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Sowmya Krishnan

THE business dynamics for watches have completely changed ever since the import of fully assembled watches into India was allowed. A few years ago, one could buy a Swatch or a Tissot only from the grey market or abroad.

Now, exclusive Swiss watch showrooms dot the metros. If the entry of foreign brands has, on the one hand, given consumers a variety of brands to choose from, it has, on the other, giving the domestic manufacturers a run for their money.

At the lower end, that is, in the Rs 100-300 price range, Chinese watches have flooded the market. In the mid range, Rs 1,000-5,000, Japanese brands, such as Citizen and the lower-end Swiss brands, such as Swatch, Esprit, and others have a presence.

In the premium segment, the above-Rs 10,000 price bracket, top notch brands, such as Omega, Longines, Calvin Klein and Rado are slowly establishing their presence.

With such variety invading the market, has it altered the business dynamics for Indian manufacturers?

Has it eaten into the domestic players' market share? What will be the situation, going forward?

The interesting fact is that instead of eating into the share of domestic players, these brands have actually created a niche market for themselves without really disturbing the existing structure.

Especially, the above-Rs 10,000 price category is an entirely new segment that caters to the elite. Only Titan has a presence in this segment with its gold collection priced between Rs 6,000 and Rs 36,000.

Being a niche market, volumes are low in this segment but margins are high. Given the price, the growth prospects are limited.

The middle segment is the most happening and poised to grow faster than the others. Here, the domestic players would actually be walking the tightrope.

Though both Titan and Timex have made, or are planning, new product launches, it is a tough game. For instance, Titan positioned its new product `Edge', supposed to be the slimmest watch in the mid-high segment.

Titan used its technological prowess as its unique selling point. Priced in the Rs 4,500-5,000 range, Titan targeted the brand at the techno-savvy consumer looking for a prestigious watch, who would otherwise go in for a foreign brand.

According to company sources, the product is a hit both in the domestic and international markets.

Timex, on the other hand, is planning to launch 300 new models in this range with additional features, which would appeal to the sport lover and the techno-savvy consumer. HMT has a limited presence in this segment.

Though domestic players are bullish about the segment, much will depend on their ability to provide a value product with a unique selling point in order to take customers away from foreign brands.

According to industry sources, many of these foreign watches are sold at subsidised prices in order to create a market and make them more competitive.

Thus, the pricing advantage an Indian watch might have over an imported watch may fade slowly. Therefore, the impact of imported watches on the organised sector will be felt the most in this segment.

Chinese watches have hit the unorganised manufacturers while the organised players, except HMT, have not taken a cut in market share.

While Timex plans to phase out its collection in this segment, Titan has made a huge impact with its brand, `Sonata' targeting the youth.

Maxima, on the other hand, is introducing two new ranges in this segment.

One a range of waterproof wristwatches for kids called `Lil Dolphin' and a youth range called H2O. These brands are growing at the expense of the unorganised sector.

The availability of quality branded watches in this price range might have actually induced consumers to upgrade from the unorganised market.

Thus, while imported brands have created fresh demand at the top end, at the lower end they have eaten into the share of unorganised players.

The mid-segment continues to pose challenges for the domestic players.

Domestic players would be able to corner market share and continue to grow only if they strengthen the distribution channels and in the process create a protective barrier around them.

Understanding the market, consumer preferences and introducing new products to suit different tastes and at the same time offering a value product would be the key steps to fight competition from imported watches.

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