Eyal Lalo

President of Invicta Watch Company of America

Interviewer: Richard Paige

June, 2000

While I was wandering the halls of the huge JCK Watch and Jewelry Show in Las Vegas, I literally stumbled upon the booth of Invicta watches. This was actually the very first time that I had laid eyes on this line of watches, and from all the discussions here on TimeZone over the last year, I felt compelled to get to the bottom of why these watches get so much attention on the public forum. I was fortunate enough to meet the owner of the company, Eyal Lalo. At first he was very reluctant to grant me an interview, but after sleeping on it overnight he agreed to a meeting of the minds. I believe he felt intimidated by me, and felt I may not be a totally friendly interviewer. I agreed to let him see the interview before I posted it, and this seemed fair to him.... The Interview took place on June 3, 2000.

RP: Could you tell me about the background of the company? EL: I'm a third generation watchmaker from a family in Switzerland. I have the Invicta distribution for the Latin American market, and I own the brand. My family marketed Invicta in the European markets and other markets including the Middle East in the 1970's. That's where the brand is big. The brand started in 1886. The booming years of popularity were in the 70s up to 1973, 1974. We also produced military watches for Switzerland during the war. My grandmother had a lot to do with the Invicta brand in her days. She still supervises the collection. RP: Was the company making new movements up to that time also? EL: No, the popularity of the product was because it was a low end watch: good quality, water resistant, hand-winding. We were talking about US $12 - $13 selling price at that time in huge volumes of 30,000 to 40,000 pieces per month. You can still find a lot of old Invicta watches.

About 10 years ago, we took the brand from a specifically Latin American market. Originally, we started a line with low end prices. The kind of market we had was quality-oriented and very low end in pricing. These are people who have to buy a watch once every two years. They want something that runs, works, and does not require changing of batteries regularly. They were interested in automatic watches and that's why we participated in the automatic market. We started in Central and South America. Here at the show , at least six or seven people came by saying that they remember our watches or that their father had an Invicta watch. They come to the show and they like to show us their watches. I am the distributor for United States, Central, and South America. We have an office in Latin America. I am the president of the entire company. But We are not doing anything in Europe. RP: How many models does Invicta make?

EL: We have over 1,000 models.

RP: Why do you need so many models? EL: Most of our sales were in Latin America, and we were competing against other brands and we had to come out with a lot of models. When we adapted to the US market., we modified the range of products to match the US, Central, and South America. So now, we have over a thousand models to match every market. A popular brand in Latin America, such as Citizen has over 2,000 models. But when I say 1,000 models, when we talk about that, we may be carrying six different dials and that's six different models. RP: It seems like concentrating on just 15 or so models would be easier to market. EL: You're right. It's difficult to think of 1,000 models. But it's basically modifications, or just variations on a theme to get to the 1000 different models. Different dials, bracelets, straps. RP: What I find the most fascinating about Invicta and also because I am a fourth generation watch maker, is that I remember seeing the Invicta name way back when, but I had no idea that it's still being produced until I started seeing it on TimeZone. What do you think contributed to such a high degree of interest on TimeZone in your watches?

EL: I think the TimeZone community is an area for a wide range of watch collectors. Different

people consider themselves watch collectors when they wear different watches. When they started buying Invicta watches, there began on the forums a lot of conflict about the watch. RP: Conflict meaning? EL: I read the posts a lot and I see how the people on the public forum get into arguments over our watches. I am very interested in what the consumer has to say about our product. We put in a lot of effort into our production based on the consumers. RP: Really? Do you consider TimeZone like a field testing for some of your watches?

EL: Absolutely. I've seen what some of the TimeZone people have done with these phenomenal

reviews of our watches. I am amazed, and I am very proud of it. I have a lot of respect for these people. They actually put effort into taking pictures of opening the watches and testing them, and checking it. The bottom line is we have great results and it's nice to see that. I think the problem is really not a problem. The real problem some of the people in the community have is with the price that the watches are selling for. They think it's too inexpensive to be any good. We are master watch makers. We know how to make quality time pieces for a great price. RP: When you say you are quality, master watch makers, do you mean your company buys movement kits and you assemble them yourself? Or do you buy a finished products?

EL: We buy finished movements, but we actually make the components.

RP: Where is all this being done? EL: Everything is made in Japan, the cases and the automatic movements. RP: Isn't labor in Japan very expensive? How can you put out such an inexpensive product and be paying such high labor costs? EL: That's part of the company's success. RP: Why were you intimidated by this interview? Do you think it's something you felt about me personally because I was the owner of TimeZone and that I am not a big fan of your watches, or was it the idea of being interviewed for so many diverse watch enthusiasts? EL: No, no. Like I said, it's an open community and I don't feel like I should be a judge. I don't want to be in the middle of this discussion that's happening. I think it's very productive and very constructive of what they are talking about. I just enjoy reading it. I have a lot of respect for all the collectors and for the high end watch collectors who probably don't like the products being sold so cheap. And people who own it and consider themselves collectors. The bottom line is we have a lot of respect for our consumers. We think that people are in the know and we value people's money. I don't think people have to pay thousands of dollars to get a quality time piece. I think our watches are beautiful. They are great. They are phenomenal. I, myself, love expensive watches. Whatever I can afford, I will buy something expensive. But most of the people out there cannot afford very expensive watches, but they are still entitled to have a quality watch. That's where we come in. An automatic is a starting point to collect watches. You don't start with a quartz watch with a $1.50 movement to begin a serious collection. RP: How long have you been doing this?

EL: Ten years.

RP: You seem really young. How old are you? EL: 27.

RP: You've been doing this since you were a teenager? Did you get involved because of your family? EL: Because of my dad. I enjoy the manufacturing side of the product and the marketing of it. RP: Where are you headquartered?

EL: In South Florida. But I travel often to Japan, and we also have offices in Hong Kong where

we have some production for the low end. There's a lot of traveling. Two weeks out of the month, I'm out of the house. RP: I want to get back on this thing about the success on the Internet. Who is the biggest dealer for you in the United States?

EL: We sell to mostly mom-and-pop-owned jewelry stores, remote areas. Our usual marketing

method is by catalogs. We send out catalogs to all our dealers. We send out about six or seven catalogs a year. We try to target remote areas in the US where our salesmen won't go out because it's not cost effective. To get a $200 to $300 order in such remote areas such as Wyoming, and what have you, is just too expensive in travel time. The Internet has been very big for us. We started very early when many people didn't know about the Internet. The only thing we don't maintain is our own website, that's something we're working on. We have invested a lot of money in a forthcoming website for the consumers. RP: Are you going to be selling Invicta watches on the website?

EL: We do not want to compete against our dealers. We are manufacturer. We are not a retailer

store.We don't want direct contact with the consumers. We are not interested. RP: How are you doing with our parent company, Ashford.com?

EL: Ashford is doing very well with our watches.

RP: One of the things I was looking forward to this interview was seeing the irony of the Director of TimeZone interviewing the owner of Invicta. I find it phenomenal quirk of fate that Invicta, among all the other watch companies out there in the world, is getting so much attention on TimeZone. I'm not saying that I'm happy about it at times, but other times, I am fascinated to see such in depth conversations and discussions about Invicta watches. It seems to bring up a lot of emotions in some people, good and bad. Why do you think that's like that? EL: It's mostly price-oriented, it's only about price. Some people just cannot swallow the fact that you can buy a good product from us at such a low price. And consider the watch a collection piece or a piece that they can admire and that they can keep, and can take care of, and that they can clean. It's not a throw away watch. Something that will last them a long time, probably as much as the other higher end brands. On the other side of the coin, there are people out there complaining about there being some very expensive watches out there. It's just a question of name and fashion and that's it. RP: I think that the people who are arguing are making a comparison between a very expensive watch and your watch. I don't think it is a very good analogy, it's apples and

oranges. I think you have to compare your watch with other watches at a similar price point and manufacturing philosophy which would be companies like Seiko, Citizen, and other watches in that venue. Why is it that some of the TimeZoners find it so fascinating comparing Invicta watches to other more expensive watches? EL: It's got to be that it's an automatic watch. This is what they mostly talk about. RP: Isn't that the same movement being used in other watches that we have talked about? EL: Yes, Citizen uses the same movement. But, to buy a Citizen watch with that type of movement, you will pay over $250, at least. RP: And your price point is what? EL: At around $110 and $115. I've seen them on Ashford for $99 on special. We have them on network TV for $189. RP: Has the TV been very good for you? EL: Yes, it's been very good. Good advertising and keeping the price up. We don't control our dealers as to how much they can discount. But, if we see anybody selling at an inflated price point, we will stop them. RP: Do you publish a suggested retail price?

EL: We let the market find its own price point.

RP: Doesn't your catalog have prices listed? EL: Yes, we have retail prices printed and we use them. Most of our dealers use them as a base for discount. We're a discounted line. They will sell them at 30%, 40% or 50% off everyday. RP: How would you describe a typical retail store that carries your line? EL: They are owner operated and have three locations. They usually carry ten different watch brands and we'll be their brand that they can at least make some money on. Better profit and better volume. When you're at our price range, there's a lot more buyers out there than for the more expensive watches, so you'll sell more volume. We are not competing with high end watches. Look, we can show you quality time pieces that we sell in Latin America. You wouldn't believe the prices that we sell them at. I'll show you now. It's a different brand of watches that we produce that we sell for $5 or $6. (Richard looks at the line) RP: So you're telling me that you're producing and selling these watches not under the Invicta name, for $5 or $6 in Latin America?

EL: Yes, they will sell these watches to consumers in Latin America for about $6. What I am

trying to show you is the quality of manufacturing for the price. RP: So is the conclusion to draw is that it doesn't cost that much to produce a high quality watch? In the final analysis is that we only paying for name?There are a lot of beautiful watches out there, are you saying all of them are way over-priced? I don't think the TZ community would necessarily agree with you.

EL: If you can't afford it, this is what you have to go with. Let's take Franck Muller as an

example. It's a beautiful watch. I would love to own one, but they are too much money. I will never sit down at a table and compare our watches to Franck Muller, I am not saying that the quality of my product is the same, but the price is much more affordable for what you're getting. I think FM is selling art and not timepieces. RP: But you are talking about a completely different customers between Invicta and Franck Muller. If they own a FM, they may consider buying an Invicta as a sports watch or something to go fishing with. Do you think the TimeZoners who have bought an Invicta buy it because they want it to be their only watch or do you think it's something they want to add as part of their collection or as an everyday watch? EL: It's an introduction to watches. You have got to start some place. Not everyone can afford higher price watches, so you might start with an Invicta watch. Some people have Invicta as their everyday watch, and they'll have a higher end watches for more important events. I have seen a lot people with many Invicta watches in their collection. RP: I still find it amazing. I attended the Basel show and I saw thousands of different watches and hundreds of different watch companies. I find it amazing that Invicta gets so much attention on TimeZone since there are so many different companies competing with you at the same price point. I can't put my finger on it except that maybe it's a quirk of fate.

EL: I think once you own one, you will understand. It's truly a wonderful, quality-made product. I

want to say that the TimeZone community has influenced a lot of good things for the product. I've heard many good comments and bad comments that I have used as constructive comments to modify the line to make it better. RP: What's the most negative thing you have heard on TimeZone?

EL: Well one thing was that people were complaining that they couldn't read the numbers, so we

modified the luminescent material on the dial for better readability. RP: What was the philosophy behind the limited edition? Was that something influenced by the TimeZoners?

Some customers wanted higher end watches from us, and they wanted to have a limited edition piece. The Bezel is 18 karat gold. It's a 25 jewel ETA Swiss movement. The retail is $1200. RP: What do you think of TimeZone?

I go there a lot. I read it a lot. I enjoy your website a lot. I read almost everything on it.

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