MEETING INDIA’S LARGEST LUXURY

WATCH RETAILER
MARKETS 🇮🇳

India will likely become the most populous country in the world
by 2027. This stunning growth is not yet reflected in the watch
industry, due to historical protectionist measures, a complex
business environment and considerable economic disparities.
India’s largest luxury watch retailer, Ethos, is nevertheless
laying the groundwork and lobbying for change. In less than
two decades, it has already disrupted the Indian watch market.
We met its founder, Yasho Saboo.
t’s interesting to look at the Indian watch market from the
perspective of its largest luxury watch retailer, Ethos,
which operates 54 stores in the country. The national
leader is not even 20 years old: Chandigarh-based
entrepreneur Yasho Saboo founded it in 2003. Ethos
rapidly established itself, positioning itself strategically in
a market that has transformed utterly since the turn of the
new century, although it remains relatively small in terms
of Swiss watches, with CHF 150 million in exports last
year.

This national leader is not even 20 years old:

Chandigarh-based entrepreneur Yasho Saboo
founded it in 2003.
An important feature to note about India is its historically
protectionist stance, a major factor in building the nation’s
economy since it gained its independence in 1947. It
helps to explain how a homegrown company, Tata-
owned Titan, completely dominates the entry-level watch
segment in India, with sales at about 340 million dollars
in 2018-2019. According to The Economic Times, the
company sold around 16 million watches in 2018,
including brands Titan, Sonata and Fastrack. It also owns
Swiss brand Favre-Leuba (read our interview with CEO
Vijesh Rajan here).
From supplier to retailer
“The year 2000 was a turning point for the Indian watch
market, as the government started to open the door to
the import of luxury watches on a larger scale,” says
Yasho Saboo. “Before that, it was difficult to sell watches
above 1,000 dollars without resorting to smuggling or the
grey market.” Having founded a watch part
manufacturing company called KDDL in 1983, the
entrepreneur seized the opportunity to diversify and
invest in watch distribution. He soon realised, however,
that the real growth was to be found in retail rather than
distribution.
In 2003, Ethos opened its first luxury watch store in
Chandigarh, where the company is based. Chandigarh is
a “new city” with strong ties to Switzerland: it was
planned by the famous architect Le Corbusier, who was
born in La Chaux-de-Fonds, following the independence
of India in 1947. From the outset, Yasho Saboo made no
secret of his ambition to go nationwide, expanding into a
network of stores throughout the country.

“The year 2000 was a turning

point for the Indian watch
market, as the government
started to open the door to the
import of luxury watches on a
larger scale.”
 The Ethos store in Chanakya
The entrepreneur put his plan into action, building on the
country’s new consumption habits and the opening of
luxury malls. “My vision was that the quality of the stores
had to evolve in India to reach the standards seen in
Dubai or London,” recalls Yasho Saboo. “The malls
offered a brand new opportunity. We were lucky because
the major Indian watch retailers didn’t want to invest in
malls, as they deemed them too expensive. As a result,
although we were a new player, we managed to open
watch stores in key malls in India.” Another important
growth factor for Ethos was the modernisation of the
country’s airports, favouring expansion through travel
retail and duty-free shopping.

“We were lucky because the

major Indian watch retailers
didn’t want to invest in malls, as
they deemed them too
expensive.”
Powerful grey market
Starting in the 2000s, the Indian watch market, although
still subject to high import duties, experienced the dawn
of a new era for luxury watch sales. Major watch groups
and brands opened local subsidiaries and implemented
stronger policies to bypass the strong local grey market
and support official imports.
While Ethos began by representing mid-range brands
such as Rado, Longines, Tissot and TAG Heuer, it
became a major beneficiary of this change. As a new
player expanding through India’s modern malls and
airports, it offered the kind of prestigious presence the
luxury Swiss brands were looking for. Gradually, the
company started adding high-end watch companies to its
portfolio, including Omega, Jaeger-
LeCoultre, Hublot and Cartier.
Another important turning point would come in 2008,
through a partnership with Rolex. “We set up their first
boutique in Bangalore,” explains Yasho Saboo. “It
brought us more luxury customers and we were also
more confident in our growth strategy.”

As a new player expanding

through India’s modern malls
and airports, it offered the kind
of prestigious presence the
luxury Swiss brands were
looking for.
 The Ethos store in Kolkata
A major recent shift for Ethos has been the launch of an
e-commerce platform, under the impulse of the second
generation to head the company. “Last year, my son
Pranav took over as CEO after three years as Head of
Marketing. We implemented a new digital strategy and
our marketing spend shifted from 100% offline to almost
100% online. We set up call centres and a loyalty
programme around our digital platform.”
Online sales comprise mainly watches priced under 500
dollars, and e-commerce accounts for 5% of Ethos’s
turnover. Yasho Saboo sees it primarily as a marketing
tool to attract customers to the company’s network of
brick-and-mortar boutiques: “We now have more than
50,000 visitors a day to our website, and the leads
generated through these eventually account for nearly
35% of in-store sales.”
Trade-in now available
As for many other watch retailers around the world, the
latest initiative of Ethos has been the launch of a pre-
owned division. “Until not long ago, this business would
not have been seen as legitimate in India, so we were
afraid that consumers would think we don’t sell authentic
watches,” says Yasho Saboo. “But we talked to collectors
and observed the work of companies like WatchBox and
Tourneau in the USA, and we realised there was a need
to establish this market in India too.”
Like e-commerce, this new segment is small but growing.
“I don’t think many brands yet have a really clear view
about pre-owned, and some are hesitating over whether
to support it or not,” says Yasho Saboo. “For our
company, it’s a completely different division. We will work
with some external partners. Through our loyalty
programme, our customer base is now able to trade in
watches. The largest chunk of pre-owned timepieces are
watches we sold previously to our customers, so we can
track them better. And customers also realise that there
is residual value when buying watches, so it builds
confidence. It’s a virtuous circle.”
Changing tax law
Nevertheless, there remain a few impediments to the pre-
owned segment, thanks to the Indian tax structure. In
particular, legislation requires that retailers verify that any
watch in stock, however ancient, has been legitimately
imported. “It’s an old law, we are making sure we comply
with it, but we are working with the government to
upgrade it to the new reality,” says Yasho Saboo.
The Indian tax system has historically been a source of
severe headaches for the watch industry. “We developed
as a protectionist country over the last 70 years. Don’t
forget that India was conquered not by a regular army but
by a British private company, the East India Company.
This had a strong impact on the country’s subsequent
development and identity.”
Until two years ago, the complexity was primarily due to
the fact that each Indian state (there are 29 states and
seven Union territories) was free to collect its own taxes.
A nationwide VAT was nevertheless introduced in 2017.
“The tax started at 28%, which was really high. After a
few months, it was reduced to 18% for watches.
Meanwhile, import tax was raised from 11% to 22%. If
you combine both taxes, it’s still pretty high, though lower
than in the past.”

Contrary to popular belief,

luxury watches are not
immensely more expensive in
India than in the rest of the
world. The retail margins are
 just much smaller than
elsewhere, to compensate for
the high taxation.
Yasho Saboo hopes that VAT will be reduced to 15%
(the issue is currently under discussion) and that import
tax will return to its previous level of around 11%.
Contrary to popular belief, luxury watches are not
immensely more expensive in India than in the rest of the
world. The retail margins are just much smaller than
elsewhere, to compensate for the high taxation. “Our
prices match what you would find elsewhere, between
95% and 105%, according to my estimates,” says Yasho
Saboo.
Working with independents
If it’s not about price, why then is the Indian watch market
still relatively small? Yasho Saboo sees two main
explanations: “Traditionally, India has been less brand-
driven and luxury-oriented than other nations such as
China. Buying luxury has historically not been seen as a
priority. Spending goes primarily on the family. Indians
can spend huge amounts for a good education abroad.”
Moreover, high income disparity has meant that, unlike in
China, India has not yet seen the rise of a strong middle
class “with the willingness to spend rather than save.”
There is a silver lining for the retailer, however: “In the
last eight years, we have maintained a compound
average growth of above 20%.” Yasho Saboo hopes to
see interest in watches match the level of passion for
jewellery in the country: “India is the world’s largest
consumer of gold. Many see it as a means of storing
wealth. People are very attached to products that will
retain their value over time, so luxury timepieces and
quality pre-owned watches have strong potential.”

Yasho Saboo hopes to see

interest in watches match the
level of passion for jewellery in
India.
Faced with the changing policies of groups that are
developing their own retail networks, Ethos has opted for
a growth strategy based on a strong portfolio of
independent brands, in all price segments. It is also
investing in flagship stores to cater to luxury brands’ new
expectations. “Both these strategies have played well,”
says Yasho Saboo. “If you have a large store, you can
offer more space to large brands, and also provide a
convenient display for smaller, independent
watchmakers.”