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.