One of the most high-profile aspects of the recent consumer boom, and one which came to a juddering halt with the City's virtual collapse last autumn, was the surge in demand for luxury watches. Rarely had men and women spent so long—or so much—on what they wore on their wrists.
Now, despite what we read about a bounce in City fortunes (and bonuses), the wind has been taken out of the watch market's sails. According to the Federation of the Swiss Watch Industry, the first five months of 2009 saw a 25 per cent drop in exports.
At a time when "value" and "budget brands" seem to be thriving, it's something of a surprise to find a mainstream watch firm attempting to push its way into the upper echelons of the market. But this is precisely the strategy adopted by Japanese firm Seiko.
"The best way to explain this is to not think about it as a change in strategy for Seiko, but more a matter of the international market catching up with Seiko's domestic market in Japan," explains Robert Wilson, European marketing director for Seiko. He goes on to explain that despite being well known in international markets for its lower-priced quartz watches (Seiko invented the quartz technology), the firm has a long tradition of making precision mechanical watches.
Wilson adds that watches such as the Grand Seiko have become cult classics with watch connoisseurs. It's a claim that James Gurney, editor of leading watch industry magazine QP struggles with: "The Grand Seiko was never really sold in Europe or the US, which militates against it generating any sort of cult status. Also, despite their quality, the watches are not really that exciting."
Wilson says that plans for a global push upmarket have been in place for a long time.
He says the firm has been gradually increasing the quality and prices of its watches in recent years, ready for the push into the top sector of the market. Gurney confirms that the company has increased prices by "about 10 per cent a year over the last couple of years". But he questions how effective the company will be in positioning at the top end of the market.
"Seiko is not about to become Girard-Perregaux or even Omega, but it is getting closer to Omega. Back in Japan it makes high-quality mechanical watches for the home market that are easily Omega's match."
Wilson cites the launch five years ago of the firm's Spring Drive movement, a high-quality mechanical movement that combines electrical and mechanical elements to offer levels of accuracy more often associated with quartz.
But the global push into the high-end market kicks off in earnest this autumn with the launch of the Ananta collection.
A range of high-quality, handmade mechanical watches that mimic traditional Japanese craftsmanship, and in particular Katana—the ancient art of sword making.
The collection features watch cases with the distinctive sweeping curves associated with Katana swords and a three-stage "blade polishing" process gives the watch cases an unusual mirror finish.
Gurney is impressed with what he has seen of the new collection, but feels the company could still do more. "Ananta is a step in the right direction. The move Seiko needs to make is from association with Japanese gadgetry to association with Japanese craftsmanship. I think they could and should push the whole thing further than they do. The watches are nicely made and certainly feel the right price, although they are a little on the non-glamorous side."
The big challenge for Seiko now, says Wilson, is to get the watches into the right retailers, where they will have to compete with brands more often associated with watches costing up to £5,000. "The new Ananta range will only be in select stores and there will be a limited market for it. In conventional marketing terms what we are trying to do in upgrading the brand is one of the hardest things you can do. But we are not crazy and we are patient and we are in this for the long term. We have been around for well over 100 years. If this takes a few more years, that's fine by us."
Wilson has also taken some confidence from the industry's reaction to the watches at the annual watch fair in Basel. "The industry reaction has been that the quality and price of this range—and especially the Seiko mechanical chronograph movement—stacks up against anything else in the industry in terms of quality and offers immense value, which is obviously a good thing at a time like this."
Posted 29 July 2009 : Director.co.uk
