stores. For example, a jeweler in Lancaster, Pa., closed his Bulova account after the watch firm opened a shop in its factory in the town.

Reasons for the company stores vary. For some, the stores are a small side business. Movado, for example, has just two: one on Fifth Ave. in New York City and one in New Hampshire. Bulova Corp. has shops at its headquarters in Woodside, N.Y., and at the Bulova Technologies plant in Lancaster, Pa. Movado and Bulova marine star declined to discuss their stores.

For others, the stores are an important part of corporate strategy. Gruen Marketing Corp. and Seiko Corp. of America focus on outlet malls, offering reduced prices and basic services (band sizing, changing batteries).

Gruen has two factory-direct stores — called The Design Watch Factory Store — in outlet malls in Philadelphia, Pa., and Gurnee, Ill. More are planned. The manager of the Philadelphia store says Gruen-owned stores carry current models and offer discounts of up to 50% off suggested retail. Prices (including the discounts) range from $10 to $200.

Seiko Corp. of America plans to have as many as 10 shops in the next few years. It already has two stores — called Seiko The Company Store — in North Conway, N.H., and Ellenton, Fla. The stores will all be in outlet malls, in tourist spots far from metropolitan areas and 50 miles from the nearest SCA retail customer; they’ll sell only discontinued or older SCA products at discounts of 20% or more from original suggested retail prices. “We need an outlet for |disposing of~ old, slowing-moving and discontinued stock in an orderly manner without disturbing the market,” says Shigeho Kurashina, SCA president.

Timex Corp. launched its chain of Timex stores in 1988 and now has 10 of them in upscale malls in Texas, California, Minnesota, Connecticut, Florida, Maryland, Missouri and Washington, D.C. (opening this year). The goal, says Bruce Dukas, manager of operations of Timex stores, is to open five new stores a year in upscale malls for the next few years.

Timex also is experimenting with a new multi-brand store — called Rush Hour — in Arlington, Tex. Identical in design and size to Timex stores, the new stores sells Timex, Monet and Guess brand watches, all owned by Timex Corp.

Unlike outlet stores, Timex and Rush Hour shops carry only the very newest models at full retail and are used to build brand image and test response to new and experimental models and merchandising.

Luxury watches are running fast

Despite their weighty price tags, luxury watches are moving at-top speed.

Producers say 1988 is evloving into a banner year, nothwithstanding the fact prices have increased in some cases as high as 25 percent due to the devaluation of the dollar and the rise in the cost of gold. Moreover, last year’s market crash and the economic uncertainties that followed seem not to have dented the appetite or these nog-ticket timepieces. Generally, watches that start retailing at about $1,000 take on the status of luxury.

In some ways, the growth of luxury watches reflects an overall surge in the watch business. Last year 191,700,000 watches were imported to the United States, which reflects a 13 percent unit increase over 1986 and a 40 percent unit increase over 1985.

While there was no breakdown by price point, Emilio Collado, executive director of the American Watch Association in Washington said, “In the watches, like many other areas, the consumer wants better products and top quality.

Last year was a good year for watches all around, especially better-priced watches,” Collado pointed out. “And this year luxury watches are selling better than expected.”

Luxury watch firms here projected sales increases for the year from 15 percent to as high as 60 percent.

Robert Wexler, managing director of Tourneau, the five-store watch chain, said currently luxury watches are the strength of his business. “This is the continuation of a trend that started three to four years ago in luxury watches and over the past eight months the business has grown dramatically.”

Wexler said part of the surge is because the consumer is appreciating quality, and status products more than ever. Additionally, he said, the weak dollar against foriegn currencies is prompting tourists to purchased luxury watches here.

The strength of the business at Tourneau is between $5,000 to $15,000 retail. He said the leading brands are Cartier, Rolex, Patek Philippe, Baume & Mercier and Ebel.

Wexler does not see the trade dimishing, “All indications show its going to continue.”

Cartier International considers itself to be the largest firm in the better-price end of the watch market since its acquisition of Piaget and Baume & Mercier from the Piaget family at the end of April.

Alain-Dominique Perrin, president and chief eaxecutive office of Cartier Intenational, said Cartier’s total slales, all merchandise, would reach $1 billion this year; Cartier accounting for $830 million; Piaget and Baume & Mercier for the remaining $170 million.

Cartier reports watches and clocks accout for 43 percent its total sales. According to Ken Watson, president of Cartier here, unit watch sales in both retail and wholesale will increas more than 20 percent this year.

“It’s amazing to me how important watches have become to the American consumer,” said Watson. “People are buying multiple watches for different occasions.”

Ronald Wolfgang, president of Ebel her, said his firm had increase of 50 to 60 percent each year for the past three years, and he expects the same i n 1988.

“Luxury watch retail sales are estimated at $1 billion,” said Wolfgang. “My objective is to account for 20 percent of those sales by 1995.”

Wolfgang explained, “Our customer base is broadening. More people perceive having a nice watch as part of being accessorized.”

The 150-year-old Patek Philippe watch brand is also finding a growing demand for its watches, according to Werner Sonn, president, who pointed out the firm only produces 12,000 watches yearly for world distribution.

“We are coming off a record-breaking year in 1987. I expected we would be a little off this year,” said Sonn, “but for the first months of the year we are ahead.”

Sonn sees a change in watch business coming up. “The acquisitions by Cartier are the start of a few things.” He said, “There are too many watch brands in the United States and some will be weeded out.”

Meanwhile, those in the business tick off a number of reasons for the current upswing. One is the growing consumer awareness of accessories in general, as evidenced by the growth surge several accessories categories have experienced over the past two years or so. “Because of the importance of accessories,” explained Wolfgang, “the American consumer has become aware of luxury watches. It is a natural evolution.”

Ben Kaiser, president of David G. Steven, Inc., the distributor for Baume & Mericier in the U.S., said, “There is more visibility of better-price accessories across the board, and this has helped boost watch sales. Women and men are accessories-oriented today.”

Kaiser projected a 15 to 20 percent increase in sales in 1988. In 1987, it was reported, Baume & Mercier did $45 million in sales and sold approximately 65,000 watches.

Another major factor cited for the growth of the better watches for different occassions and functions — for daytime wear, sport and evening. Many watch suppliers agreed the lower-price watch market was instrumental in creating the trend toward multiple watch sales and tying watches into the idea of fashion.

“The lower-price brands such as Swatch have helped our end of the business,” said Watson. “Swatch was a brilliant concept. It was a fashion trend that made people think about watches more than ever before. It also helped put the design concept of watches in high gear.

“Watch producers have gotten more involved in the design stage,” continued Watson, “and madewatches more contemporary and fashionable.”

Wolfgang agreed design is becoming more important. “The customer buying a luxury watch is looking for style and design you can buy any watch for $25.”

Efraim Grinberg, senior vice president of marketing for North American Watch Corp., which distributes Piaget, Movado, Concord & Corum watch lines, projected a 22 percent increase in sales in ’88. He said all brands are growing at about the same pace, but with Movado’s growth slightly larger than the others.

Grinberg said the trend toward fashion in the watch business started almost seven years ago. “We are definitely in the fashion business.”

Grinberg said North American through promotion and advertising has pushed the theme, “that to be well dressed you need a good watch.” He noted his firm will spend $25 million on advertising in 1988, up to 20 percent from ’87.

Jacques Irniger, president of Omega Watch Corp., also sees the trend toward buying multiplewatches as fueling sales.

“A watch makes a personality statement. A person wants to project a different personality for work, sports and evening.” said Irniger. “This is a trend that started at th lower end of the business and is really taking off now at the higher end.”

Irniger projected a 30 percent increase in sales this year. “I am positioning Omega at the lower end of the luxury market with out sales at $500 to $2,500 retail.”

At Tiffany & Co., Maggy Siegel, division vice president of watches, pointed to the fact that there is a new watch customer, “the working woman who is buying herself a big expensive watch.”

Tiffany’s is seeing its watch sales shoot up, both in its own brand and through the selected brands it offers. While Michael Kowalski, vice president merchandising, would not specify amounts, he saidwatches are one of the store’s fastest growing categories, particularly over the past two years.

Watches will continue to grow in important because people perceive them as a tasteful way to display status, achievement and success,” said Kowalski. He admitted he was concerned about betterprice watch salse after the crash in October, but he said, “It did not affect sales. Maybe car sales have slipped and other high ticket items — but watches are still affordable.”

Tiffany added more private label watches last October, including its first bracelet watch. Siegel said, “In private label, watches are the cornerstone of our expansion plan in the U.S., Europe and the Far East.”

Tiffany’s also distributes its own watches to fine jewelry stores across the country. “We select top jewelers in a given area where we don’t have a branch store,” said Kowalski.

Fine jewelry stores are basically the only distribution channel for luxury watches, with the exception of a few specialty department stores. Most agree department stores cannot offer the services needed to sell luxury watches.

Armed with the Tiffany’s name, though, the retailer was successful with a watch catalog it sent to its customers. Siegel said, “The amount of watches we sold through the mail was amazing.” Among the watch brands the store offers are Patek Philippe, Rolex, Piaget, Baume & Mercier and Concord.

Kaiser, the Baume & Mercier distributor, said 99 percent of his sales are done with jewelers, but he does not sell to Saks Fifth Avenue, New York and Neiman-Marcus, Dallas. He noted more jewelers are expanding their watch selections. Baume & Mercier sells less than 800 doors. Amongh its top accounts are Tourneau, Birk’s Tiffany’s and Zale Corp.

Cartier began wholesaling its watch line about 10 years ago. “We are a brand first and then a retailer,” said Watson. Cartier sells about 300 jewelry stores in the U.S. “Our wholesale business is growing faster than our retail sales,” said Watson, noting “dramatic increases” have been developing at wholesale, while the firm keeps its number of retail accounts stable.

Watson said, “To sell a luxury watch you have to understand watches and fine jewelry and that is hard for a department store because they do not have a specialized sales staff.”

However, Watson said, “Department stores have an important role in the watch business. They help set the trend through display and put watches in a fashion context.”

Ebel sells about 400 jewelry stores doors in the U.S. Wolfgang commented, “The customer needs specialized trained help when making a expensive purchase like a luxury watch — its not an impulse item.” The only nonjewelry store Ebel sells is the Nordstrom chain.

“IT’S AMAZING TO ME HOW IMPORTANT WATCHES HAVE BECOME TO THE AMERICAN CONSUMER. PEOPLE ARE BUYING MULTIPLE WATCHES FOR DIFFERENT OCCASIONS.”

— KEN WATSON, PRESIDENT OF CARTIER

Wolfgang admitted the watch business is more competitive today. “The U.S. market is perceived worldwide, particularly in Switzerland, as the top market. You must succeed here if you are going to be a factor in the watch market.”

Attracting a lot of attention these days are the complicated, multi-function watches. Wexler at Tourneau said best-selling styles are the chronograph, moonphase and perpetual calendar.

Patek Philippe is known for its multi-function watches, and while demand is up, their supply is limited. Sonn said it simply takes a lonng time to produce these type of watches and there are few people who have the skills to produce them.

Classics are stressed by Rolex, according to Bill Sullivan, vice president advertising at Rolex. “We do not bring out new models yearly,” he said. “We keep the same styles so that the customer will view us as classic and will know our watch lasts.”

Watson at Cartier sees a trend back to classics.

“Leather strap watches are hot again,” he said. The largest unit sales at Cartier are coming from a leather strap vermeil watch which sell for $895.

Bracelet watches selling from $10,000 to $15,000 are also strong sellers. Watson said the idea of a watch as a piece of jewelry is always a good sell. A new addition to the Cartier line is a diamond covered gold watch which has a detachable face and can be made into a bracelet. It sell for $55,000.

The third trend, Watson said, is the antique feeling in watches. The firm is showing more classic shapes from the Twenties in its line.

Wolfgang said people are more design and aesthetic conscious about watches than ever before. Ebel introduced a new series of colored shark skin straps this year, retailing from $1,000 to $10,000. He said Ebel is deemphasizing two-tone gold and steel watches. “People want more cleaner, understated watches.” However Wolfgang noted woman are looking for bulkier, larger watches.

At Baume & Mercier, the bulk of sales are at $2,000 to $6,000 retail. Kaiser said this spring diamondwatches were particularly strong and he said gold bracelet watches are always best sellers.

At Tiffany’s, the basic leather strap Atlas watch is a best seller. It sell from $1,400 to $1,900. The women’s gold sport watch is also a hot number, retailing at $7,800. The firm is adding diamondwatches in September. In other brands, Siegel reported, classic strap watches are strong, while the moonphase watch is declining in popularity.

Omega’s latest addition is Symbol watches, inspired by Yin and Yang, the ancient Oriental symbols of unity and the sun. Prices start at $595 and go up to $6,000 retail.

Demand soars for six-figure watches

Owning a million-dollar home used to signal that one had arrived. In today’s new Gilded Age, how about purchasing a million-dollar watch?

As wealth creation reaches unprecedented levels, uber luxury is thriving at Switzerland’s top watchmakers. Whereas $5,000 timepieces used to impress, watches in excess of $100,000 are the new bellwether for the extraordinary. Watches with a tourbillon – a complicated mechanism to compensate for the effect of gravity on time – or dripping with diamonds easily climb into the seven figures.

“It used to be stunning to sell a watch over $100,000,” said Franois-Henry Bennahmias, chief executive of Audemars Piguet USA. “Today, it’s no longer surprising.”

Bennahmias said Audemars Piguet sold more than 80 watches priced at more than $100,000 last year. “This year, we’ll sell more than 100 [watches of that caliber],” he added.

Executives said they see no reason for the trend to abate. These are, after all, boom years for high-end Swiss manufacturers, with most of the major players, from Cartier to Omega, reporting high-double-digit annual gains. Industrywide, the Federation of the Swiss Watch Industry said sales ofwatches through the first half of the year gained 15.5 percent, with luxury watches growing at as much as twice that rate. The growth is coming worldwide, from New York to Hong Kong, as the increasingly wealthy splurge on rare, ultraexpensive watches as collectors’ items.

“The growth is spectacular in high-end mechanical watches, above $40,000,” said Caroline Faivet, president of Swatch Group US, which runs brands like Breguet and Blancpain. “We sell the watches as soon as we get them.”

Occasionally, that is a problem. Because of the labor-intensive nature of the trade – the most intricate pieces take years to assemble – watchmakers can’t always keep pace with demand. Likewise, years are required to train new watchmakers, making it difficult to rapidly boost production.

A prestigious name like Jaeger-LeCoultre, the Richemont-owned brand, for example, has an estimated annual output of 50,000. Patek Philippe made 38,000 watches last year, while Rolex produces more than 500,000 watches a year.

As in the art world, where limited supply has driven prices at auction to spectacular levels, so, too, has the rarity of the finest Swiss watches added to their mystique. Often, editions are sold out even before they are in production, as collectors scramble to get the latest releases.

“The demand is extraordinary,” said Jerome Lambert, chief executive of Jaeger-LeCoultre. “Customers are ready to wait two years to get the watch they want.”

Or more. Lambert said an order today for Jaeger’s new Gyrotourbillon watch, a 300,000 euro, or $414,000 at current exchange, supercomplicated piece with a tourbillon mechanism that rotates on a double axis, will be delivered in five years.

“Finding buyers isn’t really the challenge,” said Paul Ziff, president of Zenith North America. “It’s producing the watches to fill the demand that keeps us up at night.”

Severin Wunderman, the owner of Corum, the luxury Swiss watchmaker, said his firm had sold 22 watches retailing for $1 million-plus through the first six months of this year. Two were sold in the U.S., three each in the Middle East and India, five in Southeast Asia and nine in Russia. “This trend seems to find no end,” said Wunderman. “Big sales are the norm for the moment, and not the exception.”

Meanwhile, the trend is having a trickle-down effect to less-expensive mechanical watches by pushing average prices up across the board. Brands traditionally geared to the midmarket – from Tag Heuer to Omega – have reported double-digit hikes in average prices. Executives said it largely reflects market demand for more sophisticated watches, such as chronographs or watches sparkling with diamonds.

“We see sales daily on price points that hover around $50,000 retail,” said Andrew Block, vice president of Tourneau. “A $10,000 to $15,000 sale is no longer the highest sales of the day. We are witnessing more and more sales made that eclipse the $100,000 mark.”

Executives conceded that, while the most expensive watches were typically moving fastest in markets such as Russia and the Middle East, more Americans were willing to spend big bucks on Swiss mechanical pieces.

“Obviously, we see a tremendous amount of Wall Street money being spent,” said Block.

Faivet asserted that Americans have grown more educated in the intricacies of fine horology over the last decade.

“It’s an appreciation process,” she said. “Only now is the U.S. grasping the idea of high-end luxurywatches. They now understand that a watch that costs $40,000 doesn’t exactly mean it’s clunky. It can also be understated, and that the price is linked to the art of the precision movement. There are $300,000 Breguets without a single diamond.”

Nonetheless, diamonds are the requisite status symbol for certain customers. But even that is changing as conspicuous consumption supplants restraint among influential tastemakers.

“The very expensive watches [in diamonds] used to be for the Middle East and Russia,” said Philippe Leopold-Metzger, president of Piaget, which introduced a $2.5 million watch this year. “Today, Europeans and Americans are also buying diamond watches.

“It’s recognition that diamond-set watches aren’t ugly – but are beautiful objects in themselves,” added Leopold-Metzger.