Watch out! Time is money
Jennifer L. Zebel
The venerable wrist watch offers a great wearables premium with profit potential
Unless you’re one of those lucky people with a daily schedule that’s not bound by time, then you probably wear a watch every day. If you somehow make it to work one morning without your watch, you spend half the day looking at your bare arm, feeling a little lost and a lot behind. Watches are a necessity in today’s busy world, and just about everyone wears one. That’s why a customized watch is a good way to etch your customers’ logos into the minds of their clients or employees, or to simply reward someone for a job well done.
Watches make cents
Data from the Promotional Products Association International says that watches, jewelry, and clocks make up about 5.5 percent of total sales in the promotional products industry, making it one of the six largest product categories.
Depending on quality and customization, watches generate profit margins comparable to wearables, according to Ken Wittenberg, president of Gardner & Geldmacher, a distributing firm in Itasca, III. “I would say that wearables and watches are pretty even as far as profitability is concerned, but watches are a more consistent item,” he says. “The reason that watches do well is because they’re the type of product that not many distributors work with because you have to understand the mechanics and other details in order to make good sales.”
One of those other details is communicating to the client the high number of impressions a watch will make on the recipient.
Suppose Joe Widget receives a customized watch on his five-year anniversary with the company. He wears the watch every day and he looks at it at least four times a day. He wears it on the weekends and on vacation since the high-quality watch is water-resistant with a Swiss movement. That totals 1,460 times a year that Joe remembers who gave him the watch and where his loyalty lies. That’s a great argument to use when convincing customers to spend the extra money on high-quality watches.
Time for facts
Knowing and understanding the facts about watch construction is a vital part of selling. If buyers do not understand why a Swiss or Japanese analog movement is better than a discounted LCD style, sellers will not see high profit margins.
Vi Smith, owner of S&S Time Corp., a Tulsa, Okla., watch manufacturing company that customizes between 12,000 and 20,000 watches per month, says that low-end watches usually have what is called a “throwaway” movement, which means they can not be repaired when something goes wrong.
“The internal works are what makes the difference in price,” Smith says. “The cost is not necessarily affected by cosmetic differences except for the amount of plating used, or the method of customizing chosen. A quality quartz movement is what you want.”
Quality movement is one of the reasons that S&S’s best-selling watches are in the $25-$30 range (wholesale) with water-resistant qualities and nice features.
Andrew Goranson, general manager of Timecal in Fort Lee, N.J., agrees that quartz movement is the best choice, but, since all of his company’s watches have a Japanese quartz movement and long-life silver-oxide batteries, prices at Timecal vary chiefly according to case designs and band choices.
“Our watch costs (wholesale) start at under $3 for digital watches and go to $30 for our Millennium Collection,” Goranson says.
The new collection, which has done well in its first few months, consists of Japanese quartz movement watches with either leather or the popular steel mesh bands. The new watches are $20 to $30, depending on quantity, and all pricing includes imprinting.
Point of origin also is an important cost factor, according to Andy Peabody, national sales and marketing manager for Swiss Army Brands, Inc., in Shelton, Conn. “A Swiss Army watch, for example, must be made in Switzerland – a prominent and recognized point of origin in the watch world,” he says.
Buyers must be willing to pay for that point of origin and brand name, however. Swiss Army’s most popular watch styles are from the Original Series, which retail at $135, the Officer’s Series, selling at $250 to $350, and the relatively new Summit and Ascent Series, ranging from $65 to $110. Wholesale pricing to promotional products distributors is available, Peabody says.
High perceived value
“Functionality combined with high perceived value and the fact that watches make great accessories makes them a real winner,” Smith at S&S Time says. Her company has been in the business for around eight years, and what started out with four employees has grown to right at 40 employees, including the Smith’s children and their spouses.
One reason why the watch industry and Smith’s business have done so well is due to the high perceived value of watches. Nice watches are a good value alone, and, once embellished, that value is increased, Smith says. She believes that value is high regardless of the watch’s brand name.
“Name brands on watches increase cost, and we can get name-brand watches and customize them, but I ask people, ‘Why would you want to put a brand name at 12 o’clock on a watch dial when your company name could be there?”‘ Smith says.
On the contrary, brand name recognition makes a gigantic difference, according to Wittenberg at Gardner & Geldmacher.
“For us, there’s no comparison,” he says. “People today really want a brand name, I’d say by about 100 to one. H.R. managers and V.P.s want to give something extra nice to their employees, and they want to focus on the well-known manufacturers who are there to support everything about the industry.”
Companies such as Wittenberg’s largest watch supplier, the Special Markets department of Bulova Corp. in Woodside, N.Y., take pride in their ability to offer a full range of services to today’s buyers. They offer repair services, parts and support. According to Wittenberg, an employee who receives a watch for 20 years of loyal service deserves a timepiece that is supported by a helpful, reliable company. “A broken watch that can’t be repaired leaves a bad impression on any employee,” he says.
Swiss Army’s Peabody concurs.
“Brands are important in any product category and watches are no different,” he says. “There are very few consumer brands in the promotional watch business. Without a brand, perceived value and quality are difficult to perceive for the corporate recipient. Swiss Army Brands is recognized by 92 percent of U.S. consumers. That means that we have accountability. We must produce a watch that matches the quality of every product that carries the Swiss Army Brands name or we lose our market.”
Indeed, like most suppliers in the competitive promotional products industry, good customer service and high-quality products are what sets watch manufacturers apart in the industry.
“A promotional watch is only as good as the supplier,” Smith at S&S Time says. “One of the best compliments that anyone can give me is for them to say that I provided exactly what they asked for.”
Time will tell
Customized watches tell their wearers how much the watch-giver, cares for its employees or clients, and there are several ways to get the company message across.
One of the most eye-catching types of customization, especially for employee reward, retirement or gift watches, is the dye-struck, coin-relief, medallion dial. This method is one of the most expensive, but the result is a 3-D image that is sure to draw “Hey, nice watch” comments from countless coworkers. The set-up fee alone for medallion watches is around $200 to $250.
S&S Time is particularly proud of its medallion watches and offers a color-fill process, where enamel ink is applied by hand with a fine needle to the medallion watch face, giving a cloisonne-like appearance. Surprisingly, the color-fill process only adds around a dollar and a dime difference to the price of each watch. According to Smith, the medallion watches used to take several weeks to turn over, but her company has narrowed its production time to around 20 working days.
Watches can be embellished in other places besides on the face. Custom straps can be ordered from several companies, and some customers prefer to engrave the back of a watch, leaving the dial blank.
Swiss Army offers pad printing for dial decoration, case back laser engraving and personalization, and blind debossing on leather bands.
Peabody points out that dial decoration is the most popular for most promotional watches, but when watches reach the upper price range, the case back decoration becomes a more subtle and more appropriate means of decorating.
“Recognition watches are better served by a subtle decoration so the recipient does not feel as though they are also providing a billboard advertisement as well,” he adds.
Screenprinting is a less expensive and more versatile form of customizing, while full-color printing is becoming popular with the use of computers.
Goranson notes that Timecal offers a full-color process called Timecal Imaging Process (TIP), which allows cost-effective, multi-color, continuous-tone images in short runs and without expensive color separation charges.
Jennifer L Zebel is assistant editor of Wearables Business.
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