With the opening of premium boutiques in key foreign cities including Tokyo, Seiko Watch Corp. is hoping to bolster its brand image to sell more high-priced products, the firm’s president said.
“Seiko Watch can grow overseas more and more,” with a specific focus on Europe and U.S. markets, by promoting its premium global brands, said Seiko Watch President and CEO Shinji Hattori in a recent interview with The Japan Times.
Currently, the overseas market accounts for about a half of the firm’s sales, but Hattori said it aims to boost that to around 60 percent in coming years.
Seiko Holdings Corp., Seiko Watch’s parent company where Hattori also serves as CEO, said Tuesday its operating profit in April-June surged 56.9 percent from a year earlier to ¥4.47 billion, hitting a record high for a fiscal first quarter.
Net profit almost quadrupled to ¥3.73 billion, also a record high for April-June, reflecting robust sales of its watches to foreign visitors to Japan.
In July, Seiko Watch launched a flagship boutique in Frankfurt, Germany, and also opened a store offering only premium brand products in Tokyo’s Ginza district.
The company also has boutiques in Madrid and Paris. In September, another is scheduled to open in Moscow.
“Opening boutiques is effective, as such stores can give people a chance to see our premium products,” Hattori said.
Seiko sold the world’s first quartz watch in 1969, changing the industry’s landscape. Before that, mechanical watches dominated.
Quartz watches keep time by using a signal generated by a highly precise frequency created by a quartz crystal oscillator. Applying this technology to a watch was difficult back then, and Seiko’s first quartz watch cost ¥450,000.
The debut of quartz quickly pushed mechanical watches into a corner as other companies followed suit and introduced quartz models. But as production technology improved, it became easier to make quartz watches and their prices tumbled. Quartz watches are now sold almost anywhere at low prices, and Hattori admits this perception may have hurt Seiko’s brand image.
Meanwhile, mechanical watches have regained popularity as premium products.
Hattori said Seiko had yet to establish its upscale brands in overseas markets. “We need to let the world know Seiko has these premium products (through boutique stores). . . . We expect that our sales will grow drastically in the next several years,” he said.
Seiko is especially pushing its flagship Grand Seiko brand watches, which debuted in 1960 and is priced at ¥200,000 to ¥700,000. It is also promoting Astron, a solar GPS watch priced at ¥150,000 to ¥300,000.
There are reasons that Seiko is focusing on its premium products.
Looking at the domestic market, watch sales have been increasing over the past several years, but unit sales have been trending downward. Last year, the industry logged ¥765 billion in sales, up by about 19 percent, but unit sales decreased by 13 percent.
“This means that high-priced products are making good sales,” said Hattori.
But in the premium watch segment, the presence of overseas rival firms, such as Switzerland’s Rolex and Swatch Group’s Omega, and France’s Cartier remains strong.
Seiko hopes to snatch market share from these rivals by pushing its upscale products.
But as competition in the premium watch market intensifies, the industry faces an additional challenge from smartwatches, especially the Apple Watch.
Asked how smartwatches will affect the existing watch market, Hattori said they will probably erode market share of low-priced watches.
“I don’t think it affects the market for high-priced watches,” he said.
Also, as young people who don’t normally wear watches start to use smartwatches, they are likely to become more interested in regular watches, he said.
Already, traditional watchmakers, such as Tag Heuer and Swatch, have announced that they will release smartwatches in competition with electronics firms such as Apple, Sony and Samsung.
Hattori said Seiko wasn’t ruling out entering the smartwatch market, though it would not be anytime soon.
“I don’t think it’s really effective to pursue both (conventional watches and smartwatches),” adding that Seiko’s strength is making elaborate watches crafted by skilled watchmakers.
He said Seiko’s limited edition Grand Seiko Hi-Beat 36000 GMT received an award at the Grand Prix d’Horlogerie de Geneve, known as the watch industry’s Oscars, last year for watches under 8,000 Swiss francs (¥1 million). It is the first time a Japanese watch won an award in this category.
Hattori said Seiko has a vertical manufacturing system where designs, components and manufacturing are in-house, enabling a speedy production process.
Information from Jiji added