Brands Reset Dial to 'Price Is Right'
New York Times, September 4, 2013
LOS ANGELES — For the past several years, conventional wisdom in the Swiss watch business has held that the midrange price segment, which encompasses watches that retail between $500 and $5,000, is being squeezed out of the market, along with the disappearing middle class.
Still, Scott J. Meller, vice president of Feldmar, a 100-year-old family-owned Los Angeles watch retailer, is not among those hearing the death knell for the middle of the market.
“For a long time, the industry wasn’t required to address consumers,” Mr. Meller said, on a recent afternoon at the store on Pico Boulevard, in the heart of the city’s Westside district. He was talking about the years leading up to the 2008 financial crisis, when scores of Swiss brands rolled out “products to the point of outrageousness” that were offered at exorbitant prices to buyers with access to easy credit.
Those days are over: “The customer is now expecting more value,” he said. But, he added, “the companies have received that message.”
“We’re seeing the fruits of that reaction in more sellable product.”
As Mr. Meller was speaking, a middle-aged woman with spiky black hair and chunky black eyeglasses pounced on him. “I’m looking for a watch for my husband,” she said. “Do you have something around $3,000?”
In the context of Feldmar’s extensive watch selection — which spans some 50 brands ranging in price from $50 to $500,000 — a retail price of $3,000 is middle of the road. Intended neither for the poor nor the seriously rich, watches in this category are sandwiched between entry-priced fashion brands — like Michael Kors, which offers bold, gold-plated watches for around $300 — and the luxury watchmaking houses for which $5,000 may be barely the price of a strap.
Mr. Meller directed the woman to a showcase of Baume & Mercier watches priced around $2,000. “They’ve got a good name, well-designed product and the right price,” he said. “We deliver quite a few of them.”
At the Baselworld luxury watch fair in Switzerland, in late April, many brands, even those that had positioned themselves in the past as high-end, were singing from a price-conscious song sheet.
One example was JeanRichard, a Swiss brand belonging to the Sowind Group, which also owns the prestige watchmaker Girard-Perregaux.
In 2011, Kering, the owner of Gucci Watches, bought a majority stake in Sowind, and promptly set about repositioning JeanRichard with a new middle market identity.
“We were significantly more expensive, and we were not easily recognized-only as a small sister to Girard-Perregaux,” said JeanRichard’s chief executive, Bruno Grande. “That’s why our strategy now is completely different.”
In Basel, the brand presented four redesigned product families — Terrascope, Aquascope, Aeroscope and 1681 — starting at a retail price of 2,500 Swiss francs, or $2,700, and all building off the same cushion-shaped case style. “The concept is to have something like a chassis across four different product lines,” Mr. Grande said. “Most will have components in common.”
JeanRichard was not the only name hammering home a message of accessible pricing in Basel. “This year we introduced the Classic Index Automatic, extremely aggressively priced between $895 and $1,295,” said Peter Stas, the Dutch co-owner of Frédérique Constant. “It’s a real quality Geneva-made watch, but really aggressively priced — because we see the market needs a piece” in the value-for-money niche.
At Maurice Lacroix, Hartmut Kraft, president of the brand’s parent company, DKSH Luxury & Lifestyle North America, said that the first thing he did when he came on as a consultant in 2009 was “slash prices in half.”
“In 2012, we reintroduced quartz to the brand, and we have pieces that now start at $950,” Mr. Kraft said at Baselworld. “We are back to what Maurice Lacroix has been known for: high-end watches at an extremely accessible price point.”