Timex plans to bring more luxury brands to India

Timex plans to bring more luxury brands to India


After a complete recast of its retail structure and brand positioning, watch maker Timex Group India has been seeing steady growth in profitability. The once ailing company is now expecting its revenues to grow at 25% year-on-year, ahead of the industry rate of 12%. VD Wadhwa, managing director, Timex Group, talks to FE's Shreya Roy about how the restructuring  Granite countertops has worked, future expansion and the company's plans to bring in watches from iconic luxury brands like Versace and Valentino to India.

In the past few years, Timex India has been going through a major overhaul in its retail structure and brand positioning. How has this worked for you?

When we started in the country, we were largely in the below Rs 1,000 category. Here, you can do volumes there but there is no margin. This is where we have done a complete repositioning. With the Timex brand, we have moved largely into the Rs 1,000 to Rs 11,000 market. This has not caused much revenue growth, but we have become highly profitable. We also restructured our retailing strategy, and from 6,000 to 7,000 points of sales we cut back to 3,200. We pulled out of non-profitable geographies; we pulled out products that were not giving us the desired margins. Now, each of our products give us a significant amount of gross margin.

Is this process of restructuring complete? What is the company looking at currently?

It is an on-going process. One of the things we have been focusing on is to keep improving average retail price by at least 10-15%. We continuously revamp our product portfolio. Each time we add something new, we do a lot of product advancement and there is then an opportunity  women handbags to charge a better price. Consumers are willing to pay the price if you can give him a better product.

What is your current market share? What are you targeting?

The segment in which we majorly operate the Rs 1000 to Rs 11,000 category, is roughly 60% of the Rs 4000 crore watch market. Here, we have close to 21% share. More than market share, we are chasing our own growth. In the last few years, the market has grown at close to 12% and our growth has also been in the low double digits or high single digits. With the expansion of our portfolio and retail presence, we are aiming at a 25% year-on-year growth in revenue over the next three to five years. For the first half of this year, we have achieved 27% growth.

What is your plan for retail expansion?

Our exclusive retail format is called The Time Factory, where we sell portfolio brands from Timex including our international labels like Marc Ecko and Nautica. In the last six months, we have added 12 of these stores, and our current count is 74. In the next 36 months, we will be Led lamp looking at doubling this number. Around 35 to 40 of these would come up in the next 12 months. Currently we are located in 33 cities, and we plan to add another 16-17 cities in the next three years period. Majority of these will be tier II and tier III markets.

Other than retail expansion, what are you doing to achieve your growth target of 25%?

We are doubling our media and marketing efforts. We have decided to put a lot of money back into marketing, to make growth sustainable. Normally, we spend 11% of our turnover in the budget. Next year, we are planning to double this. Jan to December 2011, we will be looking at spending $4 to $5 million on marketing.

You have recently launched Salvatore Ferragamo, one of the luxury brands that Timex has in its portfolio internationally. How has this move helped you and what are your plans for the luxury segment?

The initial response over the past six months since the launch has been very encouraging. The luxury watch segment, that is watches above Rs 50,000 is the fastest growing category in India today . It is estimated at about Rs 600 crore, growing at 25%. This trend is going to continue. We are now in the process of rolling out a Versace collection in the next two to three months. We will look at bringing in our other luxury brands like Valentino as well. Currently this segment contributes to less than 1% but we expect it to make up 5-6% of revenues in another two years.