This year marks the 100th anniversary of the founding of leading Japanese watchmaker Citizen Watch Co. (see below). Tackling a variety of difficulties along the way, it has grown from a small Tokyo company into a global enterprise, currently operating in more than 130 countries.
Amid this time of change in the watch industry, the company intends to continuously create new value, with the watch business at its core. The Japan News recently asked President and Chief Executive Officer Toshio Tokura about the company's history and its plans for the future.
The Japan News: What are your thoughts on the company turning 100?
Toshio Tokura: A hundred years is not so old in the watch industry. [For instance], Swiss companies have a longer history. At the same time, we respect our history, because we've come this far through various difficulties, including hardships at the time we were founded, and during and after World War II.
I think the source of the company's continuity lies in its name, Citizen. It comes from the name given to our first pocket watch [in 1924] by then Tokyo Mayor Shinpei Goto (1857-1929) [in the hopes it would be "loved and trusted by citizens around the world"].
The Citizen brand doesn't mean a luxury watch, but one that all citizens can buy. Citizen has been closely related to those [who support society].
Another reason we've survived for 100 years is because we have the DNA to tackle constant challenges to create something new, which has led to numerous world-first products. This year we unveiled a movement watch with annual accuracy of plus/minus one second.
We will go forward based on these two pillars: [the original concept of] the name and its DNA.
Q: How do you view the current situation in the industry?
A: The industry is in a transition period. We can't ignore smartwatches, which have come about through the development of information technology. We're being questioned as to what kind of new value we will give to customers as a watchmaker. In addition, the emergence of e-commerce has forced distribution channels to transform rapidly.
We expect not to reach the goals in our midterm management plan, which [started in fiscal 2013 and] will end in fiscal 2018, because conditions have changed dramatically from the time the plan was compiled in fiscal 2012. The next plan, which will start in fiscal 2019, must contain bold management decisions. Otherwise, I strongly believe that we'll face a tremendous challenge.
Q: How about sales among foreign tourists in Japan?
A: Sales among tourists peaked in 2015, but they're still strong, accounting for 20 percent of our domestic sales. Many customers are from China, where we started operating about 60 years ago. It's important for us to take care of them. We'll create new brand images and make further promotional efforts in China.
Q: The company opened a flagship shop in Tokyo in April 2017.
A: I was worried at the beginning, but it's successful now. Visitors can touch our watches and try them on. This is a very important opportunity. To convey the appeal of our products to customers, we must set up more places that offer such a experience.
Q: The company has promoted a multi-brand strategy, while some rivals have concentrated management resources on fewer brands.
A: Customers have diverse tastes regarding such things as price, design and brand, so it's impossible for us to meet their demands with one brand alone. We maintain our core brand, while responding with other brands to demand we can't meet.
This strategy works not only in Japan, but also in the United States and Europe. The question is what steps we will take regarding higher-priced goods, for which demand is expected to grow in the future. I believe future generations of the company will have to cope with this issue.
Tokyo flagship store attracts overseas tourists
The Citizen group opened its first flagship store in the Ginza district of Tokyo in April 2017. The store allows customers to experience its main brands, boasting one of the world's largest collections of Citizen products and other brands, including Arnold & Son and Bulova.
The shop has about 700 models priced from 20,000 yen to 22.2 million yen. Products priced at about 100,000 yen sell particularly well.
Many inbound tourists visit the store and make purchases. According to the company, around 40 percent of total sales at the store come from inbound visitors, most of whom are from China. Citizen began exporting its products to that country in 1955 and established a sales firm there in 1958.
"There was a customer from China who've used a Citizen watch for more than 30 years," a sales associate said. "It's still working. That's why they came here -- to buy another one."
Citizen also started a large-scale ad campaign in China in 2010.
According to Euromonitor, a market research provider, the group was the eighth largest in the world in terms of watch sales in 2017. Although Citizen strives to come up with new products and services, competition is increasingly fierce. An analyst at a Japanese securities company said watch companies must also be aware of the competition from wearable devices, particularly in the lower price ranges.
Eyes are focused on what the 100-year-old company will do next.
-- Citizen Watch Co.
The forerunner of the company, Shokosha Watch Research Insititute, was established in 1918, followed by Citizen Watch Co. 12 years later. Around World War II, the company was forced to change its name. In the postwar period, it created a number of world-first products and technologies including the light-power technology Eco-Drive.
The company is strengthening its brands not only in Citizen's medium price range, but also in the high price range such as Arnold & Son and a high fashion brand. Its group is composed of various corporations in such fields as machine tools, devices and components, and electronic products. Consolidated sales ending March 2018 reached a total of 320 billion yen, of which 163.7 billion yen was in the watch business. The company employed 16,015 people as of the end of March 2018. Its headquarters is located in Nishitokyo, Tokyo.
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