There’s movement in fashion watches, and it’s not just the ticking kind. The fashion watch classification, once reserved for a handful of players such as Guess Watches, Anne Klein, Kenneth Cole, Fossil and DKNY, meant placement on the department store’s main floor, next to fashion jewelry and handbags. These companies offered colorful product to go along with each season’s clothing, and the retail price rarely exceeded $150.
In recent years, however, the success of watch upstarts such as TechnoMarine, Locman, Ritmo Mundo and Michele Watches has added a new layer to the fashion watch arena. These companies are creating watches with the same kind of whimsy as the traditional fashion watch companies, but at price points between $1,000 and $3,000.
Real estate rising
The higher prices-per-square-foot are a boon to retailers who are trying to maximize on restricted real estate in tough times.
“Retailers are always looking to increase their margins and their average unit retail of the goods, and that’s harder to do when traffic is slower,” said Marci Gordon, chief marketing officer at watch maker M.Z. Berger, which manufactures Elgin and Gruen and such licensed lines as Via Spiga and Lee. “If there are not as many units purchased, they want to see more substantial pieces going out the door at the department store level.”
Perhaps that’s why so many fashion firms were quick to react: Several have entered the category at more luxury price points, including Christian Dior and Louis Vuitton, and others, like Burberry, Yves Saint Laurent and Bill Blass, have relaunched their lines at the high end.
YSL’s watches, for instance, are emblematic of the designer’s legacy in licensing; the brand was licensed to Cartier and then sublicensed to Citizen, which flooded the market with $95 YSL timepieces. Since Gucci Group took control of the company in 1999 and began its repositioning effort, watches were one of the 152 licenses slashed and then relaunched to compete with the likes of Chanel and Hermes at prices from about $1,400 to $7,000.
Bill Blass, meanwhile, offered main-floor fashion watches with core price points under $100 in a license with Gruen throughout the Nineties. But this fall, it’s relaunching at price points that go as high as $3,000 — in a license with manufacturer Omni Watch & Clock. “This is the first time the company is trying to enter the market at the higher end of the fashion watch spectrum,” Michael Groveman, chief executive of Bill Blass Ltd., said in June. When asked why, Groveman didn’t hesitate: “Money. But a quality collection like this also helps the name Bill Blass and all the products that bear the Blass name.” Industry sources said a higher-end Bill Blass watch business could rake in between $3 million and $5 million in the first year.
But not everyone agrees that the only way is up.
“Many companies see an opportunity because they see a lot of product with companies that has been successful in $3,000 to $6,000 range — and people are trying to emulate the success of Michele Watches and TechnoMarine,” said Dennis Phillips, president of Taramax USA, the authorized U.S. distributor for the Fendi Timepiece Collection. “Generally, a person who will purchase a product at that price point wants a traditional luxury watch brand and not necessarily a designer or a fashion name. We are staying in our price range from $295 to $1,795.”
In the last three years, Taramax pulled the Fendi line out of department stores to focus exclusively on offering fine jewelry stores an entry price point to a watch with Fendi’s luxury name attached to it.
“We found that department stores have become very promotional as far as watches,” Phillips noted. “That hurt us and supported our decision to go into the jewelry stores. We feel we are a welcome price point for jewelry stores, because they don’t want to walk away from under the $1,000 price point.”
Cindy Livingston, president at Callanen International, the licensee of Guess Watches, said: “TechnoMarine, Michele and Locman have added a bridge between fashion and luxury, and they have done a great job. I don’t think that we compete with them…there is space for the middle price point.”
To succeed in today’s more competitive environment, many agreed that the product needs to differentiate itself from the others to trigger sales. “There’s just so much product out there, and there is a lot of same product, and the goal is to really be differentiated at the counter,” said Livingston.
Among the key challenges is the continuing struggle by brands to secure real estate on the main floor. “Real estate is a challenge,” said Gordon at M.Z. Berger. “The industry has ebbs and flows and the jewelry classification is very strong right now. When jewelry is going through a peak,watches lose a bit of real estate to jewelry.”
Packaging, she added, is the key method to snare consumers. M.Z. Berger makes the Radio Yota watch, which comes with a transistor radio as packaging, and Space Yota, which is packaged inside a toy space-ship. “It’s very important to give consumers a reason to buy and draw them into the department visually,” she said. “You have to be able to tell a story.”
Tom Fosorile, senior vice president of sales at Bulova, noted: “The retail customers are looking for more collections of watches. The collections improve watch merchandising and provide more case appeal.”
Case appeal, indeed, is something many firms are hoping for with the return of leather straps after a decade of metal bracelets topping trends.
“The market was driven by metal bands and ladies jewelry styles, and the trend has gone back to leather straps and cuff watches, therefore giving the entire classification of watches a new lease on life with regards to color and styling,” said Livingston at Callanen. “The cases in stores look different now. They have a much more exciting presentation in stores based on color, shape and fabric. It’s not just metal or steel.” Gordon at M.Z. Berger agreed: “Leather is coming back, and embellishment is important on watch bands, whether it’s studs or contrast stitching.”
For fall, a variety of looks will dominate the sector, including larger square or rectangular cases.
“Oversize cases and dials allow more design area and you could do larger digits, graphics, and color blocking because you have more space on the dial to work with,” said Livingston.
Interchangeable straps will be another trend. Fendi, for instance, is offering the Slide watch, which features five different colored straps that slide under the case, for $495. The Slide is packaged as a gift set featuring the watch on a black strap and four extra straps. “A woman can change her strap to accessorize the outfit she is wearing,” said Phillips.