Ethos to add stores, double down on pricier luxury watches

For new physical stores, Ethos has earmarked nearly ₹200 crore. It will add stores both in large cities where it already has a presence, as well as in newer cities such as Raipur, Bhubaneswar, Siliguri, Indore, Kochi, Surat, and Ranchi, chairman and founder Yashvardhan Saboo said.

In the last three years, the company has turned its focus on selling pricier watches and eliminated some brands at lower price points.

“We actively reduced our focus and portfolio for watches at entry level price points of below ₹30,000–40,000,” Saboo said. As a result, it no longer stocks brands such as the Fossil Group’s Armani and Fossil watches, Casio, Calvin Klein, and Swatch.

As it expanded its portfolio of luxury watches, it also shut down some of the smaller stores, especially at airports where a lot of the lower price point watches were selling.

“These stores did not provide any great customer selling experience, something that is becoming very important for luxury products; so, we closed several small stores,” Saboo said. The company opened larger luxury stores.

Currently, Ethos has stores in about 17 cities and nearly 61 luxury watch brands in its portfolio.

“Our growth is clearly coming from the higher price point watches. The consequence of this exercise (of reducing watches in lower priced brands) was that while the number of watches sold reduced, the average prices of watches sold has more than doubled in the last three to four years. It has risen from ₹75,000 to ₹1.6 lakh,” Saboo said.

The highest sales growth the company is witnessing is in the category of watches priced above ₹10 lakh, in line with the worldwide trend, he said.

“This growth in the luxury watch industry is not a flash in the pan kind of growth. The Indian economy is growing and India’s per capita income stands at around $2,200. It is well known that it is above a per capita income of $2,000 that discretionary consumption starts to grow. We know for a fact that the growth in the high net worth individuals is disproportionate. Their disposable wealth has doubled and they are the consumers of our luxury watches,” Saboo said.

Overall, the propensity to spend on watches has also increased. People don’t just have more money, but are willing to spend it on watches, something which he said was not happening pre-covid.

In the September quarter, the company reported a revenue of ₹177.7 crore and a profit after tax of ₹13.6 crore.

The luxury watch industry, Saboo said, isn’t just growing on the back of “pent-up demand” but that India’s growth story is similar to that of China’s about two decades ago, when there was a 15% compound annual growth rate in the high-end watch segment. “In India, it is a similar story now. It’s the start of a huge take-off,” he said.