Getting good quality retail in India is a challenge: Niladri Mazumder, Seiko India
Did the overall economic slump impact your business in 2019?
We were clocking high double-digit sales growth till 2018. But 2019 has been slow for us at just about 9-10%. Consumer sentiment is mellow. Our product portfolio is priced between Rs 15000 and Rs 50 lakh. The impact of the low sentiment was felt most in the Rs 20,000 to Rs 1 lakh price point. The least impact was noted in the luxury segment which tells a story.
About 80% of our earnings come from watches. Nearly 35% of this share comes from premium and luxury brands. We believe that this figure will increase to 50% next year.
Till 2018, tier 2 and 3 markets were firing. It was like a Pandora’s Box opening opportunities for us. Economic downturn, however, impacted the sentiment of consumers in these tiers and in turn affected our earnings in 2019.
Seiko India is a leader in the clock category. How is the segment faring?
About 20% of our turnover comes from clocks. In fact, one of the predominant reasons for slow sales in 2019 was low sale of our clocks. Real estate and clock market are interlinked. As soon as the economy shows any signs of recovery, the first positive impact will be on the clocks segment. When people buy houses, their propensity to buy new clocks increases. We are also exploring to set up a manufacturing facility in India to make clocks.
Seiko India does not yet have a shopping function on its website. Do you have an ecommerce plan for India?
In China, we sell about 70% of our products online. In India, the problem is that ecommerce has become a discounting platform. It is a great platform and everyone has to be part of it to grow. However, there is no justification in giving deep discounts. It is keeping a lot of brands from going the ecommerce way.
Getting customer acquisition is key for these marketplaces. They don’t bother about losses. Since we play in the luxury and affordable luxury space, deep discounting sets a bad precedence. Currently, ecommerce accounts for just 3-4% of our sales as we sell only the lower end of our portfolio online.
I don’t want to endanger my relationship with offline partners who have done business with us for 15 years. We have, thus, exercised caution on our ecommerce plan. We have stopped supplying to some of these online players for the last five to six months. There is no plan to have a shopping function on our website.
Currently, what are the challenges faced by the watch industry?
Retail in India has not developed at the same pace as the products. Getting good quality retail is a challenge. The country has limited number of malls. There is no high street. Worldwide, we have one or two main streets in every city which are real retail destinations such as Oxford Street in London, Orchard Road in Singapore, Ginza in Tokyo and 5Th Avenue in New York. Other than Mumbai’s Linking Road, we don’t have retail destinations here.
There are more Rolex watches displayed in Tsim Sha Tsui in Hong Kong than entire India. It is not because Rolex does not want to open more stores in India or that Indians do not have the purchasing power. Rolex’s advertising spend is close to Rs 5 million per year. It is purely because retail in India is not as developed. Had quality retail come up quicker, we would open a lot more stores here. The government must create a retail atmosphere in major Indian cities. It will generate revenue for both brands and the government.
Is the company planning to launch smartwatches?
Apple is the only relevant brand in the smartwatches category. All the other watchmakers have piggybacked on their success. We have no plan to launch smartwatches. In fact, this fad has in turn increased our market share. Consumers who hopped onto the Apple’s smartwatch fad got tired of wearing the same watch daily. They started looking for a statement timepiece to match the premium price point of an Apple smartwatch. A huge chunk of shoppers who did not think of my brand earlier are making a purchase now. We have since noted a huge jump in sales of our high-end watches in the price point of Rs 1.25 – Rs 2.45 lakh.
What are some of the watch trends to look out for?
The size of the watch market in India is estimated to be about Rs 15000 crore. The luxury and premium categories are growing the fastest as the base is small. The mass consumer segment is witnessing slow growth. In India, the sweet spot is still Rs 10,000 – Rs 20,000.
The ladies watch segment will get stronger in India over the next few years. Women are becoming financially independent and it reflects in their purchase decisions.
Seiko India has not had a brand ambassador since its entry into the country. Does the company have collaboration plans this year?
We are the official timekeepers for some of the marathons in Delhi, Mumbai and Bengaluru. Roping in a brand ambassador comes with a hefty budget. With India’s taxation structure and heavy import duties, profitability is a challenge for us.
Watch brand Tag Heuer had roped in Shah Rukh Khan, Ranbir Kapoor and Priyanka Chopra as its faces here. The company had to shut down its national office. The easiest thing is to throw money but you need to understand how to use that money. So, one has to be careful in this business and aim for steady growth.
How critical is social media for your brand vision?
Interestingly, India is responding far better than other countries to our social media. We have a million followers on Facebook here. Internationally, the number is just a wee bit more.
Many consumers rely on digital content before making their purchase now. In 2018, about 15-20% of our marketing spend was allocated for digital advertising. We increased it to 40% last year. While we still need to resort to traditional advertising such as billboards for some cities, we have increased our budget for digital advertising by 5-10% in 2020.
Does Seiko have expansion plans in 2020?
We are planning to add eight exclusive stores in 2020 in metros and non-metros such as Coimbatore, Chandigarh and Trivandrum.