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[NEW YORK] Tiffany & Co, coping with a slowdown in the jewelry market, is looking to sell a lot more wristwatches.
Tiffany-made watches could account for 10 per cent of the company's sales within a decade, according to Nicola Andreatta, head of its timepiece business. That's up from about 1 per cent last year. Reaching that level would probably make Tiffany one of the world's top 10 watch brands, he said.
While engagement rings and other jewelry remain Tiffany's forte, the New York-based company sees timepieces as its most important emerging category. It introduced its flagship CT60watch line last year, with prices starting at US$4,250 and extending up toward US$20,000. The idea is to develop more product lines that Tiffany can sell exclusively through its own stores, helping drive traffic.
"This is just the beginning," Ms Andreatta said in an interview. "In watches, it takes quite a while to develop new things. So we have a lot of things cooking for the next year and for the next few years."
Tiffany is facing more pressure to cultivate new sources of growth. With customer traffic slowing, the company is expected to post declining sales when it releases first-quarter earnings on Wednesday. Currency is one of its biggest challenges: The strong US dollar has been keeping foreign tourists away from domestic stores and hurting the value of Tiffany's sales overseas.
The timepieces, which are made in Switzerland, have the potential to boost profitability because luxury watches are such a high-margin market, Chief Executive Officer Frederic Cumenal said last month. For now, though, Tiffany's watch business isn't on the radar of most investors, according to Edward Jones & Co analyst Brian Yarbrough.
"Until it becomes 5, 6, 7 per cent of the business, most of Wall Street is probably going to ignore it," he said.
Ms Andreatta describes Tiffany's watch business as a "startup," but the company first sold timepieces 169 years ago. A Tiffany watch was given to President Franklin D Roosevelt as a birthday gift in 1945. He later wore it to the Yalta Conference near the end of World War II.
In recent years, the company has relied on high-profile partners to sell watches - with mixed success. A pact to develop timepieces with Swatch Group AG ended in a legal battle, with the two sides feuding over how the business should be run. Tiffany has had a more successful partnership with Swiss watchmaker Patek Philippe. The jewelry chain sells some Patek models and co-branded timepieces at its stores in the US.
Offering its own line of watches gives Tiffany more control. The company plans to roll out more expensive lines - with more features - in coming years.
The CT60 timepieces are focused on male buyers because Tiffany wanted to build credibility in a market where men make up 70 percent of customers. Next year, the company will introduce a new line dedicated to female customers, with some adorned with diamonds, Ms Andreatta said.
It won't be easy. Competition in high-end timepieces is very intense, said Ayako Homma, a luxury-goods analyst at research firm Euromonitor International. And Tiffany is up against luxury brands with strong appeal, she said.
"Tiffany will need to invest significant resources in marketing to increase more brand awareness," she said.