Autumn, my favourite time of year

October 2003

Autumn is here in the States, which is a good thing for the watch industry, for retailers and for consumers. The new product, introduced at Basel, will finally be making its way into display cases, and the cooler weather should send customers back into the stores, hopefully to buy watches. The big push, for marketing and for sales, is starting in September and October, with the idea that things will continue getting stronger through to the biggest sales period for all retailers – the holiday season.

Business isn't great, which is something everyone has been saying for many months now, but it's not horrible either. Watch brands and retailers alike are surviving and there have been some encouraging signs that changes are on the way.

It's kind of surprising that so many new watch companies are still entering the US market. As I mentioned, the market isn't extremely strong, yet still brands here never heard of before, like Pomellato, Elini, GUL, TNG and others continue to come into the market.

Retailers are understandably a little reluctant to try new brands, especially when the brands they currently have in their cases aren't selling particularly well. Some retailers might see new as a way to generate some excitement, to breathe some life into their sales.

A new brand, however, has to have a huge marketing campaign behind it. It seems like American consumers, and by extension American retailers, are very reluctant to embrace a product unless it's been around for a little while. There are exceptions to that rule, of course, but by and large, getting a foothold in the US market means staying for the long haul, spending money for marketing and advertising and getting the word out.

This is a huge commitment of time and money, with no guaranteed pot of gold at the end of the rainbow. It's possible that a watch brand could come into the US, spend tons of money, and never see sales climb.

America, however, is so large and so underdeveloped as a watch market; its allure is magnetic for watch brands that have achieved success in other markets.

Counterfeiting is a different market segment and that has changed, both in terms of who is doing it, where it is being done and the quality of the final product that makes it to the points of sale for counterfeit goods.

When most people think of counterfeit watches, they think about the knock-offs sold on the streets of big cities for $10 that are clearly not real. But now the quality of the materials used in fakes has improved, with the goal being to fool the purchaser into thinking the watches are real.

According to several sources, counterfeiters are big business and in fact are often linked to organized crime. The geographical location has shifted as well, from Taiwan and Hong Kong to China and South Korea, where labour is cheaper and intellectual property infringement claims are harder to enforce.

“Counterfeiting has progressed to the second generation, where the products are so well copied that people are buying fakes believing that those products are genuine,” says Marc Frisanco, intellectual property counsel, Richemont Group. “The price of the second generation counterfeit is within 10% of the price of gray market products. With the help and enhancement of the Internet, all the issues are blurred because you don't know if the watches on the screen are fake or genuine.”

To the casual eye, however, the watches look real. People, including some fringe retailers who can't buy authorized products direct from the manufacturers, buy these counterfeits thinking they are the real, branded watches.

Some brands, like Cartier and Swiss Army Brands, are leading the fight against counterfeiters, going undercover to bust them, destroying product and winning huge judgments against them.

Another watch segment that is H-O-T here in the US are diamond-set watches. Most companies are expanding their diamond offerings to take advantage of this trend. Diamonds are popular at all price points: the highest priced watches are still selling as are the watches for $1,000 or less. Everyone wants a little sparkle, it seems, and watch companies are committed to giving it to them. Recently, several companies have started to specialize in value-priced diamond watches, companies like Ice-Tek, which only sells diamond watches.

'Til next time...