New Ideas Have Swatch Ticking Again

We went from being a dying brand six months ago to having a huge success with the chronograph watch,” said Chris Keigel, vice president of sales for Swatch Watch USA, here.

Indeed, Swatch, fueled by the chronograph, probably has had one of the most dramatic turnarounds in U.S. brand merchandising annals.

Since its introduction in mid-June, the chronograph, retailing for $80, has sold out in department stores across the country. Swatch has kept the distribution limited, but that’s the way Swatch likes it, and apparently that has only helped to whip up the excitement. The chronograph is currently sold in only 300 of Swatch’s total 3,000 U.S. doors.

“That figure will eventually double, but we will always keep it somewhat limited,” said Keigel.

“We’ve had 100 percent sell-through on the chrono, and my only concern is that we’re not going to have enough for the holiday season,” said Helen Welsh, vice president and divisional merchandise manager of women’s accessories and handbags at Saks Fifth Avenue.

“When we launched the Swatch chrono this summer, the response was absolutely incredible,” said Joanne Hart, fashion director of accessories at Macy’s Northeast.

Hart said the chrono has been a huge success because “it has the same mechanisms found in high-price watches, plus the whole active and sport watch area has been a phenomenal category.”

Swatch’s parent firm, SMH, Inc., based in Biel, Switzerland, declined to cite any figures, but industry sources estimate Swatch currently has worldwide sales of $300 million to $400 million.

Swatch Watch USA’s 1991 volume is estimated at more than $50 million. Keigel said sales are 50 percent ahead of 1990.

Worldwide, our business has been growing at a phenomenal pace, with a growth rate of 20 percent, but we’ve had some problems in the U.S.,” said Ernst Thomke, acting president and chief executive officer of Swatch Watch USA and a creator of Swatch. He divides his time between Biel and New York.

Keigel said sales in the U.S. declined 10 percent annually between 1987 and 1990.

When Swatch was first introduced in the U.S. in 1983, the $25 plastic watch took the market by storm. It changed watches from functional, basic timepieces to fashion accessories.

Watch executives cite several reasons for the downfall of Swatch. One reason is that the market was flooded with plastic fashion watches. After a couple of years, the consumer grew tired of the look.

Thomke said the failure of the short-lived apparel line, which was introduced only for the U.S. in 1986 and discontinued in 1987, was another reason Swatch watch sales dropped.

He said the apparel failed because the firm tried to expand too quickly and ran into problems with production and quality.

Swatch opened in-store shops in department stores across the country to house the apparel and watches, along with Swatch novelty products.

“When we phased out apparel, we lost an enormous amount of real estate in the department stores, and our visibility dropped dramatically,” said Thomke.

The high turnover in management also may have been a factor in the brand’s decline. Thomke is the seventh president in five years at Swatch Watch USA.

“People in the U.S. didn’t believe in Swatch anymore, both internally and externally, and we needed to rebuild confidence,” said Thomke.

This week’s launch of Swatch’s newest watch was another indication of the brand’s popularity today.

Swatch said hundreds of people lined up outside stores in New York, Los Angeles and Minneapolis to purchase the new Swatchetable, the firm’s newest art series, designed by France-based artist Alfred Hofkunst.

The Swatchetable was launched at the Dean & Deluca, an upscale food store here, on Tuesday. Hundreds of people were waiting outside for the store to open while the press had a preview and breakfast inside the store.

The three oversize watches are made to look like a red chili pepper, a cucumber and an egg on a strip of bacon. Only 9,999 units were made of each design. They retail for $100 each.

In eight U.S. cities, the watches are being sold exclusively at fruit and vegetable markets. A total of 5,250 of the watches were sold to retailers. The other watches went on sale in Europe in the spring.

The collectible Swatch watch craze, which started in Europe in 1989, also helped bring Swatch into the spotlight again.

Limited-edition Swatch watches, created over the past eight years, are commanding high prices this year in the U.S. as well. One of the hottest collectibles here is an art series of four watches designed in 1986 by artist Keith Haring. The Haring Swatches originally sold for $50 and are now commanding prices in excess of $2,000, according in Edward Faber, president of The Aaron Faber Gallery, here, which has been selling a wide range of old and new Swatch watches since June.

What’s the next hot style on the horizon for Swatch? A watch featuring a built-in electronic pager will be introduced next spring, and others are on the drawing board.

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