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Sowmya Krishnan

DYNAMIC market conditions, cut throat competition, presence of multiple brands, low growth rates, high manufacturing costs and low capacity utilisation — this is how the dial of the Indian watch industry looks today.

Low and middle end drives growth

The total demand for watches in India is estimated to be about 25 million pieces every year, out of which the organised sector supplies around 11 million.

As only one-fourth of the population owns a watch, there is huge untapped potential. How much of this will actually turn into demand depends entirely on the creative capabilities of the players.

Industry sources peg the growth rate for the industry at a modest 5 per cent and see the mid-price segment as the high growth category.

Both Titan and Timex, the two major Indian manufacturers, are concentrating on the mid-price segment, that is, in the Rs 1,000-5,000 range, though around 70 per cent of all watches sold cost less than Rs 1,000. As Mr Kapil Kapoor, Managing Director, Timex Watches, puts it, "though the growth in the watch market has come down to around 3.5 per cent, there has been a considerable growth in the premium and middle-end segments due to the entry of international brands".

Mr Bijou Kurien, Chief Operating officer, Watches Division, Titan Industries explains, "With the availability of so many brands priced at the premium end, the perception of an expensive watch has changed. People do not mind paying a higher price for a watch".

Untapped rural potential

Most organised players are eyeing the urban population. For 730 million rural Indians, there are only 90 million watches. Effectively, about 80 per cent of the untapped potential is in rural India.

Only HMT has a presence in this segment. Its hand-wound, or non-automatic, watches are still popular in the rural areas.

None of the other brands has been able to penetrate this market. Titan did try, but could not make break through.

It is now interested in acquiring a 74 per cent stake in HMT. If this happens, Titan would get access to an established rural market access.

While both Timex and Maxima have stuck to the urban market, Titan is trying to expand into rural India. But it may take a while for the market to add volumes for the watch-makers.

Cut-throat competition

Low growth rates and availability of a variety of brands have intensified competition. Each player clearly targets products at different segments and at different price points in order to corner a larger piece of the cake.

Of the 25 million watches sold in India, 18-19 million are sold in the sub-Rs 1,000 category. This category traditionally grew at 10 per cent and was dominated by the unorganised sector.

But over the last couple of years, the organised players are making their presence felt in a big way.

Titan introduced `Sonata' in this category. Priced between Rs 300 and Rs 750, it was a huge success contributing around 30 per cent of the Titan's watch sales in 2001. HMT, which has most of its products in this range, took a heavy beating losing market share to the emerging brand `Maxima' and to some extent to `Sonata'.

HMT's market share stands at 14 per cent while Timex gained 18-22 per cent. Timex re-positioned its brand as "America's No.1 watch" with a thrust on technology, which helped it gain market share.

With Maxima targeting the mass segment with its separate collections for kids, youth and the steel collection priced in the Rs 450-1,500 range, it is making its presence felt across segments where Titan has a strong hold.

Trying different hands

A watch is now looked at as a personal accessory, an extension of a person's lifestyle. The design of the dial and the strap influence a buyer's choice rather than just the function. Also, a whole new range of technologically superior watches has also entered the market.

With the emergence of this trend, the players have clearly segmented their consumer base targeting niche markets with different products. While Titan introduced `Dash' targeted at children, Maxima launched `Lil Dolphin' for the same segment.

Another niche segment caters to the technology savvy consumers, with brands such as `EcoDrive' from Citizen, `Cognoscenti' from Timex and `Edge' from Titan.

There is also the fashion segment, where each player has a collection for men and women. For instance, Titan has `Fast track', and Raga, Regalia and Royale in the stylish segment. International brands, such as Swatch and Espirit also have a presence. While most foreign brands have their products targeted at one niche segment, either fashion or function or style, domestic players have different products targeted at different segments.

The stress is on constant innovation in style, design and products that would keep the interest alive in the various segments. This is a challenge every player is facing to keep up its market share.

Strengths in distribution network

For the domestic players, distribution network and presence across a wide geographical area are major advantages.

With the emergence of many retail chains, the trend is slowly shifting towards the `Shop-in-shop' concept. Customers now want to look at the variety on offer and then decide for themselves.

This has prompted the players to make their products available at retailing outlets and super markets, apart from dedicated retail outlets.

Imported watches too are slowly catching up to set up exclusive showrooms, though in very small numbers. Their geographical presence is restricted to the metros.

To that extent, established players, such as Titan and Timex have an advantage. After-sales service is another area where established players are trying to create a barrier and protect themselves from foreign brands.

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