TIME FOR A CHANGE
FASHION WATCH COMPANIES ARE TESTING NEW PRICES AND NOVELTY LINES TO MEET GROWTH PLANS IN A TIGHT RETAIL ENVIRONMENT.
Byline: Marc Karimzadeh
With the fourth quarter of last year dented by overall economic uncertainty and less-than-stellar department store action, the fashion watch classification is facing a challenging road to grow in a competitive environment.
For the past few years, fashion watch areas in department stores have seen a proliferation of sterling silver and white metal case and bracelet designs. While these accounted for the bulk of many brands’ sales, the result was merchandise that lacked in diversity.
“The average person in the U.S. owns about six watches,” said Gary Bollinger, senior vice president at DKNY Watches, which is licensed to Fossil. “The consumer is looking for change, for a reason to purchase fashion watches.”
“It has become more critical in the fashion watch industry for each brand to have a point of view and a brand identity that differentiates it from the competition,” agreed Gail Murray, the vice president of global product development for Callanen International, the licensee of Guess and the Guess Collection bridge watch line. “Also, the fashion watch customer is more aware of quality and perceived value than before. There are so many more magazines and so many Web sites to get information from.”
Watch execs agreed that the consumer is becoming better educated about quality and high tech features. While some retailers believe that consumers are increasingly looking for particular styles and technological features — such as chronographs, analog and digital combinations, or multiple time zones — many vendors said the bridge segment, with its status designer licenses, continues to drive volume growth at retail.
“Most [retail] growth has come from an expanded amount of designer-branded merchandise,” said Jon Step, president of Tommy Hilfiger Watches, which launched at retail this month and is being produced under license by the Movado Group. Step noted that because status designer watches usually have higher price points, they drive the increases with retailers benefiting from their higher “average ticket.”
“Some of the other lines have been flat or maybe [saw] a slight decrease in business. And retail management was looking at overall watch business as flat,” said Charles H. Kriete, president at Geneva, the licensee for Kenneth Cole Watches. As a result, he said, many stores have been planning their fashion areas conservatively and not expanding their retail space.
In a tight market like this, vendors who take their cues from status or bridge companies and introduce higher price points could register stronger sales results and lead the financial growth of the fashion watch departments. Many companies are hoping not just to take their brand up another notch and find a new avenue to reach their consumer, but also to meet their end-of-year projections with this strategy.
“The fashion watch category had stayed in one group of price points,” said Cindy Livingston, president of Callanen International. “As you move into new, higher price points, it is easier to develop new categories, and new movements, perhaps.”
Guess has been expanding its bridge Guess Collection line for the women’s market. The line initially drew on classic and men’s wear inspirations, but during last month’s World Watch & Clock show in Basel, Switzerland, the company introduced various new, more fashion-oriented styles. These feature the company’s signature “G” more prominently in the case design, with colored suede or crocodile straps and metal bracelets that can retail up to $500, targeting a different price point from Guess Watches, which on average retail between $65 and $75.
The CK Watch Co., a division of The Swatch Group, is also taking another look at the value of higher prices in the fashion watch arena. The company is redeveloping its Calvin Klein Collection line. Though little information on design or technological features is currently available, the company expects to launch new styles priced between $350 and $1,500 during the next Basel fair, homing in on a price point similar to Gucci Timepieces.
“Unlike two to three years ago, the consumer is ready to pay for quality and a name,” said Arlette E. Emch, president of CK Watch Co. and a member of The Swatch Group board. “The awareness of quality has much to do with the increasing knowledge of luxury clothing brands in the U.S. [U.S. consumers] discovered luxury brands such as Christian Dior, Chanel and Giorgio Armani, who are all powerfully hitting the market.”
While the consumer is more savvy than ever when it comes to selecting the right watch, some vendors said last year’s challenging fourth quarter has made many think twice about what it takes to promote growth, beyond new design and technological features. Since the lion’s share of business comes from department stores and their often overstocked main floor accessories areas, vendors pointed to new ways of stimulating sales.
“The trend with many retailers is exclusive collections, which gives them the opportunity to promote brands without having to compete with other retailers,” noted Tracie Gildea, brand manager for classics and fashion watches at Timex. Gildea said Timex is considering joining forces with retailers to create a new environment tailored to each store’s special needs. Some, she said, may have a promotional gift feel, though further specifics were not available yet. The revamped area, she said, would be introduced before the holiday season to help boost the crucial fourth quarter.
“There are so many watch brands out there, it is difficult to make a statement, when retailers are competing with every other retailer in the country,” she said.
Bulova, for example, also works very closely with its retail partners and supplies account-specific advertising, such as inserts to highlight particular store events.
“We worked throughout 2000 with our retail partners to implement an advertising strategy that promoted sell-through and at the same time enhanced our brand image,” said Tom Fosorile, Bulova’s senior vice president of sales. The company has registered double-digit sales growth and increased its market share, he said, even through the fourth quarter. Fosorile said the increase was also due to the company’s continued efforts to increase staff and therefore service levels at department store doors.
“How often don’t you see salespeople? We provide help at retail level; we have sales and merchandising staff subsidized by us,” said Mark Odenheimer, senior vice president at E. Gluck Corp., the licensee for Anne Klein, Anne Klein 2 and Nine West watches.
While sales are stimulated by added value introductions — such as the diamonds that are a feature in both Anne Klein and Anne Klein 2 watch lines through fall — Odenheimer pointed to open selling as being a strategy that could eventually change the nature of fashion watch retailing. That is, if retailers can overcome the potential for shrinkage inherent in such displays. Nine West is tackling the shrinkage problem with sealed-package displayed on towers or walls that allow self-service.
According to Odenheimer, these displays look more like a showcase — and the packaging is large enough to prevent people from, well, helping themselves to the goods.
“Certain brands make sense to be open-sold. As technology gets better in terms of shrinkage and retailers think of new ways to present their merchandise, this could be the next trend,” Odenheimer said. “This is something many retailers are excited about.”