Whether the international watch market is facing a major shake-up – or shake-out – courtesy of Apple and Google is yet to be confirmed, but if there’s one thing that is for sure it’s that the Japanese are quietly going about their business with little hoo-ha or grandstanding.
Indeed, if Australia is any indication, then the three major Japanese watch brands, Seiko, Citizen and Casio, are strengthening their reputations at the very time the industry is meant to be in upheaval.
Sales are increasing, price-points are rising and the traditional customer base for all three brands is shifting. They could be described as the ‘quiet achievers’, focusing on one thing and doing it properly – advanced technology.
There is no doubt that the respective head offices of Citizen, Seiko and Casio are mindful of the possible threat coming from new smartwatches developed by the ‘computer’ companies. After all, they were responsible for the first industry shake-up – which became a shake-out – when they ‘stole’ the watch industry from the Swiss in the 1970s.
Australian watch sales – by unit and dollar value – for each Japanese brand are very high on a per capita basis and in some cases outperform larger markets. This is not a new issue; Australia has long been a fertile ground for the Japanese in terms of unit sales but in more recent times the consumer’s view of the brands has changed.
Rod Willment, Citizen Australia sales and marketing manager, explains, “We are selling a higher average unit price, which is showing us that consumers and retailers are buying high-end product and also that consumers are willing to spend larger amounts on the Citizen brand.”
That trend is the same for Seiko and Casio. Seiko Australia group marketing manager Stuart Smith says the local market has performed very well over the past 12 months.
“The average unit price has increased, so that’s an indicator that there’s probably been a shift into a slightly higher price segment than where we were even this time last year – and that’s pretty much been happening since 2004,” he explains.
New Casio models are now selling at above the $1,000 mark. In fact, the brand’s national sales and marketing manager, Bruno Bouchet, states he has been pleasantly surprised by the results.
“You never want to be over-confident of anything and so when you go from selling watches at $249 to $299 to then asking for over $1,000, of course you’ll be a little bit nervous,” he says, adding, “You wonder if people will appreciate the technology, will they appreciate the design, and the reality is they have, and I’m very pleased about it. But sure, we were all kind of scratching our heads when the Mudmaster [watch] was launched.”
Bouchet believes the shifting market and the popularity of more expensive models by competitors is important: “It affects all of the watch brands inside that category and so it’s a great thing for us to see that our competitors within the Japanese watch segment are getting higher price-points.”
Not only are average price-points increasing across the board but overall sales are also on the rise after a lull during the global financial crisis.
“The international watch market has been tough and it is very much reliant on how the economy and retailers are performing; however, from a Citizen Australia point of view, while the last few years have been stable, this year we’ve actually seen a 5–10 per cent growth year-to-date, which is very pleasing,” Willment explains.
Seiko’s performance is similar, with Smith commenting that local sales are up 9 per cent on the previous year.
“We’ve had two years of growth and prior to that it was pretty much flat – just holding ground. We didn’t actually go through any growth from 2010 to 2012 but sales are up again on last year by a healthy margin.”
Bouchet of Casio also has a positive report: “Last year was our big year where we were up about 40 per cent. Right now we’re tracking at about an increase in the mid-thirties [per cent] on last year so we are experiencing some very encouraging growth, which is just terrific.”
Secrets to success
While the results across the three brands are impressive in a market facing technological change, the reasons for these achievements are different for each brand.
Willment attributes much of Citizen’s success to a revised product release plan within local markets. “We have a new strategy where we changed from two collections a year,” he explains. “We decided not to release a collection in February and consolidated that collection into one mega-style release in June this year, which skews towards the second half of the year when retailers are gearing up for the busier period. That has worked for us.”
He makes a particular point about the strong performance from the women’s diamond collection with RRPs at more than $1,000. “Probably over the last few years we haven’t really focused a lot on it [the diamond collection] but because it used to be quite a strong category for Citizen, since we re-invigorated the ladies collection, it has been doing really well over the last year or so.”
Seiko’s situation is a little different because it has three brands: Lorus at the lower-end; Pulsar in the mid-market; and of course Seiko. As a result, success needs to be gauged by sales revenue and/or units.
“What we are finding is more success in the medium to high-priced products than what was traditionally the volume products,” Smith says. “So, from a pure GP perspective, our stockists are experiencing the most success in models between $700 retail to around about $1,000 retail for the most profitability,” Smith said.
Apart from strengthening Casio’s position in the market with an ever-increasing array of models, Bouchet believes the perception of ‘Made in Japan’ is taking on new meaning.
“A few years ago, if you said something was Japanese-made people would give it a bit of a second look because it sounds like it’s mass produced and that sounds cheap. But now, especially with the rise in popularity of [Japanese] fashion and engineering, anything that’s made in Japan has got a great name to it,” he says. “It means that there’s innovation behind it, there’s attention to detail behind it and we, as well as our competitors in the Japanese watch game, have very much benefited from that.”
According to Smith, sales of other consumer technology actually helps watch brands achieve higher price-points.
“I think we’re becoming more affluent in Australia, and a lot of people, like the baby boomers, are moving out of work reasonably cashed up. It’s a market that works quite well. In addition, I think that when kids enter the workforce nowadays, they are used to spending $1,000 on a phone. So price-points like ours sort of slip into that area, so if they want to buy a quality timepiece between $800 and $1,000, it’s not an unusual purchase.”
Willment goes one step further. He believes people are taking time to research products, particularly online, when looking for quality over price, which is helping to increase the market share of Japanese watches.
“Brands with a strong reputation in quality and the high-end market of any product benefit from internet research,” he says.
“The way consumers gather information these days has really helped [quality] brands or, Japanese brands, to showcase their technology in a different way.”
It all makes sense when one compares the disposability of goods like phones and appliances these days and considers that watches are often handed down through generations.
Market penetration in Australia and New Zealand is another measure of the Japanese brands being the quiet achievers, and this is especially true when compared to other regions.
“We are punching way above our weight in terms of per capita numbers,” Bouchet confirms. “They’re higher than the US and the UK.”
It’s no different for Seiko, with Smith explaining, “Internationally we perform very strongly. Australia is a smaller market in regards to the population but when sales are broken down on population basis to sales, we’re probably one the strongest performing countries.”
Similarly, Willment says, “Traditionally, in relation to population, we do very well when compared to the rest of the world and we reinforce that point when we go to Tokyo for our meetings.”
The watch industry may be experiencing a wave of uncertainty but this doesn’t appear to be getting the Japanese watch brands down as they continue to defend their space in the market. Never underestimate a quiet achiever.