Seiko: Déjà Vu All Over Again?

What’s going on at Seiko? Quite a lot. Strong product praise. Futuristic technology. Management changes. Upscale imaging.

Seiko is on the tip of the tongue these days in terms of what’s in and what’s out. What’s in? Two years running, the brand has won rave reviews for its avant-garde products. What’s out? Significant changes in the brand’s management and sales staff have led some to wonder how well the brand is doing.

One thing is for sure: Seiko is making noise in an industry that’s relatively quiet on the innovative product front. Even traditionally Swiss retailers and distributors are impressed with Seiko. Why?

In Basel this year, Seiko unveiled a series of “future proof” timepieces: an inexpensive perpetual calendar programmed to the year 2100; a limited-edition Kinetic Chronograph with a dashboard-like design; and Spring Drive Kinetic, a mechanical piece with quartz accuracy. Each was surprising. Save for a few high-end watchmakers, rarely does a watch brand introduce three significant timepieces in the same year.

This is the same type of buzz that put Seiko on the map in the first place, with its quartz bombshell back in the late 1960s and early 1970s. Seiko’s “Electricity” ad campaign says it all. The brand has pumped high voltage into its collections with bold, unique product. The product may not be to everyone’s taste, but it’s definitely distinctive. Seiko is taking chances.

A date with the future. Seiko’s perpetual calendar looks like any other quartz watch, but it packs a programmed punch for an entire century. It features the “world’s smallest ultrasonic motor” with 10 times the power of comparable electromagnetic motors; a new high-frequency oscillator accurate to plus or minus 20 seconds per year; and a new generation of lithium batteries that last for 10 and five years, respectively, on men’s and women’s models (the first perpetual calendar watch for women). These new batteries eventually will be used in every Seiko watch, as Kinetic will. Not a bad deal from $375 to $495.

Spring Drive Kinetic, accurate to 15 seconds a month, offers quartz accuracy without the battery. Seiko executives believe Spring Drive Kinetic will change the way people feel about both traditional mechanical and traditional quartz watches. It will be available in spring 1999.

The Seiko Kinetic Chronograph, featuring four independent subdials in a dashboard design, is limited to 1,000 pieces (100 in the United States). Available this fall, it retails for $1,995 – giving Seiko a new status price point. It will come in a wider range in 1999.

All of these “worry-free” timepieces are more limited than traditional Seiko timepieces, thereby addressing retailers’ growing concerns about discounting.

Seiko officially introduced the United States to Kinetic watches in 1995 with its Winward collection. The brand later improved the technology and, in 1997, it bravely introduced a unique design that perfectly marries Kinetic technology – the avant-garde Arctura. This watch design was so cutting-edge, it graced a Vogue magazine cover model’s wrist – giving the watch more credibility.

Seiko’s goals: to increase sales units and dollars and enhance its image with younger people. So far, its strategy appears to be working. In its third year, Kinetic now accounts for 30% of Seiko’s total sales and 55% of its men’s watch business. Arctura already represents 30% of its business as well.

The rumor mill. All this success despite continued rumors that Seiko is still struggling – rumors fueled by recent and significant changes in the company’s management and sales staff. Seiko says these rumors are unfounded and often come from competition.

The brand likens its market share competition with gold and platinum competition in the precious metals market. Gold has so much market share that platinum naturally has much more room to grow. Seiko executives say it’s similar for their brand.

“Last year we were up, but not in double digits,” says Takashi Wakuyama, outgoing Seiko Corp. of America (SCA) president. “Seiko had so much market share to begin with, it’s naturally difficult to grow double digits every year.”

Adds Cheri McKenzie, vice president of advertising, “It’s always difficult to be a leader in anything. People always set you up. But what motivates them to say these things? What’s important is the positive perception of our retailers.”

Seiko executives say retailers will feel the Seiko difference, from service to advertising and merchandising to sell through. The brand is trimming the fat with corporate strategy changes from the United States to Japan. These changes are an investment in the future.

Prior to the corporate re-engineering, Seiko was two different companies: a watch production house and a marketing arm. Now, as the two Japanese factories merge into one, Seiko Corp.’s marketing arm will provide all future direction. The change also rids the company of any internal discrepancies and overlap.

This strategy will especially benefit the U.S. market, Seiko executives say. The United States is considered Seiko’s most important market, making up 30% of the corporation’s sales. Its importance is backed up by Seiko Japan’s board of directors selecting Tsutomu Mitome as president of SCA. A board member himself, Mitome previously served as SCA president from 1983 to 1988. “We now have a united company,” Mitome says. “We should act more quickly and efficiently to different markets.”

Does Mitome’s appointment mean Big Brother is watching closely? Well, yes and no. Mitome isn’t baby-sitting, but he knows the U.S. market well. And as a board member, he will have more power to implement strategies and introduce specific products. And make more noise.

Rolex USA Names New President

Rolex Watch USA has both a new chairman and a new president. Roland Puton, immediate past president, has been named chairman, and Walter Fischer was appointed his successor as well as CEO. Fischer becomes only the third president in the 50-year history of the American subsidiary of the prestigious Swiss company. Both appointments were effective July 1.

Puton is a 32-year Rolex veteran. Fischer formerly was responsible for Rolex’s sales operations in the Caribbean and Central America. He was also past president of Little Switzerland, a prominent Caribbean jewelry store chain.

“I am looking forward to this new opportunity with great anticipation,” says Fischer. “The United States is one of the most important markets. It will be a great challenge to apply my international marketing background and understanding of the Swiss watchmaking industry to the demands of the American marketplace.”

The appointments came on the heels of Rolex’s apparent decision to end its exclusive relationship with Little Switzerland, in light of the store’s merger with Destination Retail Holdings Corp. This decision has perplexed observers, who wonder why Rolex pulled out of a store previously run by its new president. Rolex accounted for 20% of Little Switzerland’s fiscal 1997 sales. According to Little Switzerland’s corporate report, the loss of any major supplier, including Rolex, could adversely affect the company’s results.

Franck Muller’s Culture Club

Franck Muller may be branching out beyond watches and into accessories. The word is that the watchmaker will unveil a line of pens, briefcases, handbags, and possibly sunwear in the near future. The designer had offered Franck Muller scarves in the past, simply as gifts. These accessory spin-offs are all part of his new concept, Watch Land, a Geneva-based museum that will present the entire “Franck Muller culture.”

Breguet for Sale?

The sale of Breguet to the Vendôme Luxury Group was a hot rumor in Basel. And it was wrong, according to a clearly annoyed J.J. Jacober, managing director of Montres Breguet SA, a holding of the watch juggernaut Investcorp (which also owns Ebel and Chaumet). Ebel was also mentioned in the sale rumors.

“These rumors are garbage,” Jacober says. “You don’t sell on the way up; you sell on the way down. These rumors are possibly coming because we are one of the few companies not hurt by the Far East problems. Investcorp would inform me first of any sale. And there’s been no talk of selling.”

Breguet executives say there’s talk every year at Basel about some company being up for sale. It was Breguet and Ebel’s turn this year. There may have been misunderstandings because Breguet is leaving the Basel Fair for Salon International de la Haute Horlogerie next year.

Jacober says Breguet’s only problem has been back orders, which it is working hard to correct. Montres Breguet is building a new factory that breaks ground early next year – another sign that Breguet is not on the block.

As is, the luxury brand has the capability to produce only about 7,000 to 8,000 watches a year. The brand is awaiting the green light after approval of its operating plan, slated to be complete by July or August.

Breguet is currently housed in a building dating from 1841 and is in need of new equipment. The brand signed a lease on property totaling 80,000 square meters.

“I think it’s frustrating for retailers to wait 12 to 15 months for delivery,” Jacober says. “We should offer the best service possible, in terms of reliability, product, and communication. Our reliability is good, but with a better factory, it will be excellent.”

New Names, New Lines

M.Z. Berger & Co. recently became the licensee for a new series of Harley-Davidson watches. The Harley-Davidson Timepiece Collection retails from $60 to $200 and includes watches for women and men, pocketwatches, mini clocks, limited-edition collectibles, and a unique assortment of accessories that tell time.

Kim White heads up the new Harley-Davidson division, based in New York. The watches are set to hit stores in October. Bulova previously licensed a series of Harley-Davidson watches.

Stelux USA named Valdawn Watch Co. the exclusive distributor for Adidas sports watches. Priced from $55 to $275, Adidas watches are sold in sporting-goods stores, direct-mail catalogs, fine department stores, and jewelry stores. Mark Shell heads Valdawn. Adidas watches previously were distributed by Wittnauer International.

Seven West Accessories was granted the license for Babe watches. The lovable pig, made famous in the Oscar-nominated film by the same name, will grace watches with interchangeable dials, LCD pocketwatches, and flip-top watches with sound-chip phrases such as “Hi, my name is Babe!” These watches go on sale in November, coinciding with the release of a sequel movie, “Babe: Pig in the City.”

Montblanc USA named Stacie Orloff vice president of sales. She was previously director of sales for Gucci Timepieces.

Wittnauer International appointed David Mosier to vice president of national sales. He was formerly southeast regional vice president. Wittnauer also promoted James Sperbeck to East Coast regional vice president. He had covered the mid-Ohio market for Wittnauer for more than a decade.

IWC appointed Marc Bernhardt as vice president and chief marketing officer of U.S. operations. He is responsible for the U.S. market and will oversee all aspects of sales, marketing, and brand management.