By his personal estimation, Akio Naito’s ascension to the presidency of Seiko Watch Company in April was uncommon. “I joined Seiko as an in-house lawyer and I knew nearly nothing about watches,” he says, recalling his arrival on the Japanese firm in 1984. “I’m somewhat bit distinctive.”
Equally sudden is Naito’s frank evaluation of his inheritance. “Seiko has turn out to be a model of no clear id,” he says. “‘Every thing for everyone’ ended up being ‘the whole lot for no one’. That must be modified.”
He has some extent. On the model’s UK web site, a steel Seiko 5 Sports priced at £230 sits alongside a diamond-set platinum Grand Seiko Spring Drive 8 Day ‘Mishaka’ at £176,120. Seiko’s worldwide web site lists additional collections, equivalent to Presage, Astron and Lukia, as manufacturers in their very own proper. Then there’s the Credor household of high-end gown watches, which don’t even carry the Seiko title.
Naito, 60, noticed the issue first-hand when he transferred to the US in 2016. “After I went to America, model notion was actually low,” he says. “Retailers advised me there was an enormous value distinction and shoppers wouldn’t admire it.”
The difficulty was inside, too. “The notion amongst our staff was that Grand Seiko didn’t have a robust attribute, like Richard Mille or Hublot,” he says. “It wasn’t eye-catching. Our personal individuals virtually gave up selling the model.”
Including to Naito’s challenges is elevated competitors from Chinese language watch manufacturers, which have improved in high quality, in addition to the stronger yen.
A part of the answer, he says, will probably be restructuring. Grand Seiko, which watch aficionados name “the Japanese Rolex”, was launched into the house market in 1960 but it surely was solely launched globally in 2010.
In 2017, the company established the model as an impartial firm with its personal administration. The subsequent yr, Naito turned Grand Seiko’s US chief government and employed individuals who felt strongly in regards to the product’s historical past and high quality.
He says the technique is working, particularly now high-end retailers deal with Grand Seiko as a unique model. “Final yr, within the abroad market, we grew Grand Seiko gross sales by roughly 30 per cent in contrast with the earlier yr.”
Worldwide progress continues to be a precedence. “After I went to America, the most important problem was to show across the abroad enterprise and, most significantly, the US — our greatest market outdoors Japan.”
He says that, within the Eighties, exports accounted for 70 per cent of the enterprise. Immediately, the proportion has reversed and 58 per cent of the group’s web gross sales are in its dwelling market of Japan.
A report revealed in March by Seiko Holdings Group, Seiko Watch’s father or mother firm, reveals that exports to the US account for simply 7 per cent of web gross sales, with Europe and Africa a mixed 9 per cent.
Final yr, watches made up 52 per cent of the group’s web gross sales of ¥202.6bn, equal to $960m. Its different actions embrace electronics, software program, retail and sport timing.
By comparability, Omega, a competitor that’s a part of Swatch, turned over $1.9bn in 2020, in keeping with Morgan Stanley.
Naito seems the suitable man to implement worldwide enlargement. In addition to the US, the place he was a Fulbright Scholar within the Nineties, he has lived in Australia. He speaks English fluently and understands western sensibilities.
However the legacy of being all issues to all males continues to be a headache. “If we had been a brand new firm, it will be comparatively straightforward to construct a model,” says Naito. “However, as a result of we’re 140 years outdated, we have already got some strong foundations when it comes to clientele and notion.”
The answer? “We have now to return to our origins and clearly outline who we’re and talk that,” he says. “I wouldn’t say that is straightforward, but when we are able to obtain that, we will probably be an woke up model.”
Positioning Grand Seiko as a luxurious model that “individuals fall in love with”, and Seiko as a premium model that gives “good high quality and good efficiency for the fee that you simply pay” will probably be crucial, he says.
Whether or not it really works will rely on Seiko’s potential to vary present developments. The luxurious sector is dominated by just a few manufacturers — Rolex accounts for 25 per cent of it, in keeping with Morgan Stanley — whereas gross sales of mid-market watches, the place Seiko’s premium assortment sits, are in decline.
In Switzerland, volumes of watches with an export value of underneath SFr500 ($540), roughly half the retail value, shrank by 7.5m models between 2015 and 2019, equal to 27 per cent of all Swiss watch exports. The Apple Watch, which prices from £199 and is believed to promote about 34m models a yr, is considered answerable for the downturn.
Naito will even have to discover a method to bounce again from the pandemic. In Seiko’s most up-to-date set of annual accounts, to the tip of March 2021, the watch enterprise was down 22.5 per cent to ¥30bn ($270m). Whereas the Swiss trade has recovered, Seiko’s dependence on the Japanese market has left it uncovered to its persevering with lockdowns.
In August, Seiko revealed its first-quarter outcomes which confirmed that web gross sales of watches between April and June had been up by 89 per cent over the identical interval in 2020. However, at ¥27.7bn ($250m), gross sales had been nonetheless down on the ¥33.9bn recorded in 2019. “We’re steadily recovering however to not the extent of 2019,” says Naito. “And it is vitally troublesome for us to foretell what’s going to occur in even the approaching few months.”
Some manufacturers have raised costs to tell apart themselves from the smartwatch market. Three years in the past, Grand Seiko did the identical however the transfer drew criticism from clients and retailers. “Our goal is how we are able to create one thing aside from perform — an emotional worth or social worth,” Naito says. “If now we have to take a position into one thing to create that worth, then the worth should be set accordingly.”
However, despite these challenges, Naito believes he has a big benefit over the competitors.
“There’s something intriguing about Japan to non-Japanese,” he says. “However even then, the notion of Japan differs considerably from technology to technology. The older technology thinks of electronics or cars, however the youthful technology thinks of anime, ramen and sushi.
“Our model has a number of aspects and if we are able to clarify these, individuals will probably be intrigued.”