The mechanical wristwatch “Campanola heaven/earth” released by Citizen Watch in June. It is a product that combines Japanese and Swiss technology and is expensive at 9.35 million yen (including consumption tax), but has a good reputation. In addition, Seiko Holdings (HD) will refrain from introducing products in the 40 million yen range in October. In contrast to the popular price range, where demand is dwindling, we will try to capture the high-end market with growth potential. On the other hand, in the high price range, Swiss manufacturers have a strong presence. The question is whether Japanese companies can increase their brand power, attract wealthy people in Japan and overseas, and appeal to young new rich people. (Risa Takashima)
[Market changes]Attract wealthy people in Japan and overseas
The seeds planted by Citizen 10 years ago have blossomed. The company acquired Swiss Proser Holding in 2012 and began collaborating with watch-related manufacturer La Joux Perret.
Utilizing the company’s technology, the company developed a new mechanical movement for the first time in 11 years, installed it in Citizen’s highest brand “The Citizen” and launched a new product in August 2009. The 9.35 million yen “Campanola heaven/earth” is also the result of collaboration with the company. Citizen Managing Director Yoshitaka Ojira cries out, “Production can’t keep up with some models of mechanical wristwatches.”
Sales of The Citizen in fiscal 2021 increased by more than 40% compared to the previous fiscal year, partly due to growth in mechanical products. At The Citizen, most of the watches are equipped with a light-generating mechanism “Eco-Drive”, but in the future, they plan to increase the number of mechanical watches that can easily appeal added value and raise the unit price. Managing Director Oji expects that “mechanical systems will lead the way in the future.”
In addition, managing director Oji said, “We will focus on three types of premium watches priced at over 100,000 yen,” including the mid-range brand “Series 8.” At Citizen, the curtain has risen on the second chapter of the wristwatch business, which promotes the shift to the high price range with mechanical watches.
[Mechanical development]Raise the “gear”
Seiko HD will release a limited edition of 20 mechanical watches “Kodo” from the luxury brand “Grand Seiko” in October. Equipped with the world’s first mechanism that achieves stable high accuracy, the price is 44 million yen (including consumption tax). The company wants to expand the price range of Grand Seiko over 1 million yen, and will use Kodo as a stepping stone to achieve this.
In addition, in September 2009, the after-sales service was enhanced, such as extending the warranty period from 3 years to 5 years. The GS Nine Club, a membership organization dedicated to Grand Seiko purchasers, will strengthen information dissemination and deepen relationships with fans. Strengthen electronic commerce (EC) in addition to directly managed boutiques. In 2008, e-commerce started a service where sales staff serve customers online in the same way as in-store sales. There is no choice but to improve the appeal of Grand Seiko.
“Grand Seiko Kodo (beat)” scheduled to be released in October.The price is in the 40 million yen range
A series of watch manufacturers are shifting to higher price ranges. The reason behind this is the change in the market. Citizen managing director Ohharu said, “Even though the sales volume of wristwatches has been declining over the past decade, the average unit price is rising.”
In addition to the popular price range being eroded by smartwatches, the spread of mobile phones has diminished the value of wristwatches as a tool for knowing the time. On the other hand, the value as a luxury item such as jewelry and the value as a means of self-expression are in the spotlight. (about 20,900 yen). The growth of each company depends on whether they can expand their market share in the high-end market with high growth potential.
[Shift acceleration is also a high hurdle]Swiss teams have an overwhelming presence
Domestic manufacturers are accelerating the shift to high-end routes, but the hurdles are high. This is because Swiss brands such as Swatch Group with Omega, Richemont with IWC, and Rolex have an overwhelming presence in luxury watches.
According to the Swiss Watch Association, the export value of Swiss watches in 2021 was 22.3 billion Swiss francs (about 3.16 trillion yen), 4.4 times the size of the Japanese market. Major markets for wristwatches such as the United States, China, and Japan rank high as export destinations. It can be said that it is an existence that hinders the progress of Japanese manufacturers both at home and abroad.
Japanese manufacturers are expanding their product lineup, and analyst Ryuji Shimamoto of Okasan Securities said, “Rolex and other brands are exceptional, but they are not losing out to some overseas brands.” On the other hand, in the high-end watch business, he points out that it is important to acquire fans who will make repeated purchases.
In recent years, in addition to the traditionally wealthy class, attention is also focused on the consumption trends of double-income couples with high annual household incomes and the new rich people in their 30s and 40s who have built up their assets through investments. In order to capture this demographic, marketing issues remain, such as whether it is possible to acquire sales floor space in department stores through store development, and whether stores can be set up in good locations that are on par with famous boutiques overseas.
Swiss-made watches with high resale value have also attracted attention for speculative purposes due to the surplus of money due to the global monetary easing of the corona crisis. At its core is its strong brand power. When Apple launched its smartwatch business, it headhunted executives from luxury brands such as Britain’s Burberry and France’s Saint Laurent. Improving the added value of a brand requires specialized know-how and cannot be completed overnight. Japanese manufacturers are required to take measures to increase their brand value from a long-term perspective while enhancing their technological and product appeal.
[Development with “G-SHOCK”]Casio aggressively expands marketing
Casio Computer Co., Ltd. does not develop mechanical wristwatches, but aims to develop the high-priced market with the “G-SHOCK” brand, which develops products from the price range that is easy to pick up.
“MR-G” of the top series of Casio “G-SHOCK”. Develop products in the 400,000-500,000 yen range
Specifically, we aim to expand sales of products in the 400,000 to 500,000 yen range for the top-end series “MR-G.” Models equipped with cutting-edge functions such as communications, as well as models with enhanced design through precision metal processing, etc. will be targeted, and it is assumed that wealthy people in their 40s and 50s who like wristwatches will be targeted.
Taku Uema, general manager of the company’s watch marketing department, enthusiastically said, “We will also promote the MR-G to watch lovers who are not G-SHOCK fans.” It plans to aggressively develop marketing through department store sales and luxury watch specialty stores.
Nikkan Kogyo Shimbun September 2, 2022
