NEW YORK — Despite economic and political uncertainties, the fine jewelry and watch sector is looking to recover its luster as 2003 rolls along.

"I expect spring to be challenging, but for fall, business will pick up and the flow will be better," said Woody La Forge, chief operating officer at Robert Lee Morris.

A number of executives said the crystal ball is still a little foggy, since so much of next year’s business will depend on how jewelry and watches perform this holiday season. However, many executives said they are feeling upbeat about business conditions as the new year approaches, partly because of the timeless nature of fine jewelry, which often has a longer shelf life and doesn’t go out of style as easily as apparel. The fine jewelry and watch market in the U.S. is estimated to have sales of about $41 billion, according to trade association Jewelry Information Center.

Classic and well-known brands are expected to perform better than some of the new names that have hit the scene in recent years, especially since many retailers kept their inventories lean for the holidays and had to edit out some brands.

"Discerning customers are still buying items which have a history and a heritage associated with them," said Daniel Lalonde, president and chief executive at LVMH Watch & Jewelry USA.

To keep business ticking in 2003, many companies said they are working to forge closer relationships with their existing retail partners and go deeper with their merchandise in those stores, rather than expand distribution. Improving service is another focus for companies, and some firms said they are looking to do more exclusives for stores.

Jewelry trends for the coming year are focused heavily on colored stones, with plenty of ethnic influences. Yellow gold also continues to make a comeback and many firms are offering flowing and organic shapes and styles inspired by nature.

Watches, in particular, look to continue to be a hot sector in 2003, although so many brands have entered this category that many observers expect there to be some fallout next year.

A number of high-end designer firms, including Prada and Louis Vuitton, have just jumped into the watch category, and Burberry recently unveiled its new line of timepieces produced by Fossil Inc. Christian Dior has debuted its high-end collection of timepieces designed by John Galliano, Yves Saint Laurent has relaunched its watch brand and Hermès also is stepping up its focus on watches with its new Nomad watch. Watches now account for about 10 percent of overall sales at Hermès of $1.1 billion, and company officials are positioning this category for more serious growth.Movado Group, meanwhile, is stepping up the focus on its Concord brand, one of the most established names in the watch business. The brand is getting spiffed up and re-energized after the addition of a new brand president, watch industry veteran Fred Reffsin, who took the helm in September. Concord accounts for about 15 percent of the company’s overall sales of about $320 million, according to Efraim Grinberg, Movado’s chief executive officer.

Reffsin said the company plans to grow its Concord business deeper in existing accounts. As part of the relaunch, Concord recently introduced a new advertising campaign that centers on product. Retail prices for this brand start at around $1,390 and range up to about $10,000.

At Asprey, which has now been separated from Garrard, watches are also taking center stage. The company for the first time will introduce watches under just the Asprey name, according to Robert Donofrio, the new chief executive officer of the A&G Group in the U.S.

"We are positioning the brand as the ultimate British luxury lifestyle brand and you have to have things people will need to live their lifestyle," Donofrio said. "Watches are one of those things."

John Hardy, meanwhile, is focusing on a new upscale collection called Cinta that’s being sold initially at Bergdorf Goodman in New York and at some Neiman Marcus locations. The collection features precious and semiprecious stones, such as garnet, spinel, sapphires, rubies and diamonds. Cynthia Hardy, co-owner of the company, said she expects to notch up sales growth of about 30 percent in 2003, driven by "better sell-in and better sell-through."

Robert Lee Morris is going to expand its product offerings in the coming year with a new Tahitian pearl collection, a new category for the company, La Forge said. The company is also focusing more on gold items.

At LVMH’s watch and jewelry division, which includes Tag Heuer, Christian Dior watches and Chaumet, the focus is on raising the prestige of all the brands, Lalonde said. The company has scaled back distribution for the Tag brand and raised some of the materials and price points. Lalonde said he is planning for double-digit growth of these brands in the U.S. next year, fueled by gains in Tag and Dior. This division worldwide had sales of about $480 million in 2001. The company doesn’t break out sales by country.Golfer Tiger Woods will be featured in the Tag advertisements starting in January, which is a big initiative for the company.

Italian jewelry firm Roberto Coin, meanwhile, is going back to its classic roots by offering plenty of yellow gold and staple pieces, said Lisa Nikfarjam, the company’s senior vice president and sales director, who projects the firm will have single-digit growth next year.

She noted that the company’s advertising in the coming year will focus on the Chic and Shine collection, which has a broader appeal and is more affordable to a wider range of customers.

"We are trying to create accessibility," she said. "Our theme is classic looks that are more affordable."

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