BRANDS IN FOCUS: Seiko shifts upmarket with Knightsbridge boutique opening

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Seiko is on the march in the UK. Among the most consistent and respected brands with British jewellers, the company is now positioning itself for a steady push upmarket with more elite models selling at higher price points. A new boutique, which opened in London’s ultra-affluent Knightsbridge last month, is all part of that strategy. WatchPro wanted to learn more, so sat down for a discussion with Kinya Iwami, managing director UK Division for Seiko; Philip Wolkind, associate director; David Harnby, sales & marketing director; and Carl Eady, marketing consultant to find out what’s next for the Japanese watchmaker.

Seiko opened its first boutique in the UK in August, but rather than locate it in a major mall where thousands of customers might snap up sub-£200 quartz models, the company planted its flag in Knightsbridge, sandwiched between Harvey Nichols and Harrods on Britain’s most exclusive shopping street.

The positioning tells the industry everything it needs to know about Seiko’s ambitions this year and into the future. The Japanese giant is pushing upmarket with its latest Prospex sports watches, Presage mechanical dress watches nudging up to and beyond £1000 price tags.

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Higher still is Grand Seiko, which now operates as a wholly independent brand to Seiko. Every Grand Seiko from this year onwards has its logo proudly displayed at the 12 o’clock position, not as a subsidiary marque to the main Seiko name. “My intention is that, in the coming years, Grand Seiko will scale new heights of watchmaking excellence and commercial success,” declared Shinji Hattori, Seiko president and CEO, at Baselworld this year.

The timing of the new boutique, which graphically demonstrates Seiko’s push up the value chain, comes at a perfect time. The market for watches priced at under £500 has been in decline for two years, and retailers are responding by focusing on selling fewer watches at higher prices.

“We all know that the sub-£500 price segment is a bit of a challenge right now and we know that our partners are always demanding greater value in our products and the best possible quality,” Kinya Iwami, managing director, UK Division for Seiko, tells WatchPro. “At Seiko, we see this as a great opportunity, especially within our elite collections,” he adds.

 

Kinya Iwami

Kinya Iwami, managing director UK Division for Seiko.

 

 

 

 

 

There are few watchmakers like Seiko. The company makes all its own watches and all its own components. It makes quartz movements, automatic movements, hairsprings, cases, dials, sapphire glass — absolutely everything. It is also highly inventive. The spring drive automatic movement introduced by Seiko in 2005, is still unique in the way it releases the kinetic energy wound into its mainstream without using an escapement to control speed into the gear train. “One of the really big differences between Seiko and many of our competitors is that we make every single part of all our watches. We are a true vertically integrated manufacture, which is how we are able to guarantee the quality of our products,” states Mr Wolkind, associate director for Seiko UK.

Seiko works with more jewellers in the UK than any other brand, and it intends to keep it that way by focusing on producing great products that they can sell. “Our strategy has always been that we are a brand for jewellers; that is where our focus is although we work with department stores as well. Despite the market changing, and a lot more happening online, we will continue to be a jewellers’ brand, and those are the guys we will support,” says Mr Wolkind.

Those retailers are hearing a lot about what Seiko calls its elite collections this year. These are watches that have more of a story to tell to customers, meaning shop floor staff need to be fully informed to sell them well. “We see the best retailers are the ones that really understand our brand and are able to educate their customers about our history, our heritage and our watch collections. The size of the retailers is important, of course, but more important is the relationship with the customers. We want retailers that understand and agree with our concept, and can communicate that to customers,” explains Mr Iwami.

 

Philip Wolkind, David Harnby and Carl Eady.

Philip Wolkind, David Harnby and Carl Eady.

 

David Harnby, who as sales and marketing director for Seiko UK, is at the sharp end of getting this message across, is optimistic. “We have developed a much stronger team of merchandising, marketing and sales experts in the market. They are providing sales training and encouragement to our retailers. That education is the same to the major multiples and the independents. Seiko does have an extensive range, and it is our job to educate our partners on opportunities through the elite models, the sports watches and even our Japanese handcrafted mechanicals. They have to be displayed the right way in stores and online so that consumers are aware,” he says.

“It is important that the customer is treated with the same respect, whether they are buying a watch for £100 or £10,000,” adds Carl Eady, marketing consultant to Seiko UK.

Unlike fashion watch brands, which have seen sales flare up then fizzle, Seiko’s strategy has kept it on a steady growth path over many years in the UK (see graphs below). Mr Iwami will not give a detailed breakdown on which models are on the rise, and which are doing less well, but it is clear that lower volumes of sales overall are being compensated with rising average transaction values for more prestigious collections. “We have enjoyed steady growth over the past few years. We are expecting accelerated growth for the coming year because we are seeing more demand for our elite collections, especially Prospex dive watches and Presage mechanical watches. We would like to build on that momentum,” he suggests.

 

Seiko Boutique Exterior

 

Seiko Boutique Interior

 

Seiko’s president and chief operating officer was joined by Japan’s ambassador to the UK for the official opening of its flagship store in London last month. Shuji Takahashi welcomed ambassador Koji Tsuruoka to the Knightsbridge store, along with invited guests and media. Instead of the usual ribbon-cutting, the store was officially opened when a ceremonial barrel of saki was broken open. TV celebrity Jonathan Ross — who is a passionate student of Japanese culture — helped with the honours. Seiko may be best known for watches priced at under £200, but none of them are on show at the flagship, which has Harrods, Harvey Nichols, Watches of Switzerland and the One Hyde Park Rolex boutique as neighbours in one of London’s most affluent shopping streets. Half the store is devoted to Grand Seiko, the top end of the Seiko family, which is a fully integrated manufacture that makes everything from hairsprings to complete movements and cases. The remainder of the boutique displays high end Seiko elite models from Astron, Presage and Prestige collections, the majority of which carry four-figure price tags. The store even displays Credor watches, the highest horological watch brand in the Seiko family. Mr Takahashi said that the store is more than just a point of sale for London, it is a “global flagship” designed to raise the profile of Seiko in the UK and for visitors from around the world. He added that Seiko’s retail partners will benefit from the opening of the flagship because it will raise the prestige of the Seiko brand in the country. “Every city where we we have opened our own boutique has seen retailers benefit from the increased profile it brings,” Mr Takahashi added.

Seiko’s president and chief operating officer was joined by Japan’s ambassador to the UK for the official opening of its flagship store in London last month. Shuji Takahashi welcomed ambassador Koji Tsuruoka to the Knightsbridge store, along with invited guests and media.
Instead of the usual ribbon-cutting, the store was officially opened when a ceremonial barrel of saki was broken open. TV celebrity Jonathan Ross — who is a passionate student of Japanese culture — helped with the honours.
Seiko may be best known for watches priced at under £200, but none of them are on show at the flagship, which has Harrods, Harvey Nichols, Watches of Switzerland and the One Hyde Park Rolex boutique as neighbours in one of London’s most affluent shopping streets.
Half the store is devoted to Grand Seiko, the top end of the Seiko family, which is a fully integrated manufacture that makes everything from hairsprings to complete movements and cases.
The remainder of the boutique displays high end Seiko elite models from Astron, Presage and Prestige collections, the majority of which carry four-figure price tags. The store even displays Credor watches, the highest horological watch brand in the Seiko family.
Mr Takahashi said that the store is more than just a point of sale for London, it is a “global flagship” designed to raise the profile of Seiko in the UK and for visitors from around the world.
He added that Seiko’s retail partners will benefit from the opening of the flagship because it will raise the prestige of the Seiko brand in the country. “Every city where we we have opened our own boutique has seen retailers benefit from the increased profile it brings,” Mr Takahashi added.

 

The London boutique will only help build the impression that Seiko is a watchmaker to be taken every bit as seriously as the venerable Swiss players. Grand Seiko does not yet have the cachet of some of the top tier brands, but it is greatly admired by expert watch collectors that know its pedigree. Seiko Presage, particularly the enamel-dialled model launched last year, is so popular it is being bought and sold between collectors because retailers can’t get their hands on them. The average selling price of Prospex dive watches is rising.

Seiko’s retailers have everything to gain from this new-found confidence, and nothing to fear from the company opening a boutique selling directly to consumers. “We are not a retailer. The boutique is a showcase, it is a marketing tool to inform consumers about who we are and what we really do,” Mr Wolkind says reassuringly. “We will not be opening boutiques in every shopping centre,” he promises.

 

Seiko UK Limited Turnover

 

Seiko’s UK business has been a remarkably consistent performer over recent years. Turnover has increased from £64.6 million in 2011-12 to £72.9 million in the year ended March 31 2017. Profit has been equally stable in a range between £1.5 million and £2 million since 2011. Seiko says that its UK subsidiary’s commercial performance has been boosted by better sales in Continental Europe in its latest financial year. Turnover rose by 13% from £64.4 million to £72.9 million for the 12 months ending March 31, 2017. However, the accounts for Seiko UK Limited state that the fastest growth for the business came from its operations on the Continent where it operates a retail outlet in Germany and subsidiaries in Netherlands and France. Those sales, reported in sterling, rose as the value of the pound fell by over 20% following Britain’s vote to leave the European Union. Stripping out the European sales, UK turnover rose by 4%, the company reports. Gross margin remained largely unchanged from the previous financial year at around 40%, but the boost from a weaker pound helped bottom line profit increase from £1.2 million in 2015-16 to £3 million in 2016-17.

Seiko’s UK business has been a remarkably consistent performer over recent years. Turnover has increased from £64.6 million in 2011-12 to £72.9 million in the year ended March 31 2017. Profit has been equally stable in a range between £1.5 million and £2 million since 2011.
Seiko says that its UK subsidiary’s commercial performance has been boosted by better sales in Continental Europe in its latest financial year.
Turnover rose by 13% from £64.4 million to £72.9 million for the 12 months ending March 31, 2017.
However, the accounts for Seiko UK Limited state that the fastest growth for the business came from its operations on the Continent where it operates a retail outlet in Germany and subsidiaries in Netherlands and France.
Those sales, reported in sterling, rose as the value of the pound fell by over 20% following Britain’s vote to leave the European Union. Stripping out the European sales, UK turnover rose by 4%, the company reports.
Gross margin remained largely unchanged from the previous financial year at around 40%, but the boost from a weaker pound helped bottom line profit increase from £1.2 million in 2015-16 to £3 million in 2016-17.

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