Business / Corporate | Taking the Lead

Changing times: Seiko eyes global luxury watch market as CEO takes iconic firm in a new direction

by Kaori Shoji

Contributing Writer

The executive floor at Seiko Holdings Corp. in Tokyo’s posh Ginza district is a piece of history unto itself — the chambers have remained the same for almost a century. If these walls and museum-worthy carved moldings could speak, they would perhaps wax poetic about how Seiko evolved from a watch and jewelry shop founded by Kintaro Hattori in 1881 into one of Japan’s most iconic wristwatch and clock manufacturers.

And though Seiko’s headquarters is located a few blocks away, the executive floor in the Wako Building — one of Ginza’s most visible landmarks and part of the property where the founder set up his business — remains an iconic part of the company.

Nearly 140 years later, Seiko Holdings is transforming itself into a global corporation under the guidance of CEO Shinji Hattori, 65, who is a great-grandson of the founder.

With a mission to make the company a worldwide luxury watch brand, Hattori, who assumed his post in 2012, separated the company’s high-end watch line, Grand Seiko, from its other brands in 2017.

“We wanted to give Grand Seiko a bigger stage that would push its name into the global public consciousness,” Hattori said in a recent interview with The Japan Times.

He also wanted to restructure the firm’s international marketing strategy, and Grand Seiko was to be at the forefront of his plans.

“The first item on the to-do list was to increase the number of Grand Seiko outlets overseas. There were only a few offshore outlets in 2015, but now we have 80 boutiques worldwide. This gives our customers a chance to get to know us and become familiar with our vision as a maker of luxury brand watches.”

In 2018, Grand Seiko was a part of Milan Design Week, an exhibition for design-forward products, with a goal of impressing upon the Swiss-dominated European market that Japan-designed watches are cool, too.

Last month, he opened the four-story Seiko Dream Square in the center of Ginza and a stone’s throw from the Wako Building, allowing customers to stroll back and forth between both outlets. It’s one part Seiko museum and one part watch boutique.

“Apparently the trend these days is to forego the wristwatch,” Hattori said. “People tell time on their phones. But there is still a place for the wristwatch, just as there is a place for the watch boutique.”

Seiko’s main clientele used to be Japanese, but the firm is now targeting inbound tourists, including millenials, Hattori said. He hopes to expand luxury brand markets in places like Dubai and Singapore, and attract travelers who come to Japan for quality Japanese products.

“They know our brand by name, but they may not be aware of the specifics of our watches. We want to reach out and have them experience our watches first hand. It’s our way of getting acquainted with new customers and promoting our vision and brand image.”

For a long time, Hattori said, “the Made in Japan logo stood for industrial excellence. But now, that same logo has become about artisans and craftsmanship. We want our watches to reflect both sides of Made in Japan.”

Hattori, however, knows that it may fly in the face of current market trends, which have seen more consumers buy luxury goods online.

“In the old days, buying a luxury watch meant getting dressed up, making the trip to the store and conferring with the salespeople to make the purchase. There were many stories attached to the act of buying a wristwatch. The wristwatch itself was a part of the wearer’s personality and history.”

But, Hattori added: “We are very aware of the vast changes in the retail market. The whole mindset has become different, and so has the act of buying a wristwatch. I feel that the tide is not going to turn any time soon.”

He touched on how Swatch Group, the world’s biggest watch brand, had pulled out of the 2019 edition of Baselworld — the industry’s largest trade show. CEO Nick Hayek shook the watch world with the announcement and his comment, according to media reports, that Baselworld was “too stuck in its old ways.”

“The news took me by surprise, but on the other hand, the watch market has been undergoing some major changes in the past decade,” Hattori said. “Corporations and their leaders must be on their toes and ready to make constant adjustments to management, strategy and marketing. It’s not enough to simply repeat what had worked before, because the same formula may not work in the future.”

Hattori knows that better than most CEOs.

In 2017, Seiko Holdings announced that its net earnings were down 95 percent, a number that astounded many in the domestic watch industry.

Analyst Masashi Sato said in an online interview that although Seiko has great technology, it needs to improve its design and brand image in order to expand in the global market.

The company, which came out with the world’s first quartz watch, has always been second to none when it comes to precision technology, Sato said.

“But both Japanese and overseas consumers are choosing brands like Tag Heuer and Bulgari over Seiko, mainly for the design and product image,” Sato said. “Seiko Holdings need to compete in those fields in order to reinforce their brand and become a real global contender.”

Hattori observed that the modern customer is sophisticated and discerning, with many options at their disposable.

“It’s not enough for a watch to be precise and infallible — it must appeal to the senses. A luxury wristwatch is a wearable piece of state-of-the-art technology. But it’s different from the smartwatch in that it’s aesthetically pleasing and evocative of memories and emotion.”

This is why, he added, Grand Seiko watches target customers looking for products in the mid-to-high price range.

“These customers are not abundantly wealthy, but they also don’t stint themselves when it comes to paying for quality products that they trust and like,” he said.

It is precisely this clientele, Hattori continued, “that will enjoy coming to Seiko Dream Square. I believe these are the people that will value the experience of trying on a wristwatch, getting to know the brand history and wandering through an actual store, looking at things.”

Such customers are free to optimize their shopping experiences in whatever way they choose, including online purchases.

That’s partly why the company opened the outlet, Hattori said, as it aims to provide a space where the customer can feel different and special.

Hattori said that if Japanese firms have a certain advantage over Western makers, it’s their special relationship with time.

The West has traditionally perceived time as something to control, or be controlled. But in Japan, time is part of the grand scheme of nature and not the enemy, Hattori said.

“Time flows, seemingly without effort. We sense the flow of time, and we have structured our lives in accordance with that flow. Time is the very essence of Japanese culture.

“And though we have retained a unique and friendly relationship with time, Japan-made watches are the most precise, reliable timekeepers in the world.”

Seiko’s path

1881 Kintaro Hattori founds watch and jewelry shop K. Hattori in Tokyo’s Ginza district.
1917 K. Hattori becomes K. Hattori & Co.
1953 Shinji Hattori, great-grandson of Kintaro Hattori, is born in Tokyo.
1964 K. Hattori & Co. becomes the official clock supplier for the Tokyo Olympics.
1983 The company changes its name to Hattori Seiko Co.
1984 Shinji Hattori joins the company after nine years working at a Japanese trading firm.
2001 Hattori Seiko Co. becomes a holding company.
2003 Hattori becomes president of Seiko Watch, part of Seiko Holdings Corp.
2012 Hattori becomes CEO of Seiko Holdings.
2017 Grand Seiko watch brand becomes independent from other Seiko watches.
Dec. 20, 2018 Seiko Dream Square opens in Ginza.

This section runs exclusive stories on top business leaders and executives interviewed by The Japan Times.

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