The Hindu Business Line : `India would be among top 10 watch markets'

The past few months have seen a number of foreign luxury watch brands make a beeline for India. The attraction: A growing number of higher income households in the country, as recent studies have shown, in addition to a fascination for luxury watches. Speaking to Catalyst, Stephen Urquhart, President, Omega Ltd, reveals Omega's future plans for India and discusses India's potential to become one of the largest markets for top end watches.

Omega has been available in India for some years now. How has the response been so far? What is the current growth in the high-end watches segment, and what potential does it hold?

We have always had a presence in India, even in the old days, especially at the service level. And then a few years ago, we started investing money in marketing to get the brand better known. I think that was our step number one in the country - to get our brand awareness really high. And step number two, was opening our office here last July. Now we have a foothold here to do the proper market work, which we should be doing in India. We have to be here to do the job - to have a proper distribution.

India has tremendous potential for growth. In my view, in 10 years time the two biggest markets in the world for all luxury products or consumer products with a certain brand equity will be India and China. These two countries have evolved differently though. China is seeing good growth now and I am certain in India, once the structure of the distribution and marketing is in place, it can be a tremendous market for us.

The potential here is enormous and we have to do the work properly at the beginning. It is such a big market that you can't even say its just one market. Different areas have different tastes and markets. At present, the high-end watches segment here is growing at about 20 per cent.

You mentioned that your focus would be on building marketing and distribution. What specific activities have you planned? Would you maintain your focus on events?

We didn't have an office here earlier for better distribution. However, we have been putting in efforts on the marketing front over the last six-seven years through events and continuous advertising. Now we are really going to put our efforts in distribution. We would increase our presence through both multi-brand and exclusive outlets. This is the policy we followed in China and it has proved to be very effective.

We have held various events in the past in India. We did a Cindy Crawford event in Delhi, and Mumbai back in 1997. We have also held polo matches in addition to other events.

Last one year was a bit quiet primarily because we were in the process of setting up our office here, but in the next few months you will see a very big event in India. We have not yet finalised who would be coming, but the event would be held in more than just one or two cities.

What would the event revolve around? Would you be bringing in one of your international brand ambassadors such as Michael Schumacher?

Omega is geared towards either lifestyle or sports. I would put emphasis mainly on the lifestyle aspect at this stage if we could get the right person to come.

While sports is important, we are not really a sports brand though we have one or two important sports figures such as Michael Schumacher. So if we do bring in a sports person it would be more on a lifestyle level.

You had also signed on local brand ambassadors. How well has that strategy worked?

We have Sharukh Khan as our spokesperson and actress Sonali Bendre as our ambassador. We are looking at how we are going to continue this relationship in the future. Though we have international brand ambassadors, I think its very important for us to have local spokespersons in key markets.

Globally, what is the growth in the top-end watches segment? What are your focus areas for growth?

Well, internationally, growth had been strong till the year 2000. The last two years, mainly in the US and Europe, the growth has come down to single digit from double digit due to reasons related to the stock markets and 9/11. Most recently the spread of SARS also had an impact on demand in Asia especially in South East Asia.

Once these problems are out of the way, I think we can look forward to a double-digit growth again.

In general, I can say that the Swiss watch industry (which has a presence at all price points) has overcome all the problems very well. Many other industries, other product segments have been affected much more than the watch industry.

Meanwhile, apart from Asia, another market which has enormous potential is the US. The US is not really a watch market. The Americans are not `watch conscious' people like the Indians or the Chinese. So we have a market of over 230 million people with the highest income in the world but if you look at watches, Omega sells more watches in Japan or even in China then we do in the US. This is not normal, if you compare the purchasing power.

But there is great potential. The ethnic mix in the US is now changing - there are people from the East, mainly Indians and Chinese, and from the South there is the Mexican and the Hispanic influence, which is going to help.

For an American, I think a watch on his list of needs is at number 80. We need to educate the market. It has got huge potential. We have a big business there, but it could easily be three times as big. Europe is also very important, as it is where the trends are set in terms of lifestyle and design. It is still in Europe where you have to launch the product.

But in terms of sales growth, it is definitely behind China, India or the US.

The taxes on imported watches in India are upwards of 60 per cent. What is the price differential between Omega watches here, and Omega sold in other countries? Do you keep your margins low?

What we try to do is get a reasonable price difference. If we offer a watch in India at 50-60 per cent higher than in Europe or Hong Kong, we would not be able to sell it. We have got a very aggressive price policy by keeping the costs and margins down by as much as possible. Today, on an average the price is about 15-20 per cent higher, which is very acceptable. It is the same as in China and lesser than the US. This is not easy though.

As far as profits are concerned, we are making profits worldwide and every new market needs a beginning. For example, in China, we did not make profits for many years. So I think in India, we will focus on investing in an aggressive price policy, and in marketing. And thereafter, we would benefit.

Any growth forecasts for Omega in India. What kind of sales are you targeting?

Well, India in five years could be among the top 10 markets in the world for us, putting it at par with Japan, China, and the US. How quickly we get there would depend on our marketing mix and obviously if the duties come down more, the growth would become easier. There is no doubt that the growth potential is there. A double-digit growth can easily be attained.

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