Brand Perceptions: Luxury Watch & Jewelry. WSJ. Insights

Renown for its world-class research and analysis, WSJ. Insights provides benchmark primary research studies, from longitudinal Corporate and Brand Perceptions studies to Wealth Management and Small Business Reports.

WSJ. Insights provides its marketing partners with the essential knowledge they need to make smart decisions. Key Trends in Luxury Market. Global Luxury Market Moderate Growth & Stable YOY.

Global Luxury Sales (US $ billions) and Growth 2008-2018

450 14

400 12 10 350 8 300 6

250 4

200 2 0 150 -2 100 -4

50 -6

0 -8 2008 9 10 11 12 13 14 15 16 17 2018

US $ Billion YOY % Growth

3 Fine Watch & Jewelry Lead Global Growth Opportunity.

2018 2014 YOY Growth vs. US $ Million CAGR Category US $ Million 2013 Projections 2013-2018

Designer Apparel 136,785 2.9% 154,299 3.0%

Fine Jewelry/ 65,042 4.5% 78,693 4.8% Watch

Fine Wines/ 30,600 3.7% 35,931 4.0% Spirits Super Premium 28,959 3.4% 33,377 3.6% Beauty

Source: Euromonitor International 4 U.S. Continues as Largest Luxury Market.

U.S. Millionaire Households: 11.53MM • 11x more millionaires than China [estimated at 1MM] U.S. luxury market €62.5 Bn in 2013, 3.5x larger than next largest market, Japan

Source: Federal Reserve Bulletin, Hurun Research Institute , Bain/Altagamma 2013 Luxury Worldwide Market Study 5 U. S. Affluents Today: Optimistic & Confident.

More than nine in 10 (94%) are optimistic about their financial future

89% believe they are in a better position to withstand market volatility than others

85% say their wealth is secure for the long term

Source: WSJ Insights 2014 Mutual Funds & ETF Study Base: Total Respondents 1,048 6 6

The Rise of the Millennial Consumer. Generation shift is rapidly approaching; Prime earning years age 35+

110,000

100,000

90,000

80,000 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

Age 25-44 Age 45-64

Source: U.S. Census, Population division Projections of the population by selected age groups for the United States 2015-2060 7 Proprietary Study: Methodology & Respondent Demographics. WSJ. Insights Brand Perceptions Proprietary Study. Methodology

Objective: To discover current consumer behaviors, attitudes and brand preferences for fine jewelry and watches among key prospects

WSJ. Insights fielded a study to the WSJ Opinion Leaders, an online insight community from October – November 2014

2,279 respondents completed the survey

Queried respondents about: • Brand familiarity and perception of 46 luxury jewelry/watch brands • Attributes of luxury brands • Ownership and purchase channels • Important characteristics of a fine watch • Purchase triggers

Note: Fine Jewelry defined as 18K+ gold and/or platinum with or without precious stones, a fine watch is defined as a watch that costs $500 or more

9

Respondent Demographics.

Household Income

Male/Female: 84/16

Average Age: 57 Under $300K+ $100K Median HHI: $268,289 25% 20%

$200- $100- 300K $200K 20% 35%

10 Measured Brands.

Audemars Piguet David Yurman Hamilton Monblanc Rolex

Baume & Mercier DeBeers Harry Winston Movado Seiko

Breguet DeGrisogono Hermes Omega Shinola

Breitling Dior Hublot Panerai Tag Heuer

Burberry Ebel IWC Patek Philippe Tiffany & Co.

Bulgari Fendi Jaeger-LeCoultre Piaget Tourneau

Cartier Girard Perregaux Longines Prada Vacheron Constantin

Chanel Graff Louis Vuitton Ralph Lauren Van Cleef & Arpels

Citizen H. Stern Mikimoto Raymond Weil Zenith

Chopard

11 Topline.

Perception of quality and value generally strong, but many brands need deeper engagement and communication to grow familiarity.

Luxury consumers expect exclusivity, attention and personalization.

Brand name is the strongest signifier of ‘luxury’ and remains the key driver for consideration.

12 Watch & Jewelry Purchases. Watch Collectors & Enthusiasts.

Purchased fine watch in past 3 years 43% [21% as gift for someone else]

$5,392 Average spent on most expensive fine watch

Average number of watches owned [30% own 3+ watches] 2.5

14 Their Fine Watch is Essential. 78% agree “I don’t feel fully dressed unless I’m wearing a watch”

15 Brand is Critical When Selecting a Fine Watch.

% Consider Important In Fine Watch Purchase (Very/Somewhat Important)

Brand Name 87%

Traditional Styling 79%

Swiss Movement 77%

Unique Look 74%

Precious Metals 70%

Quality Jewels 65%

Hand Construction 59% Multiple Complications 27%

16 Complications Watch Aficionados Desire. Practicality wins the day

% Most Interesting in Fine Watch Purchase

Waterproof 93%

Day/Date Display 87%

Auto Wind 83%

Perpetual Calendar 52%

Chronograph 47%

Multiple Time Zones 45%

Moon Phases 22%

Depth Meter 16%

Tachometer 16%

Sonneries 10%

17 ‘Smart Watches’/Wearables Not a Factor–Yet.

Interested in new ‘Smart’ Watches

26%

Very Interested/Already Own 22%

12%

35%

Somewhat Interested 27%

25%

39%

Not that Interested/Not At All Interested 51%

63%

Age 18-34 Age 35-54 Age 55+

When you are in the market to buy where do your usually shop, check all that apply. 18

Investing in a Fine Watch via an Online Only Retailer. Now close to one quarter, significantly more for men than women

Usually Shop at Online Only Retailer for Fine Watch

23% Over half of [jewelry/watch] brands now provide a path to purchase online 17% through e-commerce or e-concierge “services or both.

L2 Digital IQ Index; 2014 Watches & Jewelry Female Male ” 19 Fine Jewelry Connoisseurs.

Purchased a piece of fine jewelry past 3 years [53% purchased a gift 68% for someone else]

Average spent on most expensive piece $21,466 of fine jewelry

20 Purchase Fine Watch & Jewelry Across a Number of Retail Destinations.

Fine Watch Fine Jewelry

Specialty Watch Retailer 49% Independent Retailer 53%

Independent Retailer 42% Specialty Jewelry Retailer 43%

Specialy Department Store 41% Specialty Department Store 40%

Online Only Retailer 22% Designer Boutique 24%

Designer Boutique 22% Jewelry Retail Chain 22%

Duty Free Shop 20% Online Only Retailer 19%

Jewelry Retail Chain 15% Duty Free 12%

Auction House 6% Auction House 7%

21 Purchase Triggers Are Year ‘Round for Both Self & Gifs.

% purchased fine % purchased fine FOR SELF watch/fine jewelry GIFT watch/fine jewelry Souvenir While Traveling 18% Birthday 59%

Birthday 10% Wedding Anniversary 57%

Wedding 7% Winter Holidays 50% Promotion at Work 7% Valentine’s Day 32% Winter Holidays 7% Souvenir While Traveling 27% Wedding Anniversary 6% Graduation 25% Graduation 3% Mother’s Day/ 25% Mother’s Day/ 1% Father’s Day Father’s Day Birth of Child 14% Birth of Child 1%

Q: For which occasion(s) have you ever made a fine watch or fine jewelry purchase? 22 What is Luxury? Luxury is Exclusivity. Important in determining a “luxury/designer” brand

61% Agree exclusivity is important

56% Agree ability to customize is important

Q: How important is each of the following characteristics in determining if a brand is a Luxury/Designer brand? Q: do you have a relationship with a salesperson from whom you primarily buy fine jewelry/fine watches? 24 Luxury is a Relationship.

Have a relationship with a salesperson from whom primarily buy fine jewelry/watches. Among those who do: • Most expensive fine watch: $8,431 26% • Most expensive piece of jewelry $25,487

Attentive Salespeople important in determining luxury/ 43% designer brands [53% among women]

Q: How important is each of the following characteristics in determining if a brand is a Luxury/Designer brand? Q: do you have a relationship with a salesperson from whom you primarily buy fine jewelry/fine watches? 25 Luxury is Product, Service & Brand. ‘Celebrity’ endorsements are not important

Importance in Determining a Luxury Brand

High Quality Product 95% 4%

Service 71% 23%

Brand Heritage 47% 39%

Attentive salespeople 43% 38%

Exclusivity 25% 36%

Ability to Customize 17% 39%

Luxuriousness of retail 9% 40%

Country of Origin 13% 35%

High Price 8% 35%

Celebrity Spokesperson 6%

0% 20% 40% 60% 80% 100% 120%

Very Important Somewhat Important

How important is each of the following characteristics in determining if a brand is a Luxury/Designer brand? Q: do you have a relationship with a salesperson from whom you primarily buy fine jewelry/fine watches? 26

Brand Landscape. Familiarity Varies widely by Brand. Established fashion brands and strong retail presence appear to raise familiarity

100%

75%

50% Average: 42%

25%

0%

Dior IWC Ebel Graff Rolex Seiko Prada Fendi Citizen Chanel Piaget Zenith Hublot Cartier Bulgari Omega H.Stern Shinola Panerai Breitling Movado Hermes Breguet Chopard Burberry DeBeers Longines Hamilton Tourneau Tag Heuer Mikimoto Montblanc

Tiffany & Co. Ralph Lauren Louis Vuitton DeGrisogono David Yurman Patek Philippe Harry WinstonRaymond Weil

Girard Perregaux Baume & Mercier Audemars Piguet Jaeger-LeCoultre

Van Cleef & Arpels Very Familiar Somewhat Familiar Vacheron Constantin

28 Strong Perception of Value for Money/Quality. Across the Board

100%

Average: 79%

50%

0%

Excellent Good

29 Advertising. High Degree of Trust & Engagement with WSJ.

Recall seeing jewelry/watch advertising in 69% The Wall Street Journal

Agree “Only the best fine jewelry & watch brands 8 in 10 Advertise in The Wall Street Journal

Were inspired to shop for fine watch or piece of fine jewelry 39% directly as a result of an ad/article in The Wall Street Journal

31 Brand Perceptions: Luxury Watch & Jewelry.