Back in Time: Watch Sales Enjoy a Stylish Rebound

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Back in Time: Watch Sales Enjoy a Stylish ReboundMelanie Lopez, 20, was drawn to the design -- three circular mini-dials -- on the face of her Michael Kors Tortoise Jet Set watch.

Lopez also likes that the designer watch has gotten a thumbs up from some fashion taste makers. She keeps an eye on what the stars are wearing, and has spotted celebrities like Kim Kardashian flashing Michael Kors timepieces in the pages of magazines like PeopleStyleWatch.

The college student from Westwood, N.J., started wearing watches in her senior year of high school. Before that, they weren't on her radar. But now, Lopez believes, a watch can "make you look put together."

Step aside, handbags: Watches have become the fashion accessory du jour.

As manufacturers have been cranking out more fashionable designs -- from crystal-dotted watches with a touch of bling to trendy over-sized pieces -- more consumers, including a new wave of young shoppers, are wearing watches as pure wrist candy.

"All of a sudden, watches are cool," says Pam Mortensen, general merchandise manager of fine jewelry for J.C. Penney (JCP). "It's not about function, it's about style. Today, within the jewelry business, it's one of the hottest categories there is."

Cell Phones Threaten to Run Down Clock on Watch Biz

J.C. Penney's watch business has been seeing an uptick this year, and the retailer has expanded its offerings to meet shoppers' appetites.

It was a different picture a few years ago. Mortensen remembers sitting in business meetings in 2008 as merchants pondered what would become of the then-tepid watch business. People believed "it was going to die like the dinosaur," predicting that cell phones would become the new timekeepers, she recalls.

The growing ubiquity of cell phones might have contributed to lackluster watch sales, but the more pressing issue was that designs were uninspired, say industry watchers.

"People stopped buying watches as a utility, and then the category got dull," says Eric Beder, managing director at Brean Murray, Carret & Co., who covers Fossil. (The manufacturer designs licensed watch lines under the Michael Kors, Burberry and Armani Exchange brands, among others.)

But as the economy was tanking, suppliers' creative juices started flowing as they ramped up efforts to jump-start the business.

That's when manufacturers started injecting more fashion into their designs, particularly in watches below $1,000, says Steven Kaiser, president of Kaiser Time Consulting, "which brought in a ton of new buyers."

Then younger "people who grew up with cell phones and PCs, who never cared about watches, now thought of them as a great way to accessorize their look," Beder says.

At the same time, many cash-strapped consumers shifted their focus from high-end handbags to watches, he says. Today, consumers buy them as they would any other piece of jewelry. "No one buys a watch to tell time anymore."

In turn, "The last two years of [retail watch sales] growth have been the best of the decade," according to Beder.

Chanel Ceramic Watch Sparks Design Trend

Chanel's high-end white ceramic watch proved a turning point, design-wise. The look trickled down to the lower-priced fashion market, as brands such as Fossil started to introduce pieces inspired by the Chanel watch while popularizing ceramic watches. "The Chanel watch was a game changer," Beder says.

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Today, ceramic watches, as well as tortoise, rose gold, and brown and rose watches are selling briskly at J.C. Penney.

The department store's timepiece offerings, which range from $10 to $400, are also getting more attention from younger shoppers, who are buying ring watches, pendant watches, and watches that double as charm bracelets.

Meanwhile, many men are gravitating toward "skeleton" watches, with cases that reveal the mechanical inner workings.

Watches have also been a robust business at Macy's (M), Garth Leas, group vice president and divisional merchandise manager of fashion jewelry and fine watches, tells DailyFinance.

Sales of fashion watches from $70 to $300 have been a particular sweet spot at the 850-unit chain.

The design renaissance in watches mirrors how Swatch revived the market in the 1980s, when it captured the imagination of younger shoppers, Leas says. Watchmakers then and now designed "to an aesthetic that speaks more to their lifestyle."

Some of the "must-have" brands at Macy's include, Michael Kors, Burberry, Casio's G-Shock and Armani Exchange.

Over-sized watches continue to be hot sellers for women, while minis are also starting to gain popularity.

And in men's watches, G-Shock's black-on-black sporty pieces have been strong sellers, as have Armani Exchange watches marked by an industrial look, Leas says. "It's a very healthy business."

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