Titan is 100% Indian

Titan, before foreign brands set foot on the Indian shores, was the style icon. But all that changed when foreign makes tip-toed into the Indian market and began seducing the Indian consumers with international designs and styling. Titan stumbled. But only for a moment. The company soon realised that innovation was key to enduring success.

Today, under Titan, there are diverse brands such as Sonata, Edge, Dash and the traditional gold plated Raga collection. The success of Titan's watch division is testimony to its popularity. The watches business, during fiscal 2004, witnessed a 97 per cent rise in profit at the PBT (profit before tax) level.

To find out how that turnaround was effected Sumita Vaid Dixit of agencyfaqs! met with the man behind the the dramatic change – Bijou Kurien, chief operating officer, Watches Division, Titan Industries. Kurien who has been with the organisation since 1987, is currently handling the responsibility of running the Rs 500 crore watch division in India and in international markets.

During the course of the interview, Kurien besides, delineating the reasons for the watch division's success, talked about Titan's focus on fashion. Some excerpts.

Edited Excerpts

If you look at the watch category, you can divide it into three groups. First, is the mass and the low-end, second is mid and the premium, and the third is the luxury end. It is in the mid and premium segment, which is priced between Rs 1,000 and Rs 10,000, that you see a large number of international fashion brands.

Fashion and fashion in watches has been growing all over the world. And over the last 10 years, fashion brands have begun foraying into watches as a category. Since it is a growing segment in India, it made a particular sense for us to have a share of this segment. Titan can certainly not claim to be a fashion brand, but we are a mainstream brand.

In the price band of Rs 2,000-4,000, there are quite a few international fashion watch brands. We thought, if one wants to create an impact in that price band, one needs to have an association with an international fashion brand. One of the obvious choices was to get into an alliance with a fashion brand to enter this category. Therefore Titan decided to tie up with Tommy Hilfiger. It is just a license agreement. We will every aspect around manufacturing, sales, accounting, and retailing.

To be a truly fashion brand, we should have started with the apparel category. Because that is one category that sets the trends as far as fashion is concerned. And then that fashion gets translated into trends and styling which percolates down to several other categories.

Titan is a watch brand. And right from the time we launched in 1987, we have been a mainstream watch brand. Though we have a set of fashion products under the FASTRACK range, Titan per se is not a fashion brand.

Well, Mumbai is the commercial capital, but it was important for us to start with Delhi. That is because there is a growing awareness of fashion and fashion brands in Delhi, as compared to Mumbai.

Rahul Khanna is here just for the launch. While he is not the brand ambassador for Tommy Hilfiger, his personality epitomises the typical Tommy Hilfiger customer, so we decided to use him. We have used others such as Narain Karthikeyan for FASTRACK in the past.

Titan is a mainstream watch brand, as I have already explained to you. The brand spans several customer segments. So to get someone who characterises the typical Titan personality has been a bit difficult. Everybody has got an edge in their personality which gives them that differentiation that the brand may not have.

Having said that, yes, there are personalities such as Saurav Ganguly and Amitabh Bachchan, who can go appeal to customers across the spectrum. But at the moment, we are not talking to any of them.

Saying that Esprit, Swatch, Rado or Tissot are defining the look in the market -- is an overreaching statement, as far as those brands are concerned. Esprit has got a sharply defined look, mostly for women in the fashion category. Swatch has a sharply defined look in the plastic, and also within the fashion category. Tissot and Rado are truly mainstream brands. They do not drive fashion at all.

When these foreign brands entered India, we were the leaders and we defined the look. All these brands created a niche segment for themselves with their differentiated offering. That is the reality of life. Being a large brand, which sells 6.5-6.7 million watches a year, as opposed to many of these brands whose sales do not exceed more than 50,000 a year, it is also difficult looking like an Esprit, or a Swatch, or a Tissot...

What we do have is offering in clutters targeted at customers who are in these various categories. We have FASTRACK for the youth, who demand fashion in affordable prices. Tommy Hilfiger would target the youth segment and beyond. For the technology conscious, there is Edge. Nebula is for people, who demand value at high prices. Dash is for people who are style conscious...

I do not think so, because Tommy pushes the edge in terms of fashion. None of our clusters do.

Yes of course. They are Titan products that are in the same price brands of Tommy, but in terms of their appeal and who they are targeted at, there is a clear distinction.

If you look at the advertising of our various brands: FASTRACK, Edge, the latest ad on the 9-to-5 collection for women, an attempt has been made to make Titan contemporary. It was important to offer another side of Titan as opposed to the older image of gold plated functional watches.

It is not that these clusters are major contributors to our sale; we continue to be dominated by the gold plated look. But these others facets of the Titan brand have helped change the perception of the brand in the SEC A and SEC B segments.

Titan is perceived to be a contemporary brand, with international products and styling that compares with what the rest can give. And it is affordable. In terms of the availability and customer service, Titan has got a phenomenal network that gives a distinct and competitive edge compared to others.

But the perception that other brands offer better value in terms of style and quality has not really been borne out in the last few years. Today, the customers have begun to understand and appreciate this.

For our watch business, the spends would be in the region of Rs 40 crore a year.

About 65:35. It is very funny because if we compare the watch market ratio with the sex ratio, which is almost 50:50.

Now, there are several theories to explain why women tend to buy less watches compared to men. In terms of jewellery, there are lots that women can buy, but not watches.

They do. But then they need to buy more than one. Which is what men do. Men do not have the option of adorning themselves with jewellery. The only jewellery item, besides a ring is a watch. Whereas women have lots of options.

Another reason why men tend to buy more watches than women is the scope to spend. It basically categories items that men can spend on, versus the categories that women can spend on. Watches have less of a role to play in the life of a woman compared to a man.

All of Titan is sourced from India. The only tie-up that we have with a foreign entity is Tommy Hilfiger, which has happened now.

Our significant jump in profit is because of improvement in margins, reduction in cost and reduction in working capital that we have employed in our business. These are the three key drivers that have led to a significant improvement in profit. We had engaged global consultant McKinsey two years ago. The good show is a result of that.

Last year, we did several things. We reorganised the watch division along brand lines. So, we now have a Titan business unit and a Sonata business unit and so on. And when I say business unit that means the unit is completely responsible for its sales, marketing and its retailing. The only common thing among the units is manufacturing.

In order to provide focus and attention to alliances and brand extension, we created a new business unit called the accessories and license business unit. Tommy Hilfiger comes under this unit. We also have sunglasses under the FASTRACK brand. As a result of these structural changes we were able to finally create focus within these business units. And the impact of this is what we are all seeing in the results.

While both the brands grew last year, both Titan and Sonata have independent programmes to improve their profitability. Sonata is the volume brand and Titan the value brand, so while Sonata is 55 per cent of the volumes of the watch business, it contributes only 40 per cent to the revenue.

The most selling has been the Steel collection under the New World watch collection. We continue to do well on Edge too.

Last year, we added around 20 stores, taking the tally to 160 stores. We plan to take the number to 185 this year. In retail, we roughly invested Rs 12 crore last year. And we will invest another Rs 6-7 crore this year.

We expect the watch division to grow at the same rate as last year, which is 18-20 per cent. So we expect a turnover of Rs 625 crore this year.