Based in Lebanon as the Managing Director of watch distributor Ets. Hagop Atamian, Mher Atamian sat down with Executive to share his insight on the luxury watch sector in the Middle East.
E How would you define “luxury”?
For me, luxury is something you can afford to spoil yourself with. It’s something you buy, and want to enjoy and use for pleasure. It’s not something you need to have. The word ‘spoil’ defines it well, because you want to give yourself satisfaction by buying something if you can afford it.
E In your opinion, which are the top 5 selling luxury brands in the Middle East?
There are a lot of brands in the Middle East. If you want to talk about luxury, let’s say it starts at about $5,000. Now you have to divide that into two groups, ladies’ and men’s, because the brands that are strong for men are not necessarily the ladies’ brands. I would say the top brands in the Middle East that I deal with are Breguet, IWC, and Jaeger-LeCoultre. Other brands that are also leading luxury brands are Patek Philippe, Rolex and Audemars Piguet. They are predominantly men’s watches and people like these brands as they have strong brand awareness. Ladies go for brands like Cartier, Chopard, Bvlgari — more fashionable but luxurious at the same time.
E Let’s talk about the most luxurious timepiece you are selling at present. How much is it and how many have you sold?
Price-wise it’s Breguet. Breguet and Patek Phillipe today are the highest you can go. These are the two brands which are globally known to be the highest ranked among the luxury brands. They are the brands that have been in existence for a really long time. Breguet is a brand where, if you look at the history, you’ll see that Napoleon Bonaparte had one, all the Russian tsars had one, so we’ll go with Breguet. The highest-priced watch that I have sold so far was a tourbillon at around $180,000. We actually sell five to six tourbillon watches per year. Our market, surprisingly, is a watch market. I usually don’t carry such watches in my showroom because the deliveries take five to six months, and sometimes even more, and in general they are presold to clients who order them and have patience enough to wait until we get it.
Breguet is the most sold in terms of value but at the same time I don’t sell as many pieces as IWC, Jaeger-LeCoultre, and Blancpain. IWC and Jaeger-LeCoultre have a nice core price range of $5,000-15,000, which are more affordable. I have sold mostly from these two because of their price point. These watches are considered to be really luxurious watches, but also quite affordable.
E When a new luxurious timepiece is released, what kind of customers are they designed for?
Definitely not strictly high class. Around 80% of my clients are Lebanese, living here. Some of them have a very high income and are rich, but on the other hand we have the upper-middle class who earn a good salary and want to enjoy life and have a nice watch. And these people are good clients; they are coming back every year to buy a piece. It doesn’t have to be the most expensive or at the $30,000-40,000 price-point, but it will still be between $7,000 and $10,000. These customers really know how to live and to dress; they are very aware of all the new models coming out. Some customers call and ask questions before the watch is even launched. It’s amazing how much they know and how much they follow up; they read and follow the details and the mechanisms. It’s amazing.
E Do you have payment plans for those purchasing luxury items or are customers expected to pay in one shot?
We have recently liaised with Bank of Beirut, and came up with a payment plan for purchases between $1,000-10,000 where you could pay through the bank in a number of increments. There is only a very, very small interest rate. We are absorbing part of that percentage, so it’s working. There are a lot of people who would want to upgrade their watch and don’t have the cash, but they have the income so the bank checks on their credit.
E What are the latest trends in luxury watches in the MENA region? Recently, people have been sporting large, luxurious timepieces. What will be ‘in’ next year?
Sports watches are definitely in; even the classic brands are coming up with sports watches in their lines. For men it can be a thin, sleek watch, because some very strong, luxurious brands don’t necessarily do sports or large watches. Then again, with brands like IWC and Jaeger, the trends are watches with diameters of 45 to 46, which is quite big on the wrist; this is very trendy. For ladies, again, it is the bigger watches, and yellow and pink gold are the trends. Before, we use to be a market where pink gold was not so ‘in’, but now ladies are wearing pink gold more. People buy what they like by shape, the advertised model, etc. You can wear a sports watch with a suit now; there’s no more changing watches for specific events.
E In terms of profitability, how is the current situation? Are you expecting an increase this year?
We’re definitely expecting an increase. The first five months of 2008 were difficult, but we still maintained last year’s figures. Now that everything has cleared up and we’re getting a lot of tourists, things are picking up and are above what they were last year and the year before. So we’re expecting a significant increase this year, especially because a lot of Lebanese are coming back. We rely on those customers.
E In the last decade, what would you say the demand focus has been and how have manufacturers responded?
For the last five years all the luxury companies have been increasing their sales tremendously. This shows that the luxury market is really going up. More and more people are buying, mainly due to the opening of two big markets: India and China. They have opened up to the world as there are no more imposed restrictions by their governments for importations. Such emerging markets with large populations have millions of rich people so all the luxury brands make sales, even if Europe and the US, which is in recession, are slightly behind. Their sales are soaring because of those two countries which are really taking a lot of watches. So, the luxury market is increasing for all brands, some brands more than others.
We are experiencing a lack of product. All the brands have very bad delivery terms now. We have a huge demand; I could sell 50% more than what I’m selling now if I were to get enough goods. Thus demand is increasing, but production is increasing by ten times less, and so there’s a large gap.
Luxury is really a good place to be. I think it will sustain this growth for maybe a few years; I don’t know how long it will last. I would say the focus demand is complicated watches. The more complicated the watch is, the more things there are inside, the more difficult the production becomes, the more time it takes, the more expensive it is. More and more people are asking for complicated watches, which start at $40-50,000.
E How important is the Middle East luxury watch market and how is this reflected in the consumer demand?
To the brands, the Middle East market is around 4-5% of their worldwide turnover, in general. You’re talking about millions, so it’s not a small percentage. It is important for the market because the Middle Easterners are buyers of diamond and gold watches, they are spenders, and there’s a lot of money in this market. Lebanon is considered to be a priority for most of the brands. We have the smallest population of countries in the Middle East, but the people in Lebanon are educated in the watch-sense. They know what the trends are; they follow the details much more closely than the GCC countries. Retailers and agents consider Lebanon as a key market in the region, maybe third or fourth in terms of turnover and in terms of importance.
E Of all luxury timepieces, which is your personal favorite?
One of my favorite brands is IWC because its watches are sportier and large in size. That’s my type of watch. Also Tag Heuer, whose prices range from $2,000-5,000, because they have very innovative, sporty watches. For example, they have just launched the new Grand Carrera which is quite an innovative model. I believe that Tag Heuer has set trend for sports-elegance.
