The wristwatches market, which was worth Rs 11,483 crore in 2019, is expected to shrink by about 11% to Rs 10,164 crore this year
According to industry estimates, corporate gifting, watches for newly-weds, and gifting in general account for nearly 50% of watch sales.
When a large fraction of India’s workforce began working from home in March 2020, wristwatches became a forgotten or less important accessory. With lounge wear replacing work attire and fewer occasions to dress formally, the sales of wristwatches plummeted during Q1 FY21. As per Euromonitor International’s latest estimate, the wristwatches market, which was worth Rs 11,483 crore in 2019, is expected to shrink by about 11% to Rs 10,164 crore this year. This will set the market back by a little more than two years.
The utility value of wristwatches has been waning — first with the advent of mobile phones, and now with jewellery, fitness trackers and smartwatches vying for the same pride of place.
India’s leading watchmaker, Titan, recorded a revenue of Rs 75 crore in Q1 FY21 against Rs 715 crore in the previous year, recording a y-o-y decline of 90%. Among Titan’s various businesses, its watches vertical was the worst affected.
Timex Group India reported a widening of net loss to Rs 12.42 crore in the quarter ended June 30, 2020. The company’s revenue from operations dipped close to 89% for the quarter and stood at Rs 6.81 crore, down from Rs 61.78 crore last year.
The negative consumer sentiment and piling up of losses meant that watchmakers could not go all out with new launches for the season, as they typically would. “The summer months are crucial because of holidays and weddings that take place during the lagan season. We line up product launches for that period,” says Suparna Mitra, CEO, watches and wearables division, Titan Company Limited.
Recently, however, Titan has launched three new collections and plans to introduce more as the festive season approaches. The company’s sub-brand Sonata is hoping to entice its consumers in Tamil Nadu with a line of limited-edition Chennai Super Kings watches. G-Shock, the brand from Japanese watchmaker Casio, has launched two collections — GM-110 and a limited-edition Dragon Ball Z watch.
According to industry estimates, corporate gifting, watches for newly-weds, and gifting in general account for nearly 50% of watch sales. With personal discretionary purchases on hold, watch manufacturers hope gifting in the upcoming festive season will revive their businesses. Mitra says that since large scale gatherings are restricted, people will certainly consider gifting. “Watches are a very big part of gifting in India,” she adds.
Casio India’s VP, Kulbhushan Seth, says the company is noticing a revival in demand for watches after a sharp drop earlier in the year. “We have curated a festive collection to position Casio watches as an ideal gifting option.”
Countdown to Diwali
It is unclear if gifting will save the day for wristwatch companies. “We may not see free-spirited gifting this festive season; people may spend half of what they spent last year,” says Subramanyeswar S, group chief strategy officer, MullenLowe Lintas Group.
Analysts expect revival in watch sales to take longer than other discretionary segments such as apparel. Mitra says that there was a 20-25% surge in the weighted average sale price when consumers began spending. This indicates that middle and lower-middle class consumers, who contribute to low-value but high-volume sales, were holding back. Myntra reports that Rs 5,000-7,000 is the popular price range for traditional watches currently, with metro cities driving demand.
Even discounts may not help this category. “Consumers have become immune to discounts as they are the norm across categories now,” says Subramanyeswar.
One way to stimulate demand is by offering technology-based solutions. To this end, Titan has introduced the Titan Pay watch, which enables contactless payments of up to Rs 2,000. Casio, too, is planning on adding a smartwatch to its portfolio this season.
However, the challenge here is the price point. “Wearables that can track health statistics are of primary utility for younger users and the upwardly mobile. Because wearables have a low entry barrier, they can easily replace a wristwatch,” observes Samit Sinha, founder and managing partner, Alchemist Brand Consulting. A branded fitness tracker can cost as little as Rs 1,200.
The only silver lining for watch manufacturers is that consumers will remain brand loyal. “Investing in a branded product as a lifestyle accessory will continue and only reduce in frequency. They may opt for a less expensive product, but will not shift to unbranded products,” says business strategist Lloyd Mathias.