Fashion watches: a matter of timing

While the fashion watch business is overflowing with a diverse group of players, retailers say there are currently four brands that are far and away the leaders in department stores.

The top four lines are Guess, produced under license by The Callanen Group, Norwalk, Conn.; Swatch, a division of Swiss-based SMH; Fossil, a division of Overseas Products International, Dallas, and Anne Klein, produced under license by the Sutton Time division of E. Gluck Corp., here. In total, some sources estimate, they account for more than 50 percent of the fashion watch business done in department stores.

Also, on the strength of its ring watch success this part Christmas, Timex, Waterbury, Conn., was cited by a number of retailers as a top contender. While Timex has traditionally focused on other retail outlets, such as chains, now it’s going after department store business in a big way.

The fashion watch business in department stores is estimated to be in the neighborhood of $400 million in annual sales.

While no one trend ties the four leaders together they are all in a similar price range, doing the bulk of their sales from $50 to $125.

According to retailers, each brand fills a niche: Guess is known for its classic leather strap watches; Anne Klein does best with its bracelet watches; Fossil is recognized for its novel treatment of straps and faces, and Swatch has been the leader in plastic watches.

The four vendors say the key to their success is a constant flow of newness to the stores. They all try to ship merchandise monthly.

Watches are an item-driven business, more than price,” said Marty Nealon, vice president and divisional merchandise manager for accessories at Bloomingdale’s. “The item has to be different.”

“Fossil saw tremendous growth last year,” said Nealon. She said sales with Swatch have picked up since the watch firm introduced a diver’s watch. The Anne Klein link bracelet watch is also a good performer, she noted.

Joanne Hart, fashion director for accessories at Macy’s Northeast, said the key to the fashion watch business is “newness, whimsy and creativity.”

“Fossil’s packaging is unique,” Hart pointed out. She said two-tone bracelet watches by Anne Klein have also been good performers.

Sheila Kamensky, fashion merchandising director for Rich’s, Atlanta, said Fossil and Guess watchesare the store’s strongest brands, and Swatch remains an important part of the business.

Watches are an important part of the accessories mix,” said Kamensky. “We will test anything new.”

Nicci Murphy, fashion watch buyer for the St. Louis division of Dillard Department Stores, said the store’s top watch brands are Fossil, Anne Klein, Swatch and Guess.

She said Fossil is the fastest growing line because, “it keys into a classification and follows up with lots of items.” For example, she said that following the success of Fossil’s skeleton watch — with a see-through face revealing the mechanism — the firm has added variations on it every season.

“Guess does well for us because it offers a classic look, and the name is important for our store,” said Murphy. She said Swatch’s sales have slipped, but it remains a large volume producer. And Anne Klein’s two-tone bracelet watches are strong.

Watches have good gross margin. There are few markdowns with our top four brands, because they are not too trendy,” said Murphy. She expects watch open-to-buy to be ahead about 6 percent for fall.

According to the watch firms, the three strongest watch directions for fall are sport — such as diver’swatches — multi-function chronograph watches and traditional leather strap watches.

Mickey Callanen, president of the Callanen Group, which in addition to producing Guess produces Monet watches, is banking on divers’ and chronograph watches to keep his business growing this year.

“I think the chronograph watch can be 25 percent of our business this year,” said Callanen. He said his firm’s volume is about $75 million wholesale. For fall, he forecast a 10 to 12 percent gain.

The chronograph and diver’s watches are the focus for the Guess line for fall. The chronograph style, which wholesales from $32.50 to $37.50, is designed in the same feeling as chronographwatches offered by fine watch firms. Features include the date and month, a stopwatch and moon phase.

For fall, Guess is introducing its first diver’s watch. The company is working on special in-store displays, which will feature the watch in water. It will wholesale from $20 to $22.50.

“Retailers realize sports watches are a big business,” said Mark Odenheimer, vice president of Sutton Time. “The public is sports-oriented.” In March, Anne Klein will also introduce its first diver’s watch.

The Anne Klein line will continue to add a range of bracelet watches, and the two-tone look is currently the hottest.

Odenheimer said price is a more sensitive issue this year, and the firm has lowered its average price in the Anne Klein line, from $125 retail to $110 retail this year.

Odenheimer said his firm has seen “huge” increases in business for four years, and it’s looking for small gains in 1991.

Christopher Keigel, vice president of sales and marketing for Swatch Watch USA, said two major Swatch pushes for fall are the scuba watch — its version of the diver’s — for $25 wholesale and a chronograph watch, which it will introduce in May for fall retailing, at about $45 wholesale.

“Most people do not buy the chronograph watches for function. They simply want the look,” said Keigel. Swatch’s chronograph will be the highest-price item in the line.

Keigel admitted the total market for plastic watches, which has been the mainstay of the Swatch business, has shrunk, but added: “We have pretty much been able to maintain our business.”

He predicted his business will be flat for fall, noting that even with product launches, the retail environment is difficult.

“Fossil won a big share of the market last year, and it came out of nowhere,” said Keigel. “Swatch and Guess lost some market share to Fossil.”

Kosta Kartsotis, an owner of Fossil, said no one clear direction has developed yet for fall.

“We are continuing with dressy looks that are more feminine, such as mother-of-pearl watch faces,” he said. The firm is testing products now at retail for fall, he said, including a watch with a tortoise face.

A lot of our success is because we react quickly to trends. We test watches, read selling reports and respond,” he said.

The Fossil line has some 240 styles, and prices range from $25 to $32.50 wholesale. Fossil ships merchandise every month.

“We do a lot of different crazy and unusual things,” said Kartsotis. He said he is expecting “healthy increases for fall based on current business.”

Watch executives say advertising is becoming increasingly important. Three of the top firms have increased their budgets for 1991. Swatch, which already had a large budget, will maintain it.

“The customer identifies with brand names,” said Odenheimer. “they look for names they recognize. We are planning an aggressive campaign, with a larger budget than last year.” He said the firm will be doing television and magazine advertising and is considering billboards.

Guess will expand its co-op and national ads, Callanen said. “When we run an ad with Macy’s in a Sunday supplement, the business jumps tremendously for the following weeks,” he said.

Swatch plans to shift more dollars into mass media ads such as television and print and away from in-store promotion.

To establish a stronger presence in department stores, Timex is changing its business strategy this year. It will improve markup for stores by keystoning for the first time its suggested retail prices. It did not keystone prices before, Timex reasoned, because it used the money to help create consumer demand for the Timex brand through advertising.

Timex is also emphasizing sport watches. “We feel the sports watch area has the greatest growth potential,” said Dave Rahilly, vice president of U.S. marketing and sales for Timex. He forecast increases of 10 to 15 percent for fall.

Timex has been getting a lot of attention from deparment stores because of the surprising performance of its ring watch, which was a Christmas bestseller for many stores.

Timex sold 40,000 ring watches — at $22.95 retail — through Bloomingdale’s alone for the last half of 1990, according to Rahilly and a Bloomingdale’s spokeswoman.

“We were surprised at the success of the ring watch because we felt it had limited volume potential,” said Rahilly, noting Timex is cautious about how much longer the ring watch trend will last. He admitted it will be a tough act to follow, but the firm plans to try with a pin watch for fall. It will wholesale for about $15.

Timex’s competition applauded the success of the ring watch, but most feel that type of novelty item is dangerous because it’s usually short lived.

“It’s hard to duplicate that success. People always try novelties and often get killed, as they did with the clip watch and Russian watch,” said Callanen. “Most customers want traditional watches, and when you get too far away from that you lose them.”

“The ring watch showed us the watch business doesn’t always have to be a traditional business,” said Kartsotis. “We all try to find the item in this business, but it’s dangerous. You have to be smart enough to get in and out fast.”

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