I. Executive Summary

Scope and Methodology
• Scope of Report
• Methodology for This Study

The Market
• Watch Sales Stagnate at $6.0 Billion in 1999
• Recent Declines Are Largely Cyclical Adjustments
• Mass Market Slips below $2.0 Billion
• Mark Middle Market in Slight Progress to $2.3 Billion
• Upper-Middle Market Slips to $0.8 Billion
• Luxury Performs Best, Approaching $1.2 Billion
• Table 1-1: U.S. Retail Dollar Sales of Watches, by Price Category, 1996-2004 (dollars): Mass, Middle, Upper Middle, Luxury
• Modern Lives Run on Tight Schedules
• Watches Have Become Essential Fashion Accessories
• Many Boomers Made More Affluent by Empty Nest Syndrome
• The Healthy U.S. Economy
• June-December May Account for Two-Thirds of Sales South Has Most Watch Purchasers
• But Northeasterners Have Greatest Tendency to Purchase
• Table 1-2: Watch Purchasing by Region, 1998 (number and percent)

The Marketers
• Watch Marketers Spent $146 Million to Advertise in 1998
• Timex Led Six Marketers Budgeting Over $10 Million Each
• Pictures Are Enough
• More Sophisticated Ad Strategies on the Rise
• Discount Promos Rarely Used

Distribution and Retail
• Marketers and Distributors Often Indistinguishable
• Vertical Integration on Increase, Via Retail Plane
• Margins Generally Range From 25% to 50%
• An Assortment of Tens of Thousands of Watches

The Consumer
• At Least 46 Million Buy Watches
• More Adults Buy for Themselves Than for Others
• Table 1-3: Number and Share of U.S. Adult Population Purchasing Watches in Last 12 Months, 1998 (number and percent): Self/Someone Else, Self, Someone Else
• Purchase of Watches Generally Keys to Affluence, Age, and Ethnic
• Minorities
• Buying for Oneself: A Less Coherent Profile
• Shoppers for Someone Else Skew Affluent—and Older

II. The Products

The Products
• Market Definition
• A Brief Glossary
• Alarm
• Analog
• Anodized Aluminum
• Attachment
• Band
• Bezel
• Case
• Chronograph
• Crown
• Crystal
• Digital
• Elapsed Time Ring
• Impact- or Shock-Resistant
• Pusher
• Quartz Movement
• Water Resistant

Historical Overview
• From Clocks to Watches
• In Eighteenth Century, Jewels for Accuracy Quartz Power Dates to 1960s
• Electronic Watches Introduced in 1950s
• Quartz Power Dates to 1960s
• High-Tech Features for the New Millennium
• Foreign Watch Sources in Recent Decades

Description of Watch Types
• Classed by Type of Power: Mechanical versus Quartz Electronic
• Mechanical
• Quartz Electronic
• Two Types of Watch Face: Analog and Digital
• Multifunctional Watches
• Watches Classed by Application
• Watches Also Classed by Style and Price
• The Terms "Chronograph" and "Chronometer"
• Cases
• Bands and Bracelets
• Jeweled Movements

Watch Product Categories
• Four Categories: Mass, Middle, Upper Middle, Luxury
• Mass-Market Watches (Less Than $50)
• Middle-Market Watches ($50-$299)
• Upper Middle-Market Watches ($300-$999)
• Luxury ($1,000-Plus)

III. The Market

Market Size and Growth
• Methodology
• Watch Sales Stagnate at $6.0 Billion in 1999
• Table 3-1: U.S. Retail Dollar Sales of Watches, by Price Category, 1995-1999 (dollars): Mass, Middle, Upper Middle, Luxury
• Recent Declines Are Largely Cyclical Adjustments
• Figure 3-1: U.S. Retail Dollar Sales of Watches, 1995-1999 (dollars)
• Mass Market Slips below $2.0 Billion Mark
• Middle Market in Slight Progress to $2.3 Billion
• Upper Middle Market Slips to $0.8 Billion
• Luxury Performs Best, Approaching $1.0 Billion Manufacturers' Sales Estimated at $3.0-$3.5 Billion
• Per Unit Sales Also Decline to About 158 Million in 1999
• Mass-Market Volume at 122.3 Million Units—Close to 1996 Level
• Middle-Market Shows Some Improvement, to 33.1 Million Units
• Upper Middle-Market Slips below 2.0 Million Units
• Luxury Units Barely Increase
• Table 3-2: U.S. Retail Unit Volume of Watches, by Price Category (dollars): Mass, Middle, Upper Middle, Luxury
• Average Price in Slight Gain to $38.16
• Table 3-3: U.S. Average Retail Price of Watches, by Price Category, 1995-1999 (dollars): Mass, Middle, Upper Middle, Luxury

Imports and Exports
• Methodology
• Imports and Exports Can Fluctuate Wildly
• Watch Import Values Estimated at $2.3 Billion
• Table 3-4: U.S. Imports of Watches, by Value and Units, 1995-1999 (dollars and units)
• Watch Export Values Plummet in 1999 to $80.0 Million
• Table 3-5: U.S. Exports of Watches, by Value and Units, 1995-1999 (dollars and units)
• U.S. Watch Production within the Global Context

Factors in Future Growth
• Modern Lives Run on Tight Schedules
• Watches Have Become Essential Fashion Accessories Technological and Gadget Appeal
• Many Boomers Made More Affluent by Empty Nest Syndrome
• Seniors, As a Group, Have More Financial Stability Than Assumed
• X-ers and Y-ers Targeted with Youthful and High-Tech Designs
• Table 3-6: Projection of U.S. Population by Age, 1999-2009 (number): 6 age brackets
• The Healthy U.S. Economy
• Luxury Watches Now More Affordable
• A Greater Retail Presence
• Women, Minority-Members, Younger Executives Hired by Watch Companies
• We Lose Them, or They Break
• Therapeutic Uses
• The Prospect of Internet Time

Projected Sales
• Overall Watch Market to Brush $7.0 Billion in 2004
• Mass Market to Regain Steam and Approach $2.3 Billion
• Middle Market to Roll on to $2.6 Billion
• Upper Middle Market Will Grow to $871 Million
• Luxury Watches to Approach $1.2 Billion
• Table 3-7: Projected U.S. Retail Dollar Sales of Watches, by Price Category, 1999-2004 (dollars): Mass, Middle, Upper Middle, Luxury

Market Composition: By Product
• The Middle-Market Watch Is Sales Leader
• Imports Account for Lion's Share of Sales
• Figure 3-2: Share of U.S. Retail Dollar Sales of Watches, by Price Category, 1996 vs. 1999 (percent): Mass market, Middle market, Upper-middle market, Luxury market

Market Composition: Seasonality
• Watch Market Has Two Busy Seasons
• June-December May Account for Two-Thirds of Sales

Market Composition: Regionality
• Special Note on Regionality Data
• South Has Most Watch Purchasers
• But Northeasterners Have Greatest Tendency to Purchase
• Table 3-8: Watch Purchasers, by Region, 1998 (number and percent):

IV. The Marketers

The Marketers
• Sometimes Hard to Identify a Watch's Marketer
• Roughly 300 Watch Marketers
• Most Are Specialists
• Lots of Private Companies
• Heavy Foreign Participation
• Lots of Vertical Integration
• Frequent Involvement in Premiums Business
• Chart of Marketers, Their Brands, and Categories of Involvement
• Table 4-1: Selected U.S. Marketers of Watches and Their Brands

Marketer Rankings
• Special Note on Share Rankings
• Timex Leads in Both Overall Market, and in Mass Market Category
• Seiko Dominates Middle Market, Followed by Fossil and Citizen
• Movado/Loews/Citizen Command Upper Middle Market
• Rolex Leads the Luxe Category
• Swatch Must Be Acknowledged

The Competitive Situation
• A Crowded Field Increases Importance of Marketing and Merchandising
• Yet Opportunities for Smaller Marketers Still Exist
• A Retail-Driven Marketplace
• Marketers License More of Their Brands
• International Marketers Now Depend on United States for Success

Competitive Profile: Citizen Watch Co., Ltd
• Citizen Revenues at $2.9 Billion
• Citizen Brand Positioned on Innovation, Technology, Plus Sports Uses
• Eco-Drive Positioned on Light Power
• Citizen's Other Watch Brands

Competitive Profile: Fossil, Inc.
• Sales Rush to $304.7 Million in 1998
• Fossil Banks on Upscale Fashion at Value Prices
• Extending into Other Price Tiers with Relic and FSL
• Repositioning from Retro to Mainstream
• Lots of Licensed Characters, Private Labeling, and Premiums
• Fossil Believes in Vertical Integration

Competitive Profile: Heuer Time & Electronics Co
• Sales Topping $325 Million
• A Small Company Dreams Big
• A Model Advertiser for the Turn of the Century
• Heuer Adds a Lower Price Tier
• Heuer Takes Charge of Distribution

Competitive Profile: Loews Corporation (Bulova)
• Loews a $21 Billion Company
• Bulova a Small Contributor to Loews Revenues
• The Bulova Tradition: It Both Helps and Hinders
• Refreshing Bulova's Stance with New Lines and Heavier Advertising
• Measures to Improve Operating Efficiencies

Competitive Profile: Movado Group, Inc
• Movado Net Sales Jump to $278 Million
• A Stable of Six Middle-Market or Luxury Brands
• Movado the Retailer
• The Piaget Sell-Off
• Movado Allies with Tommy Hilfiger

Competitive Focus: The Swatch Group, Ltd
• Sales of CHF 3.3 Billion in 1998
• Watches Dominate
• Swatch a Flashy Aggressor in Mass and Middle Markets, With Namesake Brand
• Emphasizing Metal Swatches
• Swatch's Stable of Other Mass- and Middle-Market Brands
• Swatch a Powerhouse in the Luxury Market, With Four Marquees
• Swatch Expands as a Retailer
• Swatches for the Future

Competitive Focus: Timex Corporation
• Timex an $850 Million Company
• Timex: Value, Tradition, Style—and High Technology
• Timex Also Reaches Out to Techno-Challenged
• Timex Adds Museum Outlets

Market Trends
• More Sophisticated Ads, Promos, and P.R.
• Marketers Attack Sharply Defined Niches
• Sports Niche Is Not Just for Athletes
• Mining the Luxury Niche
• More Licensing
• More Involvement of Women, Youth, Ethnic/Racial Minorities at Strategy Level

Product Trends
• Watch Styles Proliferate
• High-Tech Design and Function
• Sports SKUs
• Watches for Generations X and Y
• More Luxury Watches
• Thin and Ultra-Thin Are In
• Lighter Materials
• Rectangles Are Not Square
• Steel
• Table 4-2: Selected New Product Introductions, 1997-1999

Consumer Advertising Expenditures
• Watch Marketers Spent $146 Million to Advertise in 1998
• Timex Led Six Marketers Budgeting Over $10 Million Each
• Heuer Biggest Spender of Three in $5 Million-$10 Million Range
• Breitling Was Top Spender in $1 Million-$5 Million Range
• Four Marketers Spent in $500,000-$1 Million Range

Consumer Advertising Positioning
• Pictures Are Enough
• More Sophisticated Ad Strategies on the Rise
• Tradition
• Celebrity Endorsements
• High-Tech and Sports Functions Are Shown, Not Discussed Much
• Humor
• Family + Tradition = A Family Tradition
• A Sense of Freedom or Adventure
• Museum Quality and High Performance
• Suitability for Space Travel
• A Reversible Display Face
• A Collectible Watch
• Retailer Participation
• Ads at Sporting Events

Consumer Promotions
• Discount Promos Rarely Used
• Free Merchandise with Purchase

Public Relations
• P.R. a Cost-Effective Marketing Tool
• Celebrity Appearances
• Product Placements
• Marketers Sponsor In-Store Watch Fairs
• To Launch Internet Time, Swatch Ties-In with Mir

Trade Advertising and Promotions
• Trade Ads Help Watch Brands to Stand Out
• Trade Ads Sampled in Appendix I
• Trade Promotions
• Major Watch Shows

V. Distribution And Retail

Distribution
• Marketers and Distributors Often Indistinguishable
• Vertical Integration on Increase, Via Retail Plane
• Some Marketers Increase Manufacturing and Distribution Capacities
• Seiko Modernizes Distribution Facilities

At the Retail Level
• A More Diverse Range of Outlets
• Margins Generally Range from 25% to 50%
• An Assortment of Tens of Thousands of Watches
• Numbers of Brands Carried
• Department Stores Have Converted to Boutique System
• Discounters Step Up Emphasis on Watches
• Obtaining Upscale Suppliers Is Difficult for Some Jewelers
• A Watchmaker Shortage
• Stores Are Sites of Most Promotions
• Marketers Provide P.O.P. Materials
• Enduring Long Waits for Orders
• Retail Focuses

Retail Focus: The Watch Man, Inc.
• At One Location, $4 Million in Mass-Market Watch Turnover
• Positioned Like Mass-Market Jewelry
• Lindstrom an Avid Promoter

Retail Focus: Sunglass Hut
• Sunglass Hut's New Prototype Adds Watches
• A Take-Charge Merchandiser
• Watson's Strategies Turn Sunglass Hut Around

Retail Focus: Tourneau
• The Time Machine
• Positioning Against Other Luxury Goods A Tourneau Tie-In with American Express
• Targeting Youth with Tourneau Watch Gear Chain
• A Charity Auction

VI. The Consumer

The Watch Consumer
• Note on Simmons Market Research Bureau Data
• More Than 46 Million Buy Watches
• More Adults Buy for Themselves Than for Others
• Table 6-1: Number and Share of U.S. Adult Population Purchasing Watches in Last 12 Months, 1998 (number and percent): Self/Someone Else, Self, Someone Else
• Gender Not a Factor in General Watch Purchasing
• Mass-Market Watches Are Most Purchased
• Middle-Market Watches Are Second Favored
• Upper Mid-Market and Luxury Watches Have Tiny Audiences
• Table 6-2: U.S. Watch Purchasing by Price Category, 1998 (number and percent): For Oneself, For Someone Else, For Oneself or Someone Else
• Purchase of Watches Generally Keys to Affluence, Children, Ethnic Minorities
• Buying for Oneself: A Less Coherent Profile
• Shoppers for Someone Else Skew Affluent—and Older
• Table 6-3: Demographic Characteristics Favoring Purchase of Watches, 1998
• Predictable Patterns in Purchase of Watches for Oneself by Amount Spent
• Table 6-4a: Demographic Characteristics Favoring Purchase of Watches for Oneself, by Amount Spent: Under $20 and $20-$49, 1998
• Table 6-4b: Demographic Characteristics Favoring Purchase of Watches for Oneself, by Amount Spent: $50-$74, $75-$99, $100-$199, $200-$299, 1998
• Table 6-4c: Demographic Characteristics Favoring Purchase of Watches for Oneself, by Amount Spent: $300-$499 and $500 or More, 1998
• Similar Predictability in Purchase of Watches as Gifts
• Table 6-5a: Demographic Characteristics Favoring Purchase of Watches for Someone Else, by Amount Spent: Under $20 and $20-$49, 1998
• Table 6-5b: Demographic Characteristics Favoring Purchase of Watches for Someone Else, by Amount Spent: $50-$74, $75-$99, $100-$199, $200-$299; 1998
• Table 6-5c: Demographic Characteristics Favoring Purchase of Watches for Someone Else, by Amount Spent: $300-$499 and $500 or More, 1998

The Consumer: Purchasing by Brand
• Timex, Casio, Seiko, Fossil Are Most Widely Purchased
• A High Degree of Sole Brand Purchasing
• Table 6-6: U.S. Purchasing of Watches by Brand, 1998
• Overview: Demographic Patterns in Brand Purchase
• Armitron Purchase Encouraged by Male Gender, Medium Income Level
• Bulova Purchase Favored by Male Gender, Broad Socioeconomic Range
• Table 6-7: Demographic Characteristics Favoring Purchase of Armitron and Bulova Watch Brands, 1998
• Casio Purchase Marked by Male Gender, Low and High Socioeconomic Brackets
• Citizen Purchasers Present as Middle-Aged, with Broad Income Range
• Fossil Has Broad Appeal
• Table 6-8: Demographic Characteristics Favoring Purchase of Casio, Citizen, and Fossil Watch Brands, 1998
• The Guess Purchaser Is Less Clearly Defined
• Lorus Purchase Most Favored by Women, Low to Moderate Incomes
• Pulsar Skews Male and Middle to Upper-Middle Income
• Table 6-9: Demographic Characteristics Favoring Purchase of Guess, Lorus, and Pulsar Watch Brands, 1998
• Rolex Purchase Encouraged by Upscale Males
• Somewhat Upscale Males Are Likely Seiko Purchasers
• Swatch Purchasers Notably Female, and—Surprise—Not All Youthful
• Table 6-10: Demographic Characteristics Favoring Purchase of Rolex, Seiko, and Swatch Watch Brands, 1998
• TAG Heuer Purchase Skews Male and Affluent
• Timex: A Broad, Yet Less Affluent Profile for America's Most Popular Watch
• Table 6-11: Demographic Characteristics Favoring Purchase of TAG Heuer and Timex Watch Brands, 1998

Appendix I: Examples Of Consumer And Trade
Advertising And Promotions

Appendix II: Addresses Of Selected Marketers