What does a market leader with 60 per cent share do when a flurry of international brands enter the market? Especially when the competition coming in includes big names from the world of fashion, the best brands from the world of watches, and the wristwatch is sold more as a fashion accessory and style statement than as a device to tell time.
Titan, which urges its customers to ‘Be More’ with a style statement on their wrist, believes that with a portfolio that stretches from the Sonata at Rs 275 to the Nebula at Rs 1.2 lakh, it can hold its share even as the market grows. The confidence stems from the years of investment in its brands, a strong distribution network, and an underpenetrated category. But Titan is not blind to the competition it welcomes.
The organised segment, of which Titan claims 60 per cent, is estimated to be Rs 3,000 crore. The unorganised is another Rs 1,000 crore, and even put together, only three in 10 Indians own a wristwatch. And between 100 Indians who own watches, the ownership is 130 watches, against 1,100 in the USA. This presents opportunities, but challenges abound.
Half the watches Titan Industries sells in India are sold in modern retail formats, the other 50 per cent being sold through watch dealers. This percentage is shifting at around 2 per cent each year towards modern retail, in Titan’s experience. The company has a strong presence in modern retail, with formats such as World of Titan outlets (315), Titan flagship stores (15), Fastrack outlets (55), shop-in-shops at Shoppers Stop, Lifestyle and other malls (285).
In a multi-brand environment, customers will have the option of choosing from international watch brands such as Seiko, Citizen and Casio from Japan, not to forget the gargantuan Swiss brigade. They can also opt to pick up the fashion brands’ wristwatches – from Guess to Espirit to CK, the options are endless. At last count, there were 65 brand choices available to customers.
Proof that Titan is alive to the foreign fashion challenge comes in the form of Tommy Hilfiger, Hugo Boss and FCUK, three brands Titan owns the exclusive licence to sell in India. And Titan will look at two more ‘distinctive’ brands it can get licences to sell in India – five will complete the international portfolio, notes Harish Bhat, COO – Watches, Titan Industries Ltd.
Bhat says, “Category penetration is expected to go up to 55 or 60 per cent in the next five years, and more brands investing in the market will certainly help that. Yes, there will be some customers who opt for foreign brands, and we have the licences to sell some of the best. Do remember that Titan sells in 30 Asian countries, and we are in the top three in eight to nine of those.”
On Titan holding its ground, he adds, “The international brands address the top end of the market. In the sub-Rs 500 segment, Titan has less than 20 per cent share, and we see growth coming there. Also, in the last two years, when these foreign brands have been around, our sales have only gone up.”
It’s not just the entry segment, but across segments that Titan claims to have witnessed growth. In fact, it claims to be witnessing maximum growth in the Rs 5,000 to Rs 10,000 segment, where it is present through multiple sub-brands under Titan. That is also a segment that will expand with more international brands coming in.
A Packed Portfolio
Even as Titan looks at adding international brands to bolster its vast collection of watches in India, the company is happy with its portfolio. There are no plans to launch more home-grown brands, after the latest light-powered HTSE range targeting the urban youth priced upwards of Rs 6,500.
The company’s belief is that Titan’s heritage will do the brand more good than bad, even for a generation that is wowed by international watch brands and fashion labels – both original and fake.
“Consumers are proud of the fact that Titan is an Indian brand. We’re very clearly identified as a Tata company, which is very much known as an Indian company. Going forward, I only see this pride in being Indian and owning Indian brands growing,” says Bhat.
“The factors on which the consumer chooses are the design and style of the watch, and second the price. Titan has the finest and widest range of watches in the market today, and in the widest price range. The only segment we’re not present in is the over Rs 2 lakh space,” he adds.
The company is definitely catching them young too – with its Zoop brand for school kids starting at Rs 300 launched two years ago. When they grow up, depending on how edgy they are, they can either turn to Edge or Fastrack.
Housewives present the toughest challenge for watch brands in India, as they do the world over. Titan views that as ‘something we should address’.
Titan’s awareness is definitely high, but what about loyalty? Ajoy Chawla, Vice-President, Titan Watches, notes that there are 15 lakh active customers registered with the World of Titan. “In a store that is five to six years old, we find that 60 per cent of the sales are repeat customers,” he reveals.
Yet another reason for Titan’s confidence is the scale on which it operates. As Bhat points out, its marketing budget is much higher than what any other brand can afford to spend.
Investment in its brands is not something Titan shies away from. A healthy 10 per cent of its top line of Rs 1,266 crore for Titan Industries’ watch division was ploughed back into marketing expenses last financial year, and that is set to continue even as healthy top line growth is targeted. Titan has been around since 1987, Sonata went standalone in 1999, and Fastrack has been built independently since 2005. Fastrack sales of Rs 300 crore and Sonata sales of Rs 400 crore last year show the success of these brands, with Sonata also being backed by brand ambassador M. S. Dhoni.
The idea is to remain the most aspirational within each segment. “Even in the mass segment, Sonata is the most aspirational brand. Two years back, we launched Sonata Super Fibre, and that did over 10 lakh units last financial year,” notes Bhat.
Meanwhile, Aamir Khan is busy endorsing Titan, which delivers the maximum in terms of value sales for the company, of Rs 1,000 crore. Brands within Titan are set to see some ‘premium-isation’, according to Bhat. Titan brands include the new HTSE range and other sporty offerings Aviator and Octane, thinnest watch EDGE, formal watch Orion, Raga for traditional women’s wear, Purple for fashion wear, the classic Automatic and solid Tycoon range, gold watches Nebula, Swiss-made Xylys, and more.
“The way we see it, we have a comprehensive portfolio covering all major consumer segments. There are no plans to add more brands. Brands such as Nebula and Xylys are relatively small today. The idea is to make them really strong — articulate the defined core brand propositions powerfully to the consumer,” reveals Bhat. He underlines that with modern retail, impulse purchase plays a big role in the category, making retail presence and look and feel life-critical alongside the brand messaging.
Post this articulation, Titan sees the brand premium paying off. The highest priced Tycoon sells at Rs 17,000 today – Bhat sees a top-end Tycoon watch selling at Rs 40,000 in three to five years. Similarly for the EDGE collection, which is priced between Rs 7,000 and Rs 15,000 today; the Automatic collection, and so on.
Even as it stretches the premium end, Titan is keen to ensure it continues to address the needs of a large number of Indian consumers who still buy watches at around Rs 2,000. According to the company, half its consumers are aged 27 years or below – another factor for the positive outlook.
Ask the Titan COO if the mobile phone will wipe out the wristwatch among Indian youth, and he points to Hong Kong, where every youth has been carrying a mobile for some time now. “On a metro, we observed that eight out of 10 youth were wearing a watch.”
Titan is doing its bit to keep watches refreshing and relevant, as evident from launches such as HTSE, variants from Sonata and communication for Fastrack. A few more sub-brands from the Titan stable are likely to come into their own. Meanwhile, more big brands from overseas will help keep the category abuzz.
Source – Business Line