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The Rediff Business Special/ Nikhil Faleiro

A Matter of Time: Global brands excite the watch industry

In the beginning were old-fashioned, steel-bodied European wrist-watches like those made by Swiss major Favre Leuba. In the post-Independence era, Indian consumers were wooed by Indian 'time-keepers' like HMT and Allwyn even as the craze for digital Casios intensified. And now, in the post-liberalisation era, global watch majors are seeking to hit big 'time' in India. Tissot, Longines, Rolex, Citizen, Omega, Calvin Klein, West End, Fendi, Emporio, Armani, Movado, Rado, Piaget, Chopard, Cartier are all vying for attention of the Indian consumer like never before.

In the Nineties, watch-makers/sellers mushroomed all over India peddling authentic, fake and often smuggled items. They were driven by projections that millions -- citizens of India, a poor, Third World, largely illiterate country -- would buy wrist-watches for the first time. So much so that heaps of watches on carts vied with vegetables, joss sticks and cheap underwear for space on pavements. A sleek-looking wrist-watch could be bought for as less as Rs 150. People took it for a fad that would fade with, well, time.

From being an utilitarian item, the wrist-watch has evolved into a statement of attitude, fashion, taste, says Sangeeta Bajaj, an upper middle class housewife and a self-proclaimed watch-lover. Bajaj likes "freaking out" in glitzy glass-paneled outlets. "I am crazy about watches and often buy impulsively." Doesn't her craze punch a hole in her middle class purse? "No. These are wear-and-chuck watches, much like clothes. The expensive ones come once or twice a year as indulgences or gifts."

Collegian Snehal Vakil is a regular at Bombay's Heera Panna, an arcade of custom-notified shops that stock smuggled goods and attractive fakes. "I can't afford the real ones yet, so I don't mind fakes as long as they are 'cool, sporty, colourful' with interchangeable wrist bands. But for a formal do, it's always a gold watch, either a Citizen or a Titan. For me, a watch makes as much a fashion statement as clothes, shoes or jewellery."

Small wonder, Titan has added 50 new models to its existing 800 this fiscal, categorising them into a host of series with trendy names like Fastrack. The average price: Rs 1,000. Titan's premium PSI 2000 series is priced at Rs 3,000.

Titan has also introduced a limited edition of watches created exclusively for Ganesh Chaturthi. In seven distinct styles, the limited edition is aesthetically designed with creative renderings of Ganesha on the dial.

The designs, developed by Titan's in-house designers, are both in classic and contemporary styles to suit the different moods and personalities of the wearer. They are the first in a series of special occasion and event-led limited edition watches that are being planned by Titan.

At the other end of the spectrum, Timex's fast-selling metal Vista collection and HMT's Tenmax are priced at Rs 350 and upwards.

The government, through its Export-Import Policy of 1999-2000, permitted import of watches below the Rs 35,000 price level. This opened the flood gates.

Tissot appointed former Indian cricket captain Mohammed Azharuddin as its brand ambassador. Longines has chosen Miss World 1994 and movie star Aishwarya Rai. Walter Von Kanel, president, Longines, says, "Aishwarya is all elegance and grace which is what the product is all about. With this positioning we are confident that people will be able to identify their position in life and purchase this watch."

Competitor West End entered the Indian market in July with a host of brands like Raymond Renee. Casio is planning to launch the LCD range of watches. Swatch will introduce its range in September, and has chosen model Meghna Reddy to represent its brand of plastic watches. Asked what she feels about promoting an international brand, Reddy says, "Since I am a 'colourful person' and the watchess are so varied, I guess the two of us just jelled."

Most international watches are priced in the Rs 3,000 to Rs 4,000 range. India's annual watch market is estimated at 40 million units. The grey market accounts for one-third of it. So, there is plenty of scope for global brands in India, says an industry analyst. "The middle-level consumer will find that world-class watches are now affordable." Milind Nadkarni, marketing manager, Rado (India), says, "Being different is what counts today."

Watches are positioned in various niches: economy, casual, sporty, semi-formal, formal, jewellery. Romil Ratra, a hotel executive, says, "I wouldn't like to be caught dead with a lesser known brand on my wrist... I might buy cheap watches which catch my fancy on impulse, but for proper buys, I'd go in for a choreographed watch which is the best value for money." Ratra owns 15-odd watches: the most recent acquisition is Titan's PSI 2000; he has three Titans, a couple of Indiglos, a few dual and digital watches, a Citizen and a prized Tag Haeur. He has set his sights on the "ultimate watch", a Rolex Submariner.

According to retailers, customers in India constantly seek new products, designs and brands, particularly 'phoren' (slang for foreign) ones. "The youth prefer the so-called sports models while the mass market prefers anything that's gold-plated," says a retailer in Bombay.

Market leader Titan refurbishes its offerings twice a year while economy range leader Timex varies the style of its 750 models almost every week. About 30 new models are launched every quarter. D Kannan, Timex's chief product controller, says, "The market is very competitive right now."

Swatch's entry is being viewed with trepidation by local watch-makers because it is priced at $ 40 (Rs 1,680) globally. Nicolas G Hayek, chairman and CEO, Swatch, says, "The young people are the future consumers. We are confident about the Indian market because they constitute a large portion of the Indian population who are likely to buy low-priced watches." Swatch plans to manufacture its products in India and is preparing to invade the price-sensitive mass market.

According to Mihir Kharod, editor, Trade Post, a watch trade publication, "foreign brands will definitely be a threat to the Indian watch market. The latter's weak areas are marketing and image. Foreign companies have already recruited Indian celebrities to endorse their brands."

Matinee idol Shah Rukh Khan and Miss India 1995 Manpreet Brar endorse Omega, Meghna Reddy promotes Swatch, Azhar models for Tissot. The list is growing. Jean-Bernard Gfeller, area manager, Baume & Mercier, says, "Since we are targeting the upper middle class, this campaign of celebrities works on the assumption that people know what they want in terms of the lifestyle statement they want to make."

Analysts say the watch industry in India has learnt it cannot blindly ape the West. While steel-crafted watches are picking up worldwide, they have become slow-moving low-end products in India because the premium is on gold. As retailers point out, Indian customers would rather go in for a good-looking gold-plated, ethnically styled watch than anything else.

As time ticks away, the low-end Indian watch sector is gearing up for a price war. Prices are heading south: branded watches are up for grabs for Rs 350 -- unthinkable a couple of years ago. Timex claims to be one of the lowest priced in this segment with range starting from Rs 345. HMT, a pioneer since 1961 with aggregate sales of 90 million pieces, still has a 32 per cent market-share. With Tenmax, the latest in the series of formal watches priced at Rs 350 and upwards, HMT is seeking to strengthen itself in quick time.

With global brands eyeing middle and top segments, Titan is resorting to consumer research. For a company with an annual turnover of Rs 4.82 billion, Titan's reported ad spend of Rs 2.25 billion is considered high. Jacob Kurian, vice-president, marketing, Titan Industries, says, "The medium-priced foreign brands have failed to make any impact. Other legitimate brands like Seiko and Casio are yet to enter the market."

Meanwhile, the grey market continues to be a menace for the organised sector, selling imitations of popular styles and leading brands at half the price. Kurian adds, "They have a tremendous price advantage due to lower costs of operation and evasion of all possible duties and taxes. The grey market gets the backing of the dealer as he, in the absence of a fixed price, decides the price, garnering a fat margin."

The price wars are not peculiar to the lower end. In the premium segment, scores of players are entering with limited edition watches. The break-even point is not in sight, but the Omegas, the Piagets, the Chopards and the Cartiers are looking at a long-term presence through a flurry of promotions. With quantitative restrictions on imports of watches having been lifted, watches of any CIF (carriage, insurance and freight) value can now be freely imported under special import licence by paying a fairly high duty.

Market observers say the sheer number of brands may seem high, but is actually not as only 20 people out of every 1,000 own a watch in India. "It is a ridiculously low figure with an underlying image: 'time-keepers, it's time for some action'," says a retailer.

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