Watches MARKET in India
2005 Headlines
·
India is one of the world’s
largest markets for watches, with volume sales of more than 52 million units in
2005.
·
Total annual sales in the
Indian market accounted for almost Rs43 billion in 2005.
·
With more than 1.4 billion
inhabitants, India appears to be one of the world’s most promising growth
markets for watches.
·
Indian consumers are
increasingly opting for luxury watches, since total sales of watches by value
rose by 40.5% in 2005 alone, compared with volume growth of 10.8%.
·
Increasing sales of luxury
watches are benefiting from a growing economy and increasing income levels.
·
Women account for two-thirds of
watch purchases in India.
·
Mechanical watches are now
coming back into fashion and have become a “lifestyle accessory”, with value
sales increasing to reach Rs21 billion in 2005.
Sector Trends
·
The main segment in volume
terms is watches priced at less than Rs1,000, but the opening-up of the Indian
market has allowed foreign brands to flood in, and these are rapidly gaining
market share. Among these, luxury brands (those whose watches sell for more than
Rs100,000) can be afforded by some seven million people (or 0.5% of the
population). Gold-plated watches account for 70% of this segment.
·
For the upper-middle segment,
with unit prices between Rs40,000 and Rs50,000, the ever-increasing target
population is currently about 100 million people. Since a total of 20-25
watches of all types are sold per 1,000 inhabitants each year in India
(compared with about 100 watches per 1,000 inhabitants each year in developed
countries), the potential for growth is clearly quite large.
·
In the low and lower-middle
segments, the potential for growth in volume sales is much greater still.
·
Total annual sales by value
reached almost Rs43 billion in 2005. In this context, it is easy to understand
why Omega, for example, which is estimated to sell about 12,000 pieces at an
average price of Rs150,000, is the giant in the luxury sector in India with a
turnover of about €36 million. The potential for growth is there, in a very
promising market in the middle of a major restructuring.
Competitive Landscape
·
By initially protecting its
industry totally and only then opening its markets slowly to foreign
competition, India has been able to build its own watch manufacturing sector.
Indian watchmaking was long dominated by the state-run HMT, which produced
robust mechanical watches with a classic design and designed to last a
lifetime, but HMT missed the opportunities offered by the quartz revolution.
Then came the giant Titan, which now has 7-8,000 sales outlets and controls 50%
of the total watch market. With this strong position in the retail sector and a
manufacturing industry that was ready to face the competition, India was able
to open its marketplace to foreign products.
·
Amongst the Indian players,
Titan is the undisputed leader, but maintaining its 50% volume share of the
middle market requires constant upgrading and innovation. Titan is now flooding
the market with models following international styles and offers watches at
highly competitive prices.
·
Swiss manufacturers have developed
a four-pronged strategy for the Indian market: to remove myths from the Indian
mind that Swiss watches are only for the “super rich”; to introduce watch faces
suitable for the Indian market; to market their products in the same category
as jewellery; and not to touch on anything that decreases the products’ “snob”
value.
·
Omega plans to increase its
exposure in India by opening four new stores in major cities by the end of
2006.
·
The Japanese are feeling under
pressure from the Swiss, as a result of the latters’ plans to market watches as
objets d’art rather than as mere gizmos. The Japanese are ready to counter this
strategy with digital innovations, as they are planning to flood the market
with user-friendly timepieces while also maintaining their cost advantages.
·
Taiwanese and Hong Kong/Chinese
products are available in the grey market, which include sleek, sporty,
electronic gizmos available at very competitive prices.
Sector Outlook
·
There are many entities
competing for position in the sub-continent, which include large groups seeking
to gain ground, independents that have long been established in the country,
local players with a solid presence in the marketplace, and the new entrants
from elsewhere in Asia.
·
Today, a dozen or so sales
points are sufficient for a luxury brand to become established in India.
·
For the brands that aim to
compete by building shares in the volume market, the challenge they face is as
complicated as the geography, the society and the culture of a nation that is
still struggling to overcome the poverty of much of its population, but the
race for the leading positions has begun.
·
Now that the Indian market is
wide open to imports, it will be extremely difficult for domestic players to
maintain sustainable growth. Only price, innovation and continuous enhancement
of brands can protect them from foreign competition.
·
Vibrant colours and futuristic
designs will be a major trend. The greater part of the market will be taken by
the well-known international brands that are emphasising brand name, style,
design and price in a highly price-sensitive environment. The main brand war
will be fought in the segment of watches selling for less than Rs1,000.
·
The top premium brands will see
a rise in sales but the informal sector will grow further. Chinese watches will
flood the market to the benefit of the informal sector’s players and of
smugglers.
2000 2001 2002 2003 2004 2005
Volume ('000
units)
Mechanical 4,803.6 5,092.5 5,375.1 5,793.8 7,152.0 7,972.8
Quartz analogue 10,544.5 11,462.3 12,771.2 13,986.6 16,176.0 17,952.0
Quartz digital 18,120.9 19,322.2 20,683.4 21,998.3 23,904.0 26,400.0
TOTAL 33,469.0 35,877.0 38,829.7 41,778.7 47,232.0 52,324.8
Value (Rs
million)
Mechanical 3,096.6 3,476.0 4,076.5 8,128.9 13,442.4 21,258.0
Quartz analogue 4,198.4 5,867.8 7,990.7 9,016.3 14,141.1 18,047.7
Quartz digital 1,305.6 1,611.9 1,960.8 2,252.3 3,030.0 3,692.6
TOTAL 8,600.6 10,955.7 14,028.0 19,397.5 30,613.5 42,998.3
Source: Euromonitor International from trade
sources
2000 2001 2002 2003 2004 2005
% volume
Mechanical 14.4 14.2 13.8 13.9 15.1 15.2
Quartz analogue 31.5 31.9 32.9 33.5 34.2 34.3
Quartz digital 54.1 53.9 53.3 52.7 50.6 50.5
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0
% value
Mechanical 36.0 31.7 29.1 41.9 43.9 49.4
Quartz analogue 48.8 53.6 57.0 46.5 46.2 42.0
Quartz digital 15.2 14.7 14.0 11.6 9.9 8.6
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from trade
sources
2004-2005
CAGR 1999-2005 Total 1999/2005
% volume growth
Mechanical 11.5 9.9 76.7
Quartz analogue 11.0 11.5 92.5
Quartz digital 10.4 7.8 57.3
TOTAL 10.8 9.3 70.9
% value growth
Mechanical 58.1 42.2 728.2
Quartz analogue 27.6 37.7 580.6
Quartz digital 21.9 23.9 262.6
TOTAL 40.5 38.0 589.4
Source: Euromonitor International from trade
sources
2005 2006 2007 2008 2009 2010
Volume ('000
units)
Mechanical 7,972.8 8,920.6 10,134.6 11,731.8 13,889.7 16,487.8
Quartz analogue 17,952.0 20,143.2 23,772.4 27,125.6 29,972.4 32,975.5
Quartz digital 26,400.0 29,351.5 32,780.9 36,009.2 40,206.9 44,595.5
TOTAL 52,324.8 58,415.3 66,687.9 74,866.6 84,069.0 94,058.7
Value (Rs
million)
Mechanical 21,258.0 30,413.6 40,754.3 52,305.4 71,032.7 87,922.9
Quartz analogue 18,047.7 21,307.1 28,575.1 37,348.3 44,543.2 51,889.0
Quartz digital 3,692.6 4,233.8 5,015.0 5,981.1 7,029.8 7,992.0
TOTAL 42,998.3 55,954.4 74,344.4 95,634.7 122,605.7 147,803.9
Source: Euromonitor International from trade
sources
2005-2010
CAGR 2005/2010
Total
% volume growth
Mechanical 15.6 106.8
Quartz analogue 12.9 83.7
Quartz digital 11.1 68.9
TOTAL 12.4 79.8
% value growth
Mechanical 32.8 313.6
Quartz analogue 23.5 187.5
Quartz digital 16.7 116.4
TOTAL 28.0 243.7
Source: Euromonitor International from trade
sources
