Watch Industry hopes to penetrate through organised stores
With aesthetic and elegance having taken over durability and necessity, the watch Industry has witnessed drastic change not only in consumer pattern but also in the product-line and designs.
The watch Industry is no longer dominated by a fist full public sector organisations like Hindustan Machine Tools Ltd (HMT) and Allwyn that ruled in late 1960s, and then taken over by Titan in 1980s and Maxima in 90s. Post liberalisation (1991), watch industry saw hosts of manufacturers and a variety of national, international brands making their way to the country.
The article explores what lies in store for the watch Industry, major retail players and what are the opportunities available for retailer along with price investment plans.
Size, Major players in the market
The Indian watch market is burgeoning, related to size, new product lines, growing number of players etc. giving cutting edge competition at every price segment. In 3500 crores watch market, there are 46 million (17 million organized and 29 million unorganized) number of pieces available in the country. With 27% meager penetration of watches in India, Titan is the dominant player of the market having 65% of impressive share in the organised sector (11 million). Other significant national & international players are Maxima, Timex (US player-- 12 brands including Timex, Versace, Nautica and Guess, spanning a wide price spectrum – from Rs 600 to a few lakh rupees) Citizen etc. constitute the rest 6 million pieces.
This huge market, growing annually around 11-12%, has variety of watches from budget segment to fashion-oriented to premium to cater to the need of every segment in the society. About 24% of values sales come from the sub-brands of Rs 500 segment watches.
- The budget category includes Titan Sonata, Maxima : Rs. 295- 1500 (15-34 years)), SSTEELE- Rs. 1250-3500/- (18-24 years), Timex brand (Rs 995 onwards).
- Youth oriented category: Fastrack (Titan), Timex has loyal consumers in youth), Maxima’s ATTIVO collection for youth & teenagers, Timex’s fashion brand Marc Ecko (Rs 5000-13000), Tommy Hilfiger, GAP, Guess etc .
- Medium category: Timex’s Nautica (Rs 7000-20000), Marc Ecko (Rs 5000- 13000), Titan brand
- Mid &Premium category: Swatch Groups’s Rado (Rs 40000 onwards), Longines, Omega (women premium Rs 80000 onwards), Cartier (1.2 lakhs), Rolex, Breguet (one of the most expensive watch brand), Titan Raga (sub-brand from Titan for women), Titan’s Xylys etc.
Retail Spread & Investment Opportunities
Mainly spread in the format of MBOs, kiosks, shop-in-shop and unorganized market, the industry still needs more exclusive stores and upgraded retail environment; though the products are distributed in departmental stores like Pantaloons, Big Bazaars etc. giving ample opportunities to the distributors and retailers to make their earnings from this sector, the market still needs to be more organized.
Titan which came in 80s and completely wiped out the mechanical watches from HMT and Allwyn, also discovered that the quality of watch stores needed a major facelift and created its first watch show room in Bangalore by Dec 1987. The chain then expanded through franchised stores. “With the space area of 1500 sq ft and investment of 50 lakhs onwards, 95% of the chain stores of Titan are operated through 'World of Titan' Outlet franchises, “said Mr Govindraj V, VP-Integrated Retail Services at Titan Industries Ltd.
On similar pattern, Timex Group (subsidiary of US Company) also retails through all retail formats. The company lays main emphasis on displaying multi-brands rather than mono brand. Codenamed as ‘Time Factory outlet’ store (currently 72 own outlets) displays around 6-8 other brands (in-house & outhouse) other than anchor brand for better choice for customers in retail outlets.
The store requires 300-400 sq ft area with an investment of 8-10 lakhs on interiors and 15-20 lakhs on the stock.
The company is seriously looking for retail expansion of around $1 million and targets to double its own outlets in the next two years. As asserted by Mr VD Wadhwa, MD,Timex India, “ Roughly about 40 per cent of the expansion would be through the kiosk format because of the high cost of retail property, particularly in malls. A maximum of 100-120 sq ft is good enough for a product like ours. Also, it is economical with regard to cost of funding, low regulating operations and simultaneously performing at par with any other standalone store displaying ample of watches in kiosk store.” The company is planning to bring 400 to 500 such kiosk stores with an investment cost around 10-12 lakhs only in kiosk franchise model.
Tier II & III cities: Immense potential for expansions
Watch companies are looking at these regions with great interest to tap the customers in budget segment precisely. Anticipating immense potential, retail formats would remain same with smaller store coverage.
Maxima ( still not into franchising) a value for money segment brand, finds great future in these cities and town between price points of Rs 350-600 range.
“For a starter, an area of around 40-50 sq ft and having an investment stock of Rs 25000, with a detail understanding of the market is minimum requirement to enter into the business,” opines Mr Govind Mishra, Marketing Head, Maxima India with minimum 50 pieces (70% display & 30% back-end stock).
“Commitment to retailing and sharing our values are as important as the availability of retail space and the capacity to invest in stocks and interiors of the stores,” says Mr Govindraj V. Titan has recently launched its flagship store named ‘Titan One’ with 600 sq ft coverage for tier III towns and cities. Around 1,250 watches would be displayed which would include the latest collections such as Titan Tycoon, Raga Flora, Titan Octane, Sonata Superfibre and Fastrack Army, ranging from Rs 275 to Rs 17,000 with an investment cost (including interiors) of Rs 15-25 lakh on the store.
Premium Brands Market & Budget Plans
The market is meager for the premium brands with main international players from Swatch Group (17 brands-Longines, Tissot, Rado, CK etc) and LVMH Moët Hennessy Louis Vuitton, the world's leading luxury group (5 brands-Dior, Zenith etc), Titan’s Xylys have its own premium market; The segment’s active consumer being ladies splurge on them as brand statement.
The market for this segment is growing at a decent pace but they are still looking for high luxury locations. The basic investment requirement for premium range watches starts from Rs 2 crores for mono-brand (Omega) to Rs 8-10 crores for multi-brand watches along with interior costs.
Though mobile phones have become the substitute for watches clocking the penetration to only 27%, still Indian watch market is growing at high speed bringing hosts of opportunities for all the segments equally. There are oodles of innovations, better watch portfolios with quality and price ranges and enhanced selling outlets to increase consumer base at large.