Moving ahead with time

Till now, India was considered simply a watch market but with the increased growth in the industry it is now transforming itself into a branded market. According to industry estimates, the total investment in the organised watch sector is $218 million (approximately Rs ???). Out of a total demand of more than 30 million units, the organised sector supplies only 14 million units valued at $203 million. The number of watches imported legally is miniscule while the size of the unorganised sector is around $232 million. According to reports, India`s luxury watch market is growing at the rate of 20 per cent per annum, with the market estimated at over Rs 3.5 billion. Mehul Choksi, Chairman, Gitanjali Lifestyle, the retail arm of the Gitanjali Group says, “The total size of the market for watches in the country is estimated at about Rs 3,500 crore per annum of which about 20 per cent or Rs 700 crore is accounted by luxury segment.” With growth in consumerism, higher disposable incomes, and increasing penetration of organised retail, the industry is experiencing major changes with rising competition in the market. Vishal Gurtu, country head, Egana India, says, “The overall market size of watch industry is approximately 5000 crore.” While on other hand, Rishi Somaiya, CEO, Solo Commodities Pvt. Ltd. says, “The market on the whole is estimated to be around over 45 million watches with a growth of around 10 per cent per annum as per 2006 reports. The estimated demand for 2006-07 was as high as 70 million timepieces with tremendous growth projected in 2008 and onwards. This can also be seen from the fact that many new watch brands have entered the Indian market in 2008 and have received excellent response from the consumers.”

If we look at the past few years, the watch industry was nearly unorganised as companies used to manufacture and retail watches on affordable prices by using duplicate material and technology to compete with the Swiss and Japanese brands. But today the market for watch industry is shifting from unorganised to organised sector as a lot of organised players like Titan, Timex, Maxima, Swatch Group, Citizen watches, Gitanjali, The Rose Group, and A&S Creations are tying up with international brands to transform the overall scenario for the unorganised market. Today, the organised sector is targeting the niche segment to cater to the upper class. It is now coming up with quality made watches by using contemporary technology and trendy designs to capture the interests and to attract the consumer.

Changing consumer perspective

The last few years have seen a substantial change in consumer preferences as people have become more defined in wearing a watch. Earlier, people were confined to wearing only daily-use watches but today people are becoming more and more brand conscious. Now, watches are available in various segments from casual to formal and sporty to luxury. Till now, the consumers were price-conscious, and the most important parameter they followed before buying a product was a strong cultural trait, `value for money`. They are aware of all the brands that are available globally, and know exactly what they want. Pradeep Bhanot, Brand Manager, Rado, says, “The consumers are increasingly becoming conscious of the time-pieces that suit their style. Watches have gone beyond time. The customers are adapting to the various lifestyle moods while selecting their watches and that`s what keeps us innovating and serving our patrons with the best.”

With the entry of international players, Indian watch retailers are now coming up with contemporary designs to cater to the consumers` needs. Consumers all over the world no longer use watch as a necessity to see time rather a watch has become a fashion statement that portrays their unique personality. It allows them to select brands of their own choice. Indians are now considering watches as a status symbol and they are willing to pay a premium for an elegant watch. Companies are now becoming more advanced and coming up with latest technology to cater to the growing demands of the consumers. Also with the presence of foreign players, competition is increasing amongst the major Indian players. They are now offering consumer centric products and distribute them through multi channels that in turn enables the companies to retain market share and enhance margins. Somaiya says, “The India market is a prospective one. With unorganized retail that is now gradually taking shape, there is a strong demand for players that can streamline the whole selling process. This prompted us to enter the retail industry in India as the next coming years will revolutionize the complete retail environment with entrance of many respected brands entering India.”

Organised players

Some of the organised players in the country are: Titan, Timex Group India, Swatch Group India, Maxima, Egana India, Citizen Watches and Watch IT!

Titan

Titan industries is the world`s sixth largest wrist watch manufacturer and India`s leading producer of watches under Titan and Sonata brand names. The company was established in 1984 as a joint venture between the Tata group and Tamil Nadu Industrial Development Corporation. With opening of world of Titan store in the year 1987, the company has started its franchise operations. At present the company has 225 stores across India. Out of these 212 stores are run by franchisees.

Timex Group India

The Timex Corporation is headquartered in Middlebury, Connecticut, USA with affiliate offices located throughout North America, South America, Europe, and Asia for over 150 years. With hundreds of styles among its fashion, sports, outdoor and youth lines, Timex is the largest selling watch brand in America and has sold more than one-billion watches worldwide. While every Timex produced since then has retained the virtues of those early watches, in the intervening 50 years, the company has introduced a steady stream of technological advancements.

Swatch Group India

The world`s largest maker of finished watches, The Swatch Group entered India in 1998, by importing its watches and distributing them through multi-brand outlets as well as its own shops. Currently it is present in India through its 100 per cent subsidiary, Swatch Group (India) Private Limited. The Swatch Group currently retails through roughly 150 points of sales across 53 towns in India, while some of its brands like Omega, Rado and Longines have their own flagship stores in key Indian cities.

Maxima

Maxima was born in 1996 out of the vision to serve the economically weak segments of our society. Until then, the vast majority of people had the option of buying either an expensive wristwatch at above Rs 500 or be fleeced by the smuggled or duplicate watches selling at throwaway prices but with no assurances of quality or service. The company has a strong support of 56 distributors, covering all parts of the country. The brand Maxima is today represented on all Time Zones across the country.

Egana India

Egana India Pvt. Ltd. is a joint venture between the Rose Group & Egana Goldpfeil, a US $ 600 million group. Egana India started operations in 1999. It now has distribution points in over 40 cities with more then 250 stores and has successfully established itself in the fashion lifestyle segment. Today, Egana India`s portfolio boasts of brands like Esprit Time wear, Pierre Cardin Swiss, Carrera, Cerruti 1881 and Puma in the category of watches. Egana India extends its fashion business portfolio in three specific categories viz – watches, jewellery and retail.

Citizen Watches

Japanese watch manufacturing company Citizen Watches was established in the year 1924. During the last 75 years Citizen has expanded its business through out the world. Beyond sheer size Citizen is also recognised as a worldwide leader in advanced technology. More recently Citizen has staked out a new position as a leader in ecologically friendly timekeeping with its Eco Drive collection of light powered watches. With models ranging from dress models to sports models to professional dive watches, Citizen`s Eco Drive runs continuously in any kind of natural or artificial light for a lifetime.

Watch IT!

Watch IT! is a premium boutique selling watches, sunglasses and accessories that was born in Canada in 1999. The company has a range of product lines encompassing 40 brands in watches and sunglasses with brands like Tissot, Swatch, Seiko, Kenneth Cole, Cerruti, Versus, Gucci, Armanito to name a few. Watch IT! has been franchising since 2001.

Huge competition

The time wear industry is witnessing a huge competition as a number of organised players have hit the market, lot of global brands are looking for prospects to enter the Indian watch industry. India is one of the attractive destinations wherein retailers around the world prefer to set up their businesses. To penetrate the market, companies like Titan, Gitanjali and The Rose Group are also retailing watches along with branded fashion accessories such as sunglasses, handbags, and jewellery as well. Most of the Indian companies have tied up with international companies to bring brands, which are distributed by Multi Brand Outlets (MBO`s) through franchising model across the country. To beat the growing competition in the market, companies are spending huge money on marketing and promotional strategies to represent the distinctive brand recognition amongst the consumers.

Choksi says, “Despite the odds, leading time wear retailers have registered 35–50 per cent growth in number of outlets over the last two years and, on an average, their retail sales grew by nearly 60 per cent in 2005 and 30 per cent in 2006. The most important observation has been that entry of so many brands has not affected the growth of the market leaders and in fact their growth rate has improved due to overall opening up of the market.” Lots of international brands have already entered the time wear industry in India such as Espirit, Gucci, Longines, Dolce and Gabbana, Ferragamo, Chanel, Swatch, Versace, Tag Heuer, Tissot, Hugo Boss, Christian Dior, Sunnto, Tissot, Omega, Rado, Rolex, Fendi and Tommy Hilfiger, Morellato and Swiss Junction, Pierre Cardin and many more.

The emergence of global players has influenced the Indian companies to upgrade and refurbish the current technology to face the stiff competition in the market. Watches are basically divided into two categories that includes mid-premium and premium segment. India`s leading watch brand Titan has introduced sports wear brand `fastrack` that is targeted at young generation while, `Sonata`, caters to mid-premium class to target the different class. Apart from national and international brands, consumers who cannot afford to buy the branded watches are now buying the Chinese watches, which are stylish in designs and are affordable to buy. Manjot Purewal, MD, Maxima Watches, says, “The organised watch industry is not more than 30-35 per cent of the entire market and it is the unorganised market that really thrives in this country”.

Scope of franchising in watch industry

In promising economies like India, where consumers are largely catered by unorganised competitors, franchising is a speedy way to organise the industry and to offer a product or service of consistent quality to the end-consumers. According to the current policy, Foreign Direct Investment (FDI) regulations do not permit FDI in multi brand retail trade. Currently, FDI is allowed only to the extent of 51 per cent in single brand retail trading with prior approval and 100 per cent in wholesale trading. This is the reason that the international watch players are entering the Indian market by opting the franchise route. Somaiya says, “Following the liberalization of FDI in many areas of business by the government, many international brands have become eager to grasp the plethora of opportunities in various business sectors including retail.” Commenting on the current scenario of franchising, Ryoshin Tokunaga, Marketing Head, Citizen Watches India Private Limited, says, “The current guidelines of the government do not permit foreign investment in retail. Franchising is the right option for us to expand”

Global brands that are entering Indian market foresee franchising as a different model for expansion of their operations across the country. Bhanot says, “More and more brands will be taking this route as this is an effective distribution tool providing more visibility to the brand and closer interaction with the end consumer, helping the brand understand consumer preferences and habits.”

Sumit Sabharwal, Director, A&S Creations, says “The future is bright because the concept is picking up rather than having outlet of their own initially. It gives you the wisdom franchising pattern will actually work for us to penetrate the market for people to see our products in fact all over the country.” The future of franchising in time wear industry looks very promising as consumer buying behaviour is changing with advent of latest technology; foreign brands are entering and companies are spending quality time in making strategic plans to transform the current trends to provide quality products to the end consumer.

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