Timex aims for the unexpected
Disrupted by massive competitors, Silvio Leonardi advocates for cautious innovation to find new customers.
It was bad enough when mobile phones put a timepiece in just about everyone’s pocket, but when Apple and Samsung started investing in smart watch tech, watch makers truly fell under siege. Traditional watches, as time keepers, were made nearly obsolete and sales have been falling ever since.
However, brands up and down the value chain are investing in new technologies to make their wrist wear relevant again.
Silvio Leonardi, senior vice president of Timex’s boutique business unit is on the front lines of a legacy industry fighting back.
You oversee the boutique business unit, which sells Timex’s up-market products that are increasingly more about tech than simple wristwatch. Is there tension in trying to sell something in that space when the brand was built with a “Takes a licking and keeps on ticking” every-man vibe?
We’re still maintaining our core DNA. We still want to be the best value-for-money proposition in the watch industry. The price of the boutique collection is a bit higher but still within a clear price range between $80 and $300. We don’t want to go high in price for price’s sake. We need to upscale our product offer, but we have to stay within our DNA.
I assume mobile phones and smartwatches are what’s driving you to upscale.
The younger generation are not buying watches anymore. The watch itself as a time keeper is useless for them. The only way to engage them is as a fashion accessory. Also, distribution is shifting because of the internet. All the rules of engagement are completely different today. We have to be careful here because it’s a brand new market. New competitors, new technology, new consumers as well. Our duty is to identify which path we want to follow in the technology environment. We’ve decided to go to the connected watch, rather than the smart watch.
Tell me about that decision. Why not dive into smart watches?
New technologies mean an R&D investment. R&D investment means a clear idea of what the ROI would be in the next five or 10 years. If the changes were just within our traditional market – the watch industry – we could cope with that. But because the competitive scenario has completely changed, we have to be very careful.
Let me give you a couple of numbers. The Swatch Group is the biggest watch group worldwide. They have declared $8.5 billion revenues in 2016. Apple, in 2014, invested $8 billion [in this space]. The size of our competitors like Apple and Samsung are another ballgame now, and the amount of knowledge they have in this specific environment is so vast that for any watch company, it could be dangerous and challenging.
So we have to make choices. First, we have to work on a solid technology platform. We’ve decided to develop a specific product line that is not a smartwatch, but a connected watch. It’s a fitness tracker that’s Bluetooth-connected to your mobile within a traditional watch. We’ve done this because it’s a solid platform. We don’t risk as many tech problems. Secondly, that’s a design and strategy decision. We still want to offer an amazing watch you can wear any time without looking weird. No phone calls while you’re in a meeting, no fancy display that lights up any time during the day or night. This is the path we’re going to follow.
So how much does your durable, value-for-money branding have to shift in this world?
We’ve invested 30 years talking about that. Now it’s time to move forward. Taking for granted that our product is long lasting, very well priced and very good value for money, now we can offer more.
And yet you’re trying to connect as a fashion accessory, not as consumer tech. How?