IN U.S., WATCHES BOOM, BUT NOT FOR JEWELLERS

Americans bought 125 million to 150 million watches in 1988, everything from cheap refrigerator magnets with digital displays to diamond-studded luxury timepieces. That’s up considerably from only 43 million watches in 1969.

But even as U.S. sales grew by leaps and bounds, watches and clocks became a smaller part of jewelers’ total sales. At the same time, the remnants of the U.S. watch production industry virtually disappeared.

U.S. production: The demand for digital watches in the 1970s produced a brief boom in U.S. watch production. In 1969, for example, U.S. watch production totaled 17.7 million. By 1977, production totaled 31 million watches, most of them digital, and more than 1000 stuhrling review. But aggressive price-cutting and a global glut of cheap digital watches burst the balloon. Many small manufacturers and marketers went out of business because they couldn’t compete financially or couldn’t develop an adequate distribution system.

Many nonwatch firms — such as General Electric, Texas Instruments, Gillette and Fairchild Industries — also tried their luck with digitals. They all failed because they didn’t understand watch production and marketing. They thought watches could be sold in the same way as pocket calculators — which a year or two earlier enjoyed immense success in the market. Like pocket calculators, digital watches started at a fairly high price but dropped dramatically as production soared and production expertise grew. While it was possible to sell calculators through almost every conceivable retail outlet, this wasn’t possible with watches.

At the same time, rising costs led other manufacturers to go off-shore to low-cost, labor-intensive production centers in Asia. Timex, for example, shifted most of its production and assembly operations to Taiwan, Singapore and the Philippines. The result: U.S. watch imports mushroomed from 58.1 million units in 1980 to 210 units last year.

By 1988, all that remained of the U.S. watch production industry were some Japanese-run assembly operations in California, a Swiss-run assembly operation in Pennsylvania and small Timex operations in Arkansas and Connecticut.

Jewelers’ sales: Industry experts estimate U.S. watch and clock sales total at least $2 billion annually, and some say as high as $5 billion. (Major vendors in this hotly competitive market don’t like to reveal results of their market surveys). But watches and clocks account for only about 12% of jewelers’ sales, down from 17.9% in 1969.

Why? Many jewelers reduced or dropped their watch and clock departments when discount and off-price retailers stepped into the market. Jewelers and Better Business Bureaus warned consumers that off-price retailers used huge markups to allow for markdowns, and that the discount prices weren’t much different from jewelers’ regular prices. But consumers still flocked to discount houses.

The fodder for much of the off-price watch market was gray-market goods (brand-name items made overseas for foreign markets but imported here and sold at discount prices by unauthorized dealers.)

Off-price retailing of watches got a major boost in 1980 when K mart, the nation’s second-largest retailer, added gray-market Seikos to its jewelry department. Other mass-merchandisers followed suit. By 1984, gray-market watches had become a $100 million market in the U.S.

Efforts increased in the mid-1980s’ to dam the flow of gray-market watches. Watch firms, the American Watch Association and Jewelers of America were among the founding members of the Coalition to Preserve the Integrity of American Trademarks. COPIAT lobbied aggressively against the U.S. Customs Service, which allowed the entry of gray-market goods if the trademark owner was a U.S. firm or had a U.S. outlet. But in 1988, the U.S. Supreme Court ruled in favor of the Customs Service.

Counterfeit watches: Counterfeiting also affects jewelers’ watch sales. Consumers buy fake watches at bargain-basement prices, thinking they’ve bought the real thing for much less than they’d pay a jeweler. But that creates two problems: consumers akribos xxiv reviews end up with a watch of little value and also take away business for jewelers dealing legitimately.

Some watch vendors have started to fight back to protect their names and their profits. Rolex, for example, now spends more than $1 million annually to find and prosecute watch counterfeiters.

And as a whole, the watch industry persuaded Congress in 1984 to pass the Trademark Counterfeiting Act, which makes trafficking in phony timepieces a criminal offense.

The American Watch Association also battles counterfeiting, working with individual watch firms, the Watchmakers of Switzerland Information Center and other trade groups. In addition to lobbying, AWA funded three major investigations of bogus watch trafficking. The most spectacular was “Operation Watchcase,” which uncovered a counterfeit watch network, resulted in scores of arrests and recovered tens of thousands of bogus watches in 1987.

In 1988, AWA, WOSIC and Jewelers of America initiated a successful program built around a phone number (1-800-333-FAKE) to report suspected watch counterfeiters. AWA also produced a video warning TV viewers about fake watches, helped to develop a model state law making making counterfeiting a felony and pushed to erase weaknesses and toughen seizure provisions in the Trademark Counterfeit Act.

Repair service: As watches and clocks started to claim a smaller share of jewelers’ sales, so did repairs. For generations, jewelers and watch repairmen were virtually synonymous. In fact, many jewelers entered the jewelry industry as operators of small watch repair shops.

But from 1969-1989, the number of watchmakers in the U.S. labor market dropped from 30,000 to about 12,000. While every jewelry store once had its own watchmaker, 37% of those polled by JC-K in 1989 had none.

One reason is the smaller role that watches play in jewelry-store sales. Another reason is technological advances such as quartz watches, which need few repairs. Wages also can be blamed. In late 1988, the approximate starting salary for a watchmaker was $10,000 to $12,000.

Yet jewelers say watch repairs are a valuable service. As a result, watch repair trade shops and factories have increased, serving jewelers who no longer offer the service themselves.

Other changes: The U.S. watch market has witnessed a number of other changes in the past 20 years.

The advent of electronic digital and analog watches, with their precise timekeeping, led to great emphasis on marketing and styling. As yuppies began to prosper in the 1980s, advertisements across the U.S. promoted nixon watches for men as fashion accessories first, and timepieces second.

A pioneer in this marketing concept was the Swatch, the trendy, inexpensive, Swiss watch introduced in the early 1980s.

In 1986, clothier Benneton licensed Bulova Watch Co. to produce a line of fashion watches. It was part of a fast-growing trend toward designer name timepieces. By 1989, watch and clocks bore the names of prominent designers and even leading automotive products such as Ferrari, Jaguar and Harley-Davidson.

Luxury watches ($300+) also became a growth market in the U.S. in the latter 1980s, despite rising gold prices and the devalued dollar.

Nonwatch accessories: Some watch firms even expanded into nonwatch fashion accessories. Movado offered products ranging from handbags to glasses. Bulova has a line of 14k jewelry and launched the Buly line of tote, backpack and gym bags in trendy colors with clocks affixed to the outside.

Cartier opened several in-store boutiques and reportedly considered licensing its Piaget watch name for various accessories.

Ironically, Swatch, which helped to launch the trend, is getting out of the fashion accessories business. Swatch officials said the experiment was unsuccessful and that the firm now will concentrate on its core business of watch and watch accessories.

Jeweler Joseph Bulova Put His Faith In Innovation

Joseph Bulova knew a trend when he saw one. This one, he thought, had the hallmark of a permanent change.

Bulova owned a small family jewelry shop in New York City. From halfway across the world, he learned that soldiers in World War I had stopped using pocket watches.

The wristwatches made by military suppliers struck Bulova like a bolt of lightning. He realized their ease of use could make them hot consumer products for men. He and his son, Arde, a clockmaker, decided to adapt them for civilian use.

This posed a challenge, because the military watches were simple timepieces lashed to leather straps — too plain for civilian customers.

But Bulova (1851-1935) persisted. He was a master of taste and practicality. He and his son experimented by adding fine Swiss watch movements and decorative touches to the original, Army-issued designs.

In 1919, soon after World War I ended, the Bulovas introduced the first full line of men’s wristwatches with jeweled works (read bulova marine star review). Sales took off. Other makers followed, and the wristwatch became a familiar part of 20th-century life.

The earliest wristwatches had appeared in the 1880s as small clocks that dangled from women’s bracelets. Until World War I, wristwatches were seen as feminine.

Men didn’t wear wristwatches before World War I, because such watches were considered effeminate, says Dana Blackwell, a professional watch repairer and historian.

Bulova believed World War I had stirred deep changes. He bet wristwatches would be a hit with men in the postwar era. He was right.

Women were working in larger numbers, and the Roaring ’20s spawned a generation of more independent and socially active women.

He introduced his first line of women’s wristwatches in 1924. He made them as trim and practical as the men’s — albeit smaller.

The watches became emblems of the flapper generation of the 1920s, and sales rocketed.

It was farsighted steps like this that allowed Bulova and son Arde to found the Bulova Watch Co. in 1923 in New York City. By 1929, the company had cornered about 50% of the U.S. market for watches and clocks.

In a trade where precision mattered, Bulova analyzed details from all angles.

Bulova, who was born in Austria-Hungary and moved to the U.S. as a young adult, learned the tradition of Old World craftsmanship that demanded every watch or piece of jewelry be a work of art. But he was also practical. Bulova realized mass production could revolutionize watchmaking.

Using special machine tools, the Bulovas standardized every part in Bulova watches. Each part was interchangeable with the same part in any Bulova watch.

The innovation allowed millions of high-quality tissot 1853 watches to be mass-produced at lower cost than ever before. This made watches and clocks more affordable for Americans.

Before Bulova’s brainstorm, watch repairmen had to hunt replacement parts or duplicate them by hand. This could take a long time or cost a great deal. Bulova changed all that.

Bulova saw how well people responded to advertising. He and Arde produced a radio commercial — one of the first in the United States.

In 1931, Bulova’s company became the first in the watch industry to launch a million-dollar advertising blitz. Other jewelers thought Bulova was crazy.

But Bulova wasn’t distracted by criticism. His ad blitz swamped radio and print media and made Bulova a household name.

In 1927, when Charles Lindbergh made the first trans-Atlantic flight from New York to Paris, Bulova and his son thundered from the gate with a new product. They had 5,000 special wristwatches commemorating Lindbergh’s flight packed in gift boxes with pictures of the aviator.

The first shipment of these watches sold out in three days. He sold 50,000 more of the watches over the next several years, inaugurating a commemorative watch industry.

As a Czech immigrant familiar with the wars and upheavals that shook Europe, he learned to be prepared for any situation.

Between 1930 and 1940, Bulova amassed enough plants and experts to manufacture complete watches without foreign parts or help.

This didn’t come a moment too soon. When World War II began, the government converted all of Bulova’s plants to defense work.

Though Bulova died before World War II, the firm headed by his son later did a huge volume of defense work, producing military watches, aircraft instruments and fuses and other parts for Navy torpedoes.

Invicta diver watch which gives a sub-mariner look

Invicta watches are well known for its different quality watches and styles. Some of the most prominent ones are collection of sorts, the Jason Taylor Bolt Zeus collection, and the Venom watch collection.

Below is described with invicta watch review in stunning gold, silver and blue ensemble along with precision, Swiss movement and also a quality look as well as feel. The yellow gold color sporting model is a striking blue dial, with one of the several color combinations available in this particular collection. Here, the yellow gold is a sort of common partner along with other colors as well. It gives a classic look along with the stainless steel parts, a solid feet, quality construction and also arresting without using vibrant colors.

The invicta watches have a great reputation for the modeling watches, in addition to other high class time pieces. On the other hand, you can also consider blue-gold-silver pro diver watch at affordable cost.

Description of pro diver model

This particular diver time-piece has a very hard crystal colored configuration inside along with official gold plated crown. You can easily dive, maximum up to two football fields. If you are diving too deep, then you may need to choose an Olympic career.

The pro diver invicta watch lacks battery which needs replacing as it is powered by your own hand movement. So, it is termed as automatic in nature. There are many extra links attached to the timepiece which can be easily removed from your nearby jeweler. It is an average sized wrist watch. As of quality is concerned, it is completely certified. It boasts Japanese manufactured 21 jewel Mayotte movement and it is widely recognized in the watch industry for its high precision and affordability. If you want to make any sort of adjustments on the crown, don’t employ pliers or any other type of instrument.

As it is a diver’s watch, it is screwed very tightly in order to protect the water pressure from getting it inside the watch. When you flak off some of the extra fittings of the watch, definitely you will not be able to get the same tightness level as well as proper seating unlike the manufacturer. So, it’s better to take it to a professional one or if possible use your fingers, but never allow any sharp metal to touch it.

These watches light up in dark including hour, minute, second hands and time denotations as well. It is very useful if you are walking or running in a dark place or sneaking eatables from fridge in the dark. It is not a cheap watch and it is also not known for its extreme accuracy. It looks like as if it is made out of hefty submariner.

Invicta pro diver 8926 are regarded as both high and middle quality timepieces which look elegant and affordable. Invicta watches review gives the best suggestion regarding these time pieces. The above mentioned reviews of invicta watches provide basic styles about diving watches.

The high-end watch market just keeps on ticking

After five years of sustained growth in the U.S. following a long stagnant period, industry experts said the renaissance in consumer interest here for fine Swiss-made timepieces is showing no signs of coming to an end. Optimism reigns for the holiday retail season and kickoff to the new year.

“The high-end market is on fire,” said Andrew J. Block, senior vice president of watch chain Tourneau. “Housing prices are strong, unemployment is lower. People don’t seem to be weighed down by the geopolitical situation, and this is a feel-good purchase.”

The U.S. has emerged as the biggest market for Swiss watch consumption year to date, according to the Federation of the Swiss Watch Industry, the trade group in Bienne, Switzerland. Almost $1.3 billion worth of Swiss timepieces have arrived in the U.S. between January and October, a 15.6 increase from last year’s $1.1 billion during the same period. Hong Kong, Japan and European countries such as Italy, France and Germany follow behind the U.S. in Swiss watch consumption.

Finished Swiss watch exports have shown a downward trend, according to Swiss figures. Almost 20 million watches left the country between January and October, a 4.9 percent decrease compared with last year’s 10-month figure of 21 million. In 2004, total watch exports amounted to 25.1 million.

However, fine Swiss watches show increasingly strong growth because of an overall increase in the value of the timepieces leaving the country. In October, $916 million worth of watches were exported from Switzerland, a 9.2 percent increase over this month last year. Between January and October, the value of finished watch exports was $6.9 billion, an 11.4 percent increase compared with last year’s figures.

The value of Swiss watch exports increased partly because of more use of precious metals, such as white and yellow gold and platinum. Unlike the remainder of the accessories business, which has experienced a stripping away of sparkly touches, fine Swiss watches also continue to use diamond treatments on the face and bezel.

“Diamonds are everywhere, and it’s not just for women, but men also,” said Tourneau’s Block. “Watches that you wouldn’t normally associate with being bejeweled are.”

Block anticipates such bejeweled pieces to be among the bestsellers for the holiday season from brands such as Cartier, Patek Philippe and Tag Heuer. When it comes to price, the sky’s the limit, with watches in the $10,000 and up category drawing consumer attention.

Block said the holiday period is a great selling season, but doesn’t make or break a year for Tourneau, a point echoed by Cathy Cronin, diamond and watch buyer for jeweler Shreve, Crump & Low, which opened in Boston last month in addition to having a boutique in the Mall in Chestnut Hill, Mass., and a sister store, Schwarzschild Jewelers, in Richmond, Va.

“It’s a very important season, accounting for about 25 percent of annual business, but it’s equal with spring, when people are making purchases for Mother’s Day or graduation,” she said.

In addition to industry adjustments to compensate for the strong euro against the dollar, the increase in the value of timepieces has raised the prices on watches in the stores by 10 percent, she said. Retail prices range from $900 to $50,000, with average consumer purchases falling into the $5,000 to $7,000 range.

Watches are really turning into jewelry,” Cronin said. “Timepieces are carrying higher metal contents and gem weights. The leaders in the watch world are seeing that people are coming into jewelry stores to purchase jewelry. So in order to make watches sell better in the jewelry stores, they are making them more jewelry-like.”

Despite the price increases, sales of brands such as Cartier, Rolex, Baume & Mercier, Breitling, IWC, Jaeger-LeCoultre and Tag Heuer remain so strong that Cronin anticipates upping the space dedicated to watch sales in the Shreve, Crump & Low flagship by 10 feet in the next year.

Cronin also said watch complications, which were once a feature sought out primarily by men, are gaining interest among women buyers.

“Women are getting more educated,” Cronin said. “Women really want to know what they are purchasing, and the more sophisticated watch buyers are going after the more sophisticatedwatches.”

She said the women’s market still represents a huge area for growth for Swiss watchmakers, a point brands are finally recognizing. She cited advertisements by Baume & Mercier that feature Meg Ryan and Tag Heuer that spotlight Uma Thurman as positive steps in increasing a female consumer’s interest in purchasing fine Swiss timepieces. “They are absolutely making the right decision with the right consumer,” she said. “It’s about a three-pronged approach: the sophistication of the watch, the spokesperson for the watch and the fashion focus of the timepiece.”

Tag Heuer dedicated half of its media budget this year to the women’s category, hiring Thurman and tennis star Maria Sharapova as ambassadors for the brand, said Daniel Lalonde, president in North America of LVMH Moet Hennessy Louis Vuitton, which owns the brand.

“In the past, Tag Heuer has been mainly a male-skewed brand,” he said. “However, we’ve had tremendous growth in the women’s category this year. Prices have gone up, and the customer is trading up. Women’s average price points have gone up in the double digits, but they are buying more expensive watches and recognizing the value in how a watch defines a person.”

Sharapova even had input in the development of Tag Heuer’s $1,895 Formula 1 diamond watch, which premieres for the holiday retail season and features 125 diamonds on the bezel.

“The theme of this year and especially the last two months are that diamonds are a girl’s best friend,” Lalonde said. “We expect a huge sell-through on the Formula 1. We are bullish on the collection for the next six weeks.”

Lalonde said the luxury watch business in the U.S. is largely underpenetrated with only 5 or 6 percent of the population owning a watch that retails for more than $500.

“In Europe, that figure is two to three times higher,” he said. “Therefore, the U.S. market represents huge growth potential. We have a lot of great years ahead of us in the watch category, and especially on the women’s side. I think the women’s business will grow a little faster and what you will see happening is that brands will start defining themselves more to stand out, especially brands that have a heritage and a history to tell as they will be able to use that story to continue to outpace [competitors].”

Julien Tornare, president in North America of Vacheron Constantin, which has celebrated its 250th anniversary this year, said the brand’s message has been about showing the good points of being old.

“We are very proud of our history and our savoir faire, as well as our ability to run our business in a contemporary way,” Tornare said.

The holiday season is important for the brand, not only because business peaks, but also because many of the brand’s new models that premiered during April’s Swiss watch fairs begin arriving in retail stores, Tornare said.

One model Tornare said represents the direction of the brand in the ladies’ market is the new Malte silhouette with a moonface complication. The moon itself comprises diamonds. It retails from $20,000 to $30,000.

“Women are interested not only in jewelry, but also in the nice movements of the watch,” he said. “It’s a trend for the ladies’ segment.”

Tornare expects double-digit percentage growth from last holiday season to this holiday season.

Hank Edelman, president of Patek Philippe in the U.S., said the brand is also optimistic about the holiday season.

“It’s becoming an ongoing thing, but this year it is more so, especially among women,” he said. “There is more consciousness among female American consumers for a quality watch.”

Edelman said the brand’s Twenty-4 silhouette continues to be its bestseller, but the men’s-inspired sporty oversized Aquanat Luce with a colorful rubber strap and diamonds at the bezel is a new piece that has received positive consumer response at $29,950 retail.

“It’s a different look for the American market for us,” he said. “However, women are enjoying it.”

At Michele Watches, creative director Michele Barouh continues to focus on the brand’s strength in ladylike looks with the introduction for the holiday season of its new Attitude silhouette.

“We have steady business all year-round, but we do have growth at the end of the year because the brand’s watches are in a great gift price point of $500 to $7,000,” said Barouh. “We are also doing better every year in general, with our sales increasing. Women shoppers are definitely more savvy than they were a few years ago. They want the quality there, along with the great aesthetic.”

The fashion watch explosion

For the accessories market, it was a timely introduction. When Swatch Watch USA unveiled its plastic quartz watch in 1983 — selling for $25 to $35 — the Swiss firm started a revolution.

Now literally dozens of companies in the U.S. and abroad are aggressively trying to carve out market share in what is being called the “fashion watch” market — an amorphous category that covers everything from low-end imports, with a splash of color on the face, to sophisticated graphic pieces that have become a showcase in better department stores.

The key players have become the accessory industry’s vanguard — entrepreneurs who depend on sharp marketing techniques, imaginative promotions and advertising and a constant injection of new styles to insure the area’s longevity. No one knows how large the market is nor its potential, since even the traditional watch makers have begun adding their version of fashion watches to their lines. Estimates of total wholesale volume from executives run the gamut from $100 million to $300 million, and that number grows daily.

But even Swatch Watch did not have an easy time of it at first. Looking to rebuild Switzerland’s position in the watch market — having suffered serious incursions from the Far East — Swatch (a combination of “Swiss” and “watch”) set out to capture the lower end, which had been virtually untapped by the Swiss. The watch, test marketed in the U.S. through traditional watch channels, was made of plastic, could not be repaired and sold at price points far below what watch buyers were used to.

As Swatch began approaching department stores, response was lukewarm and sell-through was initially soft. As Max Imgruth, president of Swatch Watch, said in an earlier interview, “We had to convince the fine lady accessories buyers that the watches were chic.”

The firm expects to sell more than three million watches in the U.S. this year, with total volume for the U.S. subsidiary breaking the $125 million mark, including its expanded group of accessory items.

Competitive firms are quick to give Swatch its due as the forerunner of the trend and will concede that it holds anywhere from one-fourth to one-half of the market share.

Yet they feel there is a department store place for them as well, and are striving to differentiate themselves from Swatch and attract their own following. Said Mort Gershman, president of Lorus Products, a well-established watch firm that recently added a fashion line: “Swatch is a significant part of the market, but I don’t think it creates the same hysteria in areas outside of New York, Los Angeles, Chicago and Florida.”

While Swatch has used its watch’s customer base to create an apparel tie-in, other firms, such as Fiorucci, Colours by Alexander Julian and Guess, have been able to capitalize on the success of their apparel to build their watch business.

The Guess line, which is marketed by The Callanen Watch Corp. here and has a wholesale tag of $21, claims to be second to Swatch in department store sales, doing $12 million in wholesale volume. Since the major fashion watch business is being done in women’s department stores, where Guess has a strong foothold already, the firm has a natural distribution outlet, according to Mickey CAllanen, president.

Callahen also introduced a lower-priced fashion line, under the Brooke label, which wholesales in the $13.50 to $17 range.

E. Gluck Corp., a watch firm based in Long Island City, N.Y., which claims to be second in unit sales in the U.S. to Timex, has brought out two fashion watch lines: Awatch, a plastic watch aimed at mass merchandisers, sold through the Armitron division; and Slinkys, a watch that comes with different color metal bands that resemble the “Slinky” toys, targeted to department stores. The Awatch wholesales for under $20, while Slinkys wholesale for under $30.

Overseas Products International, based in Texas and represented in New York by Discoveries, Inc., introduced a plastic watch called Linus Q for spring 1985 that came with four interchangeable faces, wholesaling for $18. Discoveries owner Dan Thurston, who was new to the watch business, was “totally freaked” by the positive response. The company also has introduced a fashion watch with a metal mesh band for $20 wholesale.

Timex is one of the traditional watch firms that has taken the “if you can’t beat ’em, join’em” route.

“There’s no rhyme or reason why these watches sell,” said David Rahilly, vice president of marketing and sales for the U.S. “Some of the dials are even hard to read.”

Nevertheless, in the fall Timex introduced its Watercolors fashion line. Rahilly conceded his company was late in entering the market. “We had not anticipated the enormous impact Swatch would have,” he said. Rahilly added that the Watercolors line, which wholesales from $9 to $13, will be expanded and that fashion watches become a “very, very important part” of the Timex line.

Even Swatch’s sister company in Switzerland, Tissot watches, has decided to take advantage of America’s appetite for the new and different. In the fall it launched The Rock Watch in Chicago and Boston — a mid-priced watch whose granite face was chiseled from the Alps.

Swatch, however, does not believe imitation is the highest form of flattery, and has at least 20 lawsuits pending against firms that it claims have violated its patent or used deceptive advertising exploiting the Swatch nme. In Imgruth’s opinion, most of the fashion watch firms “have taken advantage of our spearheading and have copied us in every respect.” He bitterly assails the lower-priced styles, in particular, saying, “Every piece of junk out there damages our image.”

Swatch’s competitors have their own bones of contention. Since Swatch’s policy is one of limited distribution, there is frequently not enough supply to meet demand, according to several executives.

“Swatch can’t deliver, and no stores have open-to-buy because it’s tied up with Swatch,” one watch company executive complained. Commented Imgruth, “It’s better than having too much merchandise and not being able to get rid of it. Stores have become too greedy; they want to maximize their business, we want to optimize it.”

One aspect all companies agree on is the necessity of continuously bringing out new looks to maintain the fashion excitement. As Callanen noted, “If we want to keep the business healthy, we need newness. When the counters start looking staid, business will go bad.” Many firms are coordinating their colors with ready-to-wear trends and introducing their collections in conjunction with rtw markets.

But, cautions Abraham Shafir, president of Oraflex, Ltd., licensee for Bonjour Watchwear, manufacturers must be extremely careful in their designs or they will have huge inventory problems. Timex’s Rahilly agreed, “I’ve heard many unhappy stories of competitors stuck with items like all white watches.”

The need for quick turns and for shallow inventories has been “a little alien to traditional watch buyers and somewhat disconcerting,” Rahilly noted. Said Shafir, “The old-time jewelry buyers have had the hardest time. They know they have to have a fashion watch segment, but they don’t understand the fast turns. While traditional watches may take 90 to 180 days, our types of watchescan be sold out in two weeks.”

Gershman, of Lorus Products, pointed out that a lot of basic watch buyers have switched their open-to-buy, hungry for those quicker turns. But, he warned, they could find themselves short on better goods for the holiday season, and they must remember “the margin on a $25 watch is not the same as on one costing $75.”

Unlike other accessories, fashion watches require little education from salespeople; customers do not have to worry about fit, merely price and looks. Consequently, a number of firms have begun offering displays that can act as “silent salesmen” for their merchandise. Some firms, such as Callanen, have borrowed merchandising techniques from other industries. Using cosmetics’ purchase-with-purchase strategy, Guess watch customers have been able to buy a Guess clock for $15 or a Guess calculator for $5. Companies such as Bonjour and E. Gluck have used television advertisements to call attention to their products.

While the momentum for fashion watches shows little signs of subsiding, several companies have expanded their accessories offerings beyond watches to embrace a lifestyle concept. Capitalizing on its watches‘ success, Swatch introduced an accessories line last spring that includes everything from umbrellas to sunglasses. This fall, it expanded further by bringing out selected apparel items. Imgruth said watches will continue to be emphasized, but he expects this year’s product mix to be about 55 percent watches and 45 percent nonwatch products.

Fiorucci recently introduced its accessories line, including fashion watches, which ties into its rtw themes. Watches, which are priced higher than Swatch, are expected to bring in 25 to 30 percent of overall volume.

Retailers are working with manufacturers to create boutiques within their department stores to group these items. Fiorucci has announced plans to open Fiorucci Time accessories shops in Jordan Marsh in Boston; Woodward & Lothrop in Washington, D.C.; Burdine’s in Miami; and Macy’s in San Francisco. According to Carlos Martinzez, president of Time Distributors, Inc., the exclusive agent for the shops, 500 in-store boutiques are planned nationwide by midyear.

Swatch is hoping to have 400 of its Swatch shops opened by the end of February. Its ingredients for continued success call for complete watch turnover at least every month, controlling the merchandise for each store it does business with and delivering against sell-through. “As long as we stay a sharp, innovative young team, we can keep ahead of any watch revolution,” said Imgruth.

The fashion watch category is as hot as it ever was.

A number of medium-priced lines of sport wrist watches are selling well in department stores. These include the Ann Klein, Ann Klein II, Fossil, and Guess lines, as well as licensed cartoon-character watches. Most of these watches are selling in the $20-$200 range, and some industry executives believe that sales are coming at the expense of higher-priced watches. In addition, Joe Boxer and Timberland will launch wrist watch lines in 1995.

And, according to industry vendors and retailers – a segment in which merchandise typically retails in the $20 to $200 range – brands are currently the biggest news of all.

According to a variety of retailers, brand names have become a critical factor in determining fashion watch purchasing patterns. In the meantime, the price issue, which heretofore had been considered paramount, has become less important.

Much of the action right now, stores say, is happening in the Anne KIein, Anne Klein II, Fossil and Guess lines, as wen as novelty-oriented licensed lines, Looney Tunes and Disney among them.

In addition, merchants say they are always willing to test new entries. Some recent brand-name newcomers cited by stores include Nautica, Liz Claiborne, Swiss Army Watches and Hugo Maxx. Balancing out this group is a slowdown in a few other brands, such as Swatch, which some stores said has not been performing up to par of late.

Watches are one of the more explosive driving forces for main floor business,” said Kim White, merchandise manager for watches at Federated Merchandising, the buying arm for Federated Department Stores. “We’re positioned for another year of tremendous growth.

“Consumers are now building a watch wardrobe for their varied needs – career, casual Friday wear, weekend, sport and young-at-heart looks,” White noted. “It’s hip to wear a Looney Tunes watch with an Armani suit.”

Guess and Fossil are anchor brands in Federated Stores, according to White. These are followed closely by Anne Klein and Anne Klein II, which are expected to grow even more this year as a result of the return to ladylike dressing.

Sportly merchandise has also been scoring big, White said.

“It’s still `Clinton Chic’ to wear a plastic sport watch,” she noted. “And the more functions the better.”

J.C. Penney is also going strong with its fashion watch business.

“While our growth may be slightly less than last year, we’re still projecting good double-digit gains this year,” said Don McKean, merchandise manager for fashion and better watches.

Business is coming from a combination of the big brand names as well as newer entries such as Hugo Maxx and even Penney’s own private label line, Arizona.

He added that although the fashion watch category continues to grow, this is probably to the detriment of the better segment of the market, which includes such brands as Seiko, Bulova and Citizen. This segment struggled to finish last year with flat sales, McKean said, and he expects that performance to be repeated this year.

Among big-brand vendors in the fashion watch field, most reported very healthy increases in 1994 and are projecting similar growth this year. They claimed increases averaging 20 to 50 percent for last year, despite the fact that Christmas sales came very late in the season. Many are particularly optimistic because of early reports of strong retail sell-throughs in January, traditionally one of the slowest months of the year.

“The launch of bracelets and metals last fall greatly contributed to our success,” said Mark Odenheimer, vice president for the Anne Klein and Anne Klein II divisions of E. Gluck.

Those categories will be further exploited this year and, he added, “We’re being very aggressive in terms of focusing on high-performing areas like interchangeable sets and classic strap business.”

Mark Shell, vice president of sales for E. Gluck’s Armitron division, which also includes its licensed Looney Tunes and other cartoon character lines, credits his products’ growth to a surge in items priced at retail in the $20 to $30 range combined with a rebound in sport business.

Armitron’s Instalite sport line, which has a dial illumination feature, will be expanded this year to include more casual lifestyle and rugged outdoor looks with leather, suede and metal bands retailing for $35 to $45, he said.

On the novelty side, the firm has created the licensed collection of watches for “Batman Forever,” the third feature film about the caped crusader, opening in late June.

Fossil continues its focus on brand name and image expansion as well as product diversification, according to Peter Benanti, vice president of marketing.

To fill out its core watch line, this year the company is adding two new watch collections – Defender and FSL – as well as a sunglass line.

“Geared to urban sport kids, we hope FSL will attract an untapped customer niche,” Benanti said.

“We’re looking at snow boarders, mountain bikers, surfers, skate boarders and rock climbers – those leading-edge alternative lifestyle consumers that demand functionality,” he noted. “We took the utilitarian trappings of this market and made it into fashion.”

FSL’s retail price range of $85 to $90 is slightly higher than that of the Fossil brand. The firm will begin shipping it at the end of May to leading U.S. sporting goods stores as well as department stores.

Benanti declined comment on the Defender line, saying only that it will be shown at the May accessories market.

Timex is coming off a particularly strong year in 1994, which saw the launch of its licensed Nautica brand. Two more licensed collections will bow this year. The Joe Boxer line will hit stores in time for the back-to-school season, with Timberland arriving for the holidays.

Justine Jennings, manager of fashion watches, said Joe Boxer is geared to the teen and young adult market – a new market for Timex – with retail prices ranging from $40 to $100.

She would only divulge that the unisex line would represent a “unique way of telling time” and noted that the name, while known to consumers, hasn’t “maxed out yet.”

Timberland will be directed to a more upscale element. With prices starting at $60 and going as high as $200, the collection is geared for active outdoor enthusiasts, according to Susie Watson, Timex’s trend analyst.

Unlike sport, which focuses on endurance and timing, Watson said the outdoor market is geared to multiple fabrications like waterproof leather and nylon combinations, with style rather than functionality being key.

“Timberland is a global name with a strong image, which we intend to support with a large advertising campaign,” Watson added, noting that Timex will participate in the Outdoor Retailer trade show in Nevada in August in order to target sporting goods stores and other current Timberland-approved outlets as well as department stores. The print ad campaign will break in November and December.

Guess expects its projected 48 percent growth this year to come primarily from its new Waterpro line and from a new product category to be launched in August, according to Mickey Callanen, president of The Callanen Group, which produces Guess watches under license. He wouldn’t discuss any details except to say that the firm’s national advertising program, which began last Christmas, will also be expanded by 25 percent to support it.

Supreme Court to Hear Costco-Omega Case

The U.S. Supreme Court on Monday agreed to hear a case in which Costco Wholesale Corp. is challenging Omega SA’s right, as a foreign manufacturer, to use copyright law to control the distribution and resale of the watchmaker’s imported products.

The decision means Costco will have the opportunity to make the case for preventing Omega from restricting middlemen from selling its watches to discounters like Costco.

The case has significant implications for off-price retailers and discounters that often purchase imported goods from middlemen and distributors at lower prices, rather than buying direct from a manufacturer or its authorized U.S. distributor, and then selling them in the U.S. below the brand’s official price. Online auction sites such as eBay also could be affected by the decision.

Costco filed a petition for a writ of certiorari in May, on appeal, asking the court to consider the case and review whether Omega can use a copyrighted image to control secondary distribution and resale of its watches made in Switzerland once it has sold them to a foreign distributor.

At the center of the case is whether a provision under U.S. copyright laws known as the “first-sale doctrine” applies to imported goods. Under the doctrine, a manufacturer’s rights to distribution of a product end upon the first authorized sale it makes.

Costco is pleased with the cert and is looking forward to litigating the case in the Supreme Court,” said Roy Englert Jr., a partner in Englert, Orseck, Untereiner & Sauber LLP, the law firm representing Costco.

The Supreme Court ruled in the 1998 Quality King Distributors Inc. vs. L’Anza Research International Inc. case that the first-sale doctrine does apply to goods made in the U.S., exported abroad and reimported to the U.S. The specific question in the Costco case is whether it makes a difference whether the goods are manufactured abroad.

“I think what it indicates is there were loose ends that were left open in the Supreme Court opinion in the Quality King case,” said Seth Greenstein, an attorney with Constantine Cannon LLP, which represents the Retail Industry Leaders Association and the National Association of Chain Drug Stores, which filed a joint amicus brief in support of Costco. “The issue does repeatedly arise in lower courts. I would surmise the reason they took it was to resolve loose ends and give guidance to courts in an issue that continues to perplex them.”

Justice Ruth Bader Ginsburg filed a concurring opinion in Quality King, agreeing with the outcome because it involved the “round-trip” of goods manufactured in the U.S.

“That led courts, including the Ninth Circuit in the Omega vs. Costco case, to believe that the outcome would be different if the goods were manufactured outside the U.S.,” Greenstein said.

Greenstein said he was “optimistic” the High Court will reverse the decision against Costco issued by the Ninth Circuit Court of Appeals in San Francisco.

In 2004, Costco purchased 117 Seamaster style Omega watches from a U.S. distributor. It was later revealed in discovery that Omega had sold some of the watches to authorized foreign distributors in Egypt and Paraguay who subsequently resold them to a U.S. distributor, according to Costco’s court documents.

Omega filed suit against Costco in 2004 after the warehouse club sold 43 of the Seamaster Omega watches in its stores, alleging Costco’s acquisition and sale of the watches constituted copyright infringement. Costco charged that Omega created a laser-engraved emblem for the back of itswatches and applied for a copyright in the U.S. for the sole purpose of invoking the Copyright Act to “restrict the resale of its products.”

Costco also argued that “under the first-sale doctrine…Omega’s initial foreign sale of the watches precluded claims of infringing distribution and importation in connection with Costco’s subsequent sales.”

The U.S. District Court for the Central District of California ruled in favor of Costco, but the appeals court reversed the lower court’s decision, saying copies made abroad by the holder of a U.S. copyright for sale abroad are not subject to the first-sale defense.

Omega argued in court documents filed with the Supreme Court that the Ninth Circuit’s decision “gives effect to the intent of Congress to give copyright owners enforcement rights against unauthorized parallel imports.” Omega also charged that after a deal could not be reached, Costco knowingly obtained the watches from a source who was buying the watches outside of the U.S. and importing them to the U.S. without Omega’s authorization.

However, RILA and the NACS said in their brief that, “Retailers need confidence that lawfully produced goods they purchase from distributors can be resold in the United States commerce free from claims of copyright infringement and constraints on consumer rights.”

LVMH watch retailing unit: Synchrony, is first of a chain

With the debut of Synchrony, the first in what will be a chain of watch retailing units, LVMH Specialty Retail Concepts, a division of LVMH Moet Hennessy Louis Vuitton, has added another new dimension to its retail world.

The first Synchrony unit, a 2,700- square-foot space, was unveiled Nov. 18 at the Glendale Galleria in Glendale, Calif.

“We’ve picked about 50 to 75 locations that we thought would be appropriate and are going after them,” said Frederick W. Wilson Jr., president and chief executive officer of LVMH Specialty Retail Concepts.

“We are a little eclectic in our real estate approach to begin with, but we would like to end up with clusters of stores in areas [of the country].”

Although Wilson declined to provide specifics, he said targeted Synchrony locations include prime cities and major malls in Florida and New York, on the West Coast and in the Midwest.

The second Synchrony store, at 2,500-square-foot unit, is slated to open Jan. 15 in the Mall of America in Minneapolis, Wilson said.

Wilson noted that unlike merchandise at other watch specialty stores, Synchrony’s assortment is grouped by lifestyle and then by brand, rather than just by brand alone.

What allows us to merchandise by brand within category is that our assortment is strong enough and wide enough,” said Helen Neff, senior vice president of merchandising for LVMH.

“When we carry an assortment of bracelet styles within a brand, we make sure that there is enough there to make a statement.”

The categories include sport and active watches, metal bracelet pieces, classic timepieces, finewatches and children’s watches, the latter of which are displayed on an eye-level table that is shaped like a toy top.

The store features more than 3,000 watch styles and 45 brand names, including Adidas, Anne Klein, Emporio Armani, Bebe, Casio, Fossil, Hamilton, Gucci, Dior and Hermes, retailing from $50 to $3,000.

Each brand offers anywhere from 30 to 200 styles. Only one of LVMH’s recently acquired stable of watch brands — Christian Dior — is currently carried in the new store. Wilson said the company plans to bring in more of its brands at a later date.

Shoppers enter the new store, located in the Macy’s wing on the first level of the shopping center, through doors flanking a working watch 8 feet in diameter.

The watch is synchronized with the atomic clock in Denver. The 24 world time zones are displayed on clocks around the store’s interior.

Those familiar with another LVMH concept, its chain of Sephora beauty emporiums, may notice some similarities.

Open-sell is a key element of the format at Synchrony, as it is at Sephora. The majority of watchesare displayed in two open-sell wall units that run the length of either side of the store. The units feature small, box-shaped vitrines, each of which houses an individual watch on a stand, giving consumers easy access to the merchandise. The display units themselves swing out to reveal stock storage space. Fine watches are displayed in more traditional, locked cases in the rear of the store.

The center of the store is dominated by a round cash wrap station and the children’s watch stations. There are also two interactive kiosks with touch-screen computers that display product information, such as instructions for setting various brands of digital watches. Battery replacement for watchespurchased at Synchrony is available on site, for as long as customers own their watches.

A display ranking the top 10 best-selling men’s and women’s watches will be changed weekly and will note fashion trends and new watch inventions.

“We are targeting a younger audience that will be attracted by the bells and whistles of the entertainment aspects of the store,” said Neff. “The product that is there, though, covers a wide range of tastes and will appeal to everyone, from kids to grandparents.”

The store is staffed by 10 to 12 salespeople, who are referred to as “timekeepers” and who wear an informal uniform — a long-sleeved black shirt with Synchrony embroidered on the wrists, a gray vest and a black skirt or pants.

“We are extremely big on customer service,” said Wilson. “Even though this is a freedom-to-shop environment, we are very rich in staffing. We are not cutting back on staffing because of the way we are retailing. Because of the foot traffic, we have planned a high level of staff.”

“The colors are meant to be modern and inviting,” said Wilson. “From the sleekness of the walls to the warmth of the floor colors, we worked very hard to get the right combination.”

Miriam Haskell to do fashion watches

Miriam Haskell, fashion jewelry manufacturer, is making its entry in the ever-expanding fashion watch market this holiday. According to company president Sanford Moss, “The timing for our watch collection is good because sales in some of the plastic watch brands are falling.”

Haskell’s watches coordinate with the jewelry line and will be merchandised with its jewelry, rather than in fashion watches.

The collection features eight styles of watches in the form of pendants and pin fobs. The antique-looking watches are gold plated, and have a Swiss quartz movement. Wholesale prices range from $45 for the pin fob to $75 for the pendant.

Moss points out its packaging will be unusual in the fashion watch market. The watches will come in blue velvet boxes, he said. “Most fashion watches come in plastic cases; our packaging will be good for the holiday season.

Basel: putting on the glitz

The Apr 1994 Basel Watch Fair in Basel, Switzerland, attracted 80,000 visitors to view more than 2,000 exhibits and featured both traditional craftsmanship and glamorous contemporary styling. The Swiss industry holds 61.6% of worldwide watch exports, far ahead of Hong Kong and Japan, and saw sales rise 3% in 1993 to a record $5.29 billion. The strength of the industry may have been one reason for the luxurious diamond-laden styles displayed.

Both high-style glamour and old-fashioned craftsmanship shared the limelight at the Basel Watch Fair here last week.

Women’s watches were often loaded with diamonds, answering a demand for more sex appeal and greater intrinsic value. Mechanical watches were also present in quantity, a development watchmakers said was indicative of a thirst for more authentic, handcrafted pieces.

The emphasis on luxe reflected the good feelings of an industry that was able to push ahead despite the recession that prevailed in many markets.

In 1993, the Swiss industry posted a 3 percent gain in sales of watches and parts to hit a record $5.29 billion (7.59 billion Swiss francs), according to the Federation of the Swiss Watch & Clock Industry.

Moreover, Switzerland continues to dominate the world watch industry, responsible for 61.6 percent of global watch exports last year. Hong Kong and Japan came a distant second and third, with 13.3 and 11.5 percent, respectively. Also, the average price of Switzerland’s export watches was $111 (160 Swiss francs), four times that of Japan and nearly 20 times Hong Kong’s.

Attendance at the eight-day fair, which ran through Thursday, rose 2 percent to 80,000 visitors, according to show officials. The event once again took over the town of Basel. Demand for hotel rooms was so heavy, organizers brought riverboats down the Rhine to house all the extra visitors.

Networking is also a key part of the fair, with scores of launch and cocktail parties. Among the key events is the reception held annually at the Kunstmuseum by De Beers, the World Gold Council and W magazine, where one party guest, Stephen Magner, vice president of fine jewelry for Neiman Marcus, summed up the value of the fair this way: “It’s not just what you see on the stands and the exciting resources, but also the quiet deals. If you want a certain set of pearls, of rare diamonds, then Basel is the likeliest place to find it.”

The number of exhibitors increased, up 60 to 2,120, boosted by the return of South African diamond manufacturers to the international scene after years of boycott.

Among the big diamond users was Chopard, featuring sports watches highlighted with floating diamonds on the faces. It also offered the same concept in 18-karat gold earrings that will retail for about $5,000.

Chopard also went with the trend toward Australian pink diamonds. One women’s evening watch with clusters of pink and white diamonds was a work of fantasy to retail at $107,000.

A new feature of the fair this year was a Prestige Hall for 41 high-end jewelers, where designers such as New York’s Henry Dunay showed major statement pieces.

Dunay unveiled several brooches in beryl and tourmaline that he surrounded with an urban landscape shaped in gold. He also showed jewelry and watches in interwoven strands and combined with emeralds, diamonds and, in one case, a huge South Sea pearl.

“We are very happy with this new section,” Dunay said. “And business has been good, but building these stands is certainly an expensive undertaking. This place cost more than my apartment.”

Around the corner, Gianni Versace had a large stand showing his line of fine jewelry and watches, launched last year.

The Italian designer showed diamond and gold rings in his signature Medusa head motifs, set to retail at about $15,000, and a group of dramatic necklaces with retails of up to $150,000.

Elsewhere, Tiffany & Co. was displaying women’s watches with gold bracelets in a basketweave style with the weave wrapped around the watch. Central American influences popped up in Tiffany’s line of scroll jewelry, in cast gold with a soft patina.

Among other developments, John Loring, Tiffany’s senior vice president and design director for the New York-based company, said the company has been looking for a major retail space in Paris for several years.

“We’ve seen several sites, but have not been able to find a space of the right size,” Loring said. “Tiffany being an emporium, we can’t just open up a small shop of 200 square meters, but Paris is a city that doesn’t have that many large shops.”

Nearby, Tag Heuer‘s stand was packed with visitors, a tribute perhaps to the Swiss watchmaker’s international ad campaign, “Don’t Crack Under Pressure.”

“Our global concept is to communicate with an image and not the product,” said Tag Heuer president Christian Viros. “We don’t want to be tempted to change our collection every season like a fashion house. The strength of a brand is measured by whether you recognize it immediately, like, say, an Hermes scarf or a Louis Vuitton bag.”

This season, Tag Heuer introduced its first all-gold sports watch. This fall, it’s planning to launch a limited edition group of 5,000 watches, with the line being named after Brazilian race car driver Ayrton Senna.

Another trend at the show was animal motifs, dramatized at Paris jeweler Rene Boivin, with delicate elephants, bumblebees and octopuses, all in intricate gold with some featuring moving parts.