Business - Tag Heuer in India;Q&A President LVMH Watch & Jewellery

Anjana Chandramouly


India is high priority for luxury watch brand Tag Heuer, which believes that it pays to have a strong brand foundation and a solid group of followers. The key is to build brands for the long term, and “we take no short cuts but go step by step. Sometimes, we may not grow as fast as others, but what’s important is that we build a very strong foundation,” says Philippe Pascal, President, LVMH Watch & Jewellery.

Though present in India since 2001, the last two years have been rewarding in terms of establishing a very strong foundation for the brand, he says, adding that the great thing about India is that the demanding consumers are responding very well to the brand. “We are optimistic, so we will keep supporting this market,” he says in an exclusive interview with Business Line. Excerpts:

What does a luxury watch brand like yours expect from the Indian market, considering that watches are still not an indulgence in India?

We entered the market in 2001, and we have seen some interesting progress in the market ever since. Indian consumers have a taste for fine watches — for Swiss-made luxury watches — and chronographs. It’s a niche market, but we think that the Indian market is opening itself to more high-end brands.

This requires a three-pronged approach: A good distribution network coupled with partnerships with the best retailers; training on the selling part; and marketing support to raise brand awareness. It’s very rewarding to see what has been accomplished in the last six to seven years. Again we, within LVMH, always take a long-term approach to developing a market and marketing a particular brand.

What is the size of this high-end market? What is your current market share, and what is the desired one in, say, two or three years?

It’s very difficult to have a precise definition of market size and share in a niche market like this. What’s important for us is to make sure we get brand recognition by affluent Indians, and a better distribution and sales network for each account we open. Rather than reasoning in terms of market share, we would reason in terms of the solid growth we have year after year. We are keeping a very selective distribution. We are not opening too many doors; in fact, we are even closing doors as the market evolves. The market is getting more sophisticated.

Frankly speaking, although we are probably the No 2 brand in the market, we want to build the market and our brand rock solid. Building a brand is like building a house. You need the appropriate foundation; you need to have a vision, and take proper steps to build the foundation.

We have established solid foundations, and now the brand is seen emerging in the landscape. We need to stick to our foundation and remain very selective. The danger would be to open too many doors and then the brand becomes mass market. So, we are remaining selective and our growth will be selective.

Who are your competitors — other global watch brands or premium brands from Titan?

I don’t think we are competing with Indian brands. We are opening a new segment of imported luxury brands, which is complementary to the local industry. I don’t see the luxury Swiss watch industry hitting premium Indian watches.

I think the Swiss watch industry will contribute to building the awareness of fine watches. But I see it as two building blocks helping each other rather than fighting with each other. Now, there is definitely competition within the Swiss watch industry. Obviously, you know which the leading imported brands are.

More importantly, as the market opens, I think it’s about building a new category where there is a lot of room for several players. Our priority is to establish brand awareness. And in the imported segment, although there is competition, I think the more fine brands do a fine job, the better it is for the market ... because it is still minuscule compared to other categories.

Building our own block and emerging as a rock-solid brand is our task. And the Indian market is potentially very interesting in the long term. In the short-term, it means efforts. We are investing heavily and working hard. We have to be strongly disciplined in the execution of our strategy rather than going full speed in all directions.

Who is your target audience in India ... young shoppers or the middle-aged, or well-travelled shoppers?

Our target is people with higher incomes ... which means they are rather middle-aged than too young. Tag Heuer is more about the attitude of people who have a very active life, quite successful in their careers and who are obviously exposed to international brands.

We have some involvement with a number of sports such as Formula One racing, Golf and Indian Premier League (IPL). We also talk to that network of people which is still aspirational in terms of lifestyle.

How are other Asian markets such as Singapore and Bangkok doing? How do you compare India with them? Do you see India emerging as a travel retail destination like these markets?

Markets such as Singapore or Bangkok are more mature, with more travel retail prospective. India has to work on retail infrastructure, which is an important milestone to achieve. I have no doubt that India will become an exciting travel destination. As a European, I can only say that it has a lot of attraction, and probably what has been missing on the retail front is more of the infrastructure than anything else. Projects such as UB City in Bangalore are very encouraging in terms of what India can do to a premium retail market.

Which are the products that you are introducing in Bangalore, and what is the price range?

We are essentially offering products from Rs 30,000 to Rs 3 lakh. What we are showcasing in our launch in Bangalore is a series called Grand Carrera, a high-end brand. This product line starts from Rs 1.4 lakh and goes up to Rs 2.5 lakh. We have introduced this line in Delhi already.

How many stores do you have in India?

We have 10 stand-alone Tag Heuer boutiques in India and a presence in 64 multi-brand outlets.

Can you spell out your expansion plans for India?

Our plan is more about qualitative development than quantitative. We want to improve the productivity. For the past couple of years, we have had a very strong growth per door.

In the luxury business, it’s very important that your point of sales develops itself in order to ramp up and reach some interesting level. The mistake that is often made is that as you are looking for growth, you open too many doors, then your brand somehow gets jeopardised by low performance; and starts to sleep in some places, and it’s not good.

Our plan is to build excitement for the brand and double the size of the brand in India in three years. We have had a very strong double-digit growth every year, without expanding the distribution. We are still averaging a 50 per cent growth year on year, despite being present in key selective stores all over India.

What are your investment plans for India?

A key part of our investment is to focus on advertising, our models ... we have probably the greatest brand ambassador we could dream of in India — Shah Rukh Khan. This is an important part of our marketing set-up in advertising, which we see the country responding to better and better.

We are associated with Kimi Raikkonen and Tiger Woods, and in India, we have also started an interesting partnership with the IPL — Kolkata Knight Riders team.

In marketing, we combine internationally successful strategies, which have often been part of the company’s heritage, as well as interesting regional programmes such as Kolkata Knight Riders, a result of our association with Shah Rukh Khan.

What is your ad spend?

We are becoming more of a national brand, and it’s a big country. So we are diverting more resources towards advertising ... which is possibly more than 50 per cent of our marketing spend. The store in Bangalore is part of our ongoing investment.