Sales of watches priced less than £500 made up 50% of the UK’s total watch revenue in 2011 – but what factors are driving sales? Kathryn Bishop discusses the boom with the brands, retailers and distributors keeping an eye on the hottest models in the price bracket.
Last year, watches retailing at £500 or less accounted for nearly 50% of retail sales on the high street and closer to 90% online.
Outlining consumer spending habits and the reacting retail offer, the GfK report containing these figures revealed that the under £500 sector of the watch market was the one building the most momentum, as the £500-plus market fell flat, dropping some 6% in volume and value during 2011.
Conversely, the value of watch sales below £500 has increased by 5.7% in the past 12 months, while with the average watch sale ringing through the tills last year stood at £102 on the high street and £54 online.
What these figures show is that watch brands, whether fashion led or traditional models, are moving in an arena that many of the poster watch brands in the UK have barely any presence. Your average consumer will have heard of Rolex, TAG Heure and Omega, but they are far more likely to be wearing a Citizen, Casio or TW Steel whilst telling you about it.
Retailers might be wondering just what is it that is driving this emerging market trend, and which brands are proving top sellers online and in stores. WatchPro took the time to find out.
CHANGES DRIVING SALES
For Stephen Drake, watch manager at Cheshire retailer Cottrills, the changing market has been influenced by two main driving factors that oppose each other in some ways. “The growth in the sub £500 category is firstly [due to] constraints on people who may have considered spending a little bit more but due to austerity measures, are having to re-think hard with financial decisions,” he says. “The other point is that there is some fantastic product out there within this price bracket. The quality of products on offer from brands like Citizen and Tissot is amazing.”
Drake says that Cottrills has noticed an improvement in sales of watches priced at less than £500 at its stores, which includes Prestons of Bolton, but adds that this might be down to keeping a tailored selection of brands, as well as a recent stock investment in brands such as G-Shock, which it acquired in the final quarter of 2011.
At Seiko UK, the distributor of the mainline Seiko brand as well as others such as Pulsar, Converse and Lorus, demand for watches priced at less than £500 has fallen in-line with the GfK report. Seiko group marketing manager Kirsten Crisford believes this is due to consumers looking for value while making a luxury a purchase.
“As far as Seiko has seen, the demand in this category has continued to be strong,” she says. “The GfK results showed that more money is being spent within the £100 to £500 price bracket than in previous years [and] we feel that this is because people are hunting for real value in the luxury purchases, such as watches, and not just a bargain price.”
Crisford proposes that in a time of austerity consumers are being more discerning in their purchases and want to make sure that they are getting value per pound spent. “For this reason those that would have at one time spent £50 to £80 on a watch are going the extra stretch and spending more to get something that will last a little longer,” she says.
Likewise, Emma Hutchinson, brand manager at Peers Hardy, which distributes brands including Ice-Watch and Radley in the UK, says an influx of new brands has kept the market buoyant. “Over recent years there has been an increase in the number of fashion brands in this price area and, combined with the traditional brands that still dominate the sector in the UK, the consumer has a massive selection of well-known quality brands to choose from,” she says. “So in the current economic climate it’s no surprise that almost 50% of UK watch sales are for under £500.”
For distributor Since 1853, growth in the sub-£500 watch market is something it has experienced during the last year; a change from when the company was founded five years ago.
“Watches selling well under £500 reflect very much what we’re seeing with our orders,” explains Pete Carmichael, director at Since 1853. “We’ve been in business for only five years and where, at first, most of our watches were selling for £900 or more, now our bestseller is a £185 watch by Torgoen.”
The brand is one that Since 1853 introduced to the UK market last year, and has since driven its presence among retailers via appearances at trade shows such as International Jewellery London (IJL) and the upcoming London-based exhibition The Jewellery Show London.
This change in typical sale price, argues Carmichael, is to do with the changing finances of consumers. “I think a lot of people want something that they can buy straight out with their debit card, not their credit card,” he offers. “They [consumers] don’t want to have to sit down with their partner and talk about the purchase before they make it.”
THE RISE OF ONLINE RETAIL
Another factor driving sales is the increase in brands selling online and retailers competing with one another to offer the best price or best selection of watches that sit under the £500 tag.
At DM London the boost to the sub-£500 market has been noticeable across the majority of its watch outlets and operations, which include websites The Watch Hut and Asos.
DM London chairman David Coleridge says the sub-£500 market is especially strong online, and the company experienced strong festive sales online at the end of 2011.
“The biggest impact has been our online sales, which are more than 100% up,” Coleridge reveals. He describes Asos being an outstanding performer in particular, with more than 7,000 watches sold by DM London through the site during the festive period last year: a 57% increase compared to the same period in 2010.
Torgoen’s main outlet has been Amazon.co.uk, where about 200 of the brand’s timepieces are currently available. Carmichael says the brand sells online and while Amazon will not divulge exact figures regarding sales, it is “happy to say Torgoen Swiss watches are a great performer” with regards to turnover. Neverthless, its bricks-and-mortar independent retailers may sell two or three a week, which Carmichael offers is “nice and steady”.
Indeed, figures exist to back up that influence that larger online watch retailers have on the market. Hedges explains that during 2011 alone, department stores and mail order houses sold more than 1.7 million watches, worth a total £128.8 million, a respectable slice of the UK market worth an annual £907 million.
Considering Q4 of 2011 in isolation, 77.3% of all watches sold online retailed for less than £250, while 14.1% of online watch sales in Q4 fell into the £250 to £800 price bracket. Swiss watch export figures similarly support these numbers, with global exports of Swiss watches priced between CHF200 (£137) and CHF500 (£343) growing by about 20% in 2011 in terms of both value and volume.
As a result, retailers are considering new ways of increasing sales in the watch market, and jewellery and watch retailer Steffans, based in Northampton, is no exception.
Last month its founder Steff Suter and co-director Wes Suter bought a new corner shop space next door to the business’s flagship jewellery store in the town – a location where the duo plan to open a dedicated watch boutique. Some may consider it brave to open a new store aimed only at watches but the reason, Steff Suter explains, is the growth in demand for fashion watches from its online customers.
“The amount of traffic we’re receiving online has meant we’ve had to update our server to deal with it,” Suter reveals. “At the moment we’re getting about 4,000 page views a day, so 120,000 a month.”
Steffans has worked hard in recent years to drive its branded jewellery sales, but now, Suter says, it wants to do the same with watches, hence the new boutique and a new drive online; something it has pushed with a recent mid-season sale of its watches that included brands such as ToyWatch and Hugo Boss.
“Without a doubt people are reluctant to spend without getting a bargain,” explains Suter. “They might search for a particular Raymond Weil online and get results at Steffans for a different Raymond Weil at a sale price, but this will log in their brain, meaning they will see there is a deal and remember us. It’s like bait to be had.”
THE MUST-HAVE BRANDS
According to GfK there are more than 400 watch brands vying for a slice of the sub-£500 price bracket meaning that there is a great deal of competition. Likewise, watches under £500 tend to be, by their very nature, quartz watches, and while brands such as Tissot offer automatics for about £300, it is a combination of quartz movements and fashion brands that appear to be winning sales for retailers.
Coleridge explains that for DM London any watch brand priced at less than £500 has the ability to do well, but those that have a strong brand continue to stand out. Among its repertoire of watches, the company works with brands such as Michael Kors, Moschino, Juicy Couture, Marc by Marc Jacobs and Emporio Armani. “Strong brands are doing very well and with large groups and massive resources behind them [they] are dominating the industry,” explains Coleridge.
Both Coleridge and Suter reference Vivienne Westwood watches as being a brand they recognise as having good sell-through and interesting collections.
Meanwhile, Seiko’s Crisford says the materials of a watch and its functions are becoming paramount for consumers. “The expanding choice in the £500 price category is also driving growth,” she says. “[For example] more ceramic watches are moving into this price range along with an increasing number of watches with advanced technology.”
As such, brands including Skagen and Bering have brought ceramic watches to the masses, while Timex’s Intelligence Quartz watch, which retails for £125, has become a bestseller not only due to its striking looks but also its quartz technology that can offer functions previously only available through pricey mechanical movements.
At a retail level, the popularity of a brand will no doubt be influenced by its availability – the more widespread a brand is, the more likely it will be to sell. But popularity is also determined by its price. Ice-Watch is one example of a fashion brand that has boomed in the UK, selling more than 47,000 of its watches in the final quarter of last year through 953 stockists, making the UK its second-largest market worldwide.
Hutchinson of Ice-Watch distributor Peers Hardy says the brand’s success is down to consumers buying a “colour brand”. Another popular brand within the Peers Hardy stable is Radley – an offshoot of the successful handbag brand – which become a sell-out for the distributor since its launch last year. Across all its brands, the bestselling Peers Hardy watches are those with retail price tags of about £150.
Moving back to retail, Drake describes how the various brands are attracting a diverse range of customers through the doors of Cottrills’ Wilmslow store. “Our portfolio below £500 consists of Citizen, G-Shock, Rotary, Tissot and Gucci, so we cover quite a range of products,” he explains. “Certain brands attract certain types of customers. For example, we specifically took on G-Shock in November 2011 to complement the recent opening of our Pandora [sales] floor [that has attracted] a younger clientele.”
The store, which is located in east Cheshire near the environs of the Peak District, also brings in outdoorsy customers, and a result Drake says G-Shock and Citizen’s multifunctional timepieces have particularly good sell-through. However, it also caters for more traditional shoppers with brands including Gucci and Tissot.
Carmichael believes that an increasing number of customers, though brand saturated and brand savvy, are actually on the lookout for something a little more unusual or low-key from their timepiece. For him, this is where Torgoen has made leaps in the past nine months, with “a lot of people looking for something different to everyday brands”.
Coleridge and Hutchinson argue the opposite, however. “We have seen particularly strong growth in fashion brands, so we believe it is people buying a watch as an accessory, rather than as a timepiece,” says Coleridge, while Hutchinson describes the number of consumers looking for a must-have, colourful watch that also doubles as a fashion accessory.
THE OVER £500s
With the UK watch market described as “polarised” by GfK – the over €5,000 (£4,120) market has similarly strengthened while the middle market has fallen, as reported in last month’s WatchPro – there is the question of what will happen next for watches under £500. It is certainly a busy market, with brands jostling for the same cabinet space, but the adage of healthy competition holds fast.
Crisford believes that the growth of the sub-£500 market will be long term. “It is hard to see how this [growth] pattern would change over the next year as the general UK economy is unlikely to change enough to effect spending habits,” she explains.
Hedges describes how consumers are shopping up to a certain point, and echoes Carmichael’s belief that, beyond a certain price, a timepiece becomes aspirational or otherwise an investment.
“It would appear that there is a clear cut-off for some consumers who will spend no more than £500 and those who see watches as an aspirational purchase who are quite prepared to spend over £800,” Hedges states, while Carmichael notes the £295 mark as the ceiling in terms of the value of the watches it is distributing. “I think customers justify in their mind that the watch at £295 is closer to £250; beyond that price they would probably pay for it on credit,” he adds.
Suter maintains that the online fashion watch market is the place to be and says retailers should not be scared to take advantage of the increasing online presence of watch brands.
“Some of the most successful jewellers in the country are tightening up their watch collections [online], meaning we can pick up some of their customers,” he explains. “If you want a ToyWatch, for example, we have about 100 online to choose from – we’ll take the whole collection, almost – because it means if someone looks at our site, they see we have everything and we become the go-to.”
And such a method of retail works, says Suter, noting how far and wide-reaching Steffans has become with its watch market drive. In fact, it sold a watch to someone in New Zealand the very morning that we speak.
Turning finally back to cold hard figures, GfK has offered its forecast for the remainder of 2012 and for the sub-£500 market this latest boom is not yet set for bust. Instead it forecasts that a number of European markets will continue to grow as locations such as London become a shopping Mecca for tourists during the Olympics, so it would seem that cheap and cheerful watches are set to win the day for some time to come.
This article was taken from the May 2012 issue of WatchPro magazine, out now. To view a digital version of the magazine click here.