Wall Street Journal article

[mlcor]

Interesting article the other day, entitled "Watch Sellers Fear Their Hour Has Come", subtitled "Swiss watchmakers are starving independent retailers by investing in e-commerce and selling directly to consumers." It's subscription only, so I'll paraphrase and quote.

Basically, the article claims that the large conglomerate brands are starting to kill independents that carry multiple brands by opening more brick and mortar boutiques, withholding new models for boutiques only, and growing their direct internet presence. It notes that Swatch and others are going to pull out of Baselworld and SIHH (not new news, I know), and doing far more direct-to-consumer social media stuff.

They quote AP's CEO, Francois Bennahmias: "If we don't have multi-brand retailers anymore and the place remains a professional convention, what are we doing there?" [referring to SIHH.]

According to the article, Richemont sold 57% of their watches through independent retailers a decade ago, and it's now down to 37%. Richemont's CFO, Burkhart Grund, says "It is a natural decline, and that will continue for the foreseeable future."

Jean-Claude Biver is also quoted as saying there are too many multi-brand retailers, and their brands will only support them "if they can provide a service and an offer that can be compared to what online can do. Very often they have salespeople who know less about the product than yourself. If this behavior goes on, they will have no reason to exist."

None of this is new, but it's interesting to see it in the WSJ. Personally I think the major brands are making a big mistake. I haven't been impressed when I've walked into various brand boutiques, and that includes the salespeople, who didn't seem any more knowledgeable than my local AD guy, which is sad since they only have to be knowledgeable about one brand! Plus the boutiques won't discount. I get that the brands would prefer to capture all that extra margin, but I don't think the average watch collector will be happy with paying list for everything...

[Col Angus]

Link?


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[mlcor]

Link?


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As I mentioned, it’s only available to subscribers (no freebies from the WSJ), which is why I didn’t include a link.

[TJMike5150]

A few random thoughts:

After living in China I am used to boutiques. They usually discount less, but have more watches on display. Lower or no discounts is not good for the consumer, but brands have to get away from discounting. Going into an AD and asking about a watch and the sales assistant telling you they can give you X% off without you asking is not a good perception for a luxury good. And all watches beyond a basic G-shock are luxury goods.

As for whether an average watch collector would be happy paying list, really who cares? We are weirdos and apart from a few niche brands, have very little influence on the success of a company.

Easy to train salespeople.

Boutiques will not sell stuff to the gray market. A boutique only world will badly stifle the grays; a great thing for the watch brands.

As a guess, Richemont selling more through boutiques is in a large part due to the rise of China as a watch-buying powerhouse.

The expenses to set up boutiques across the US and Europe would be huge. I doubt Richemont, Swatch, Rolex, and Patek will do so. AP seems all gung-ho about doing so. Personally, what I think could work, as well as cut down expenses, is to have a hybrid AD/boutique that sells only Richemont watches, only Swatch watches etc.

[Col Angus]

Yes you did say that, sorry. I was able to find it online though and think this link will work.

https://www.wsj.com/articles/watch-s...ome-1542110402







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[gnuyork]

I think social media is a strong marketing tool now, and I have to agree, in my experience, many salespeople know little (or even care) about the watches (at least the few shops I've been in) but the same applies to other products (cars)... When I'm seriously into something, I already know everything about it before I step into a shop (unless I buy online). Still, there's nothing like walking in to a store and seeing these in person, mostly things look better than online photos, with one rare exception for me (and it crushed me ).

I have run into at least one guy recently in Las Vegas who was as passionate about watches as I am, and he knew a lot, as well as taking a keen interest in my lowly Orient that was on my wrist that day as he was showing me Omega, Zenith, Grand Seiko.

[hayday]

How do shops like Tourneau fit into this, or is that what they mean by boutique?

[mlcor]

The expenses to set up boutiques across the US and Europe would be huge. I doubt Richemont, Swatch, Rolex, and Patek will do so. AP seems all gung-ho about doing so. Personally, what I think could work, as well as cut down expenses, is to have a hybrid AD/boutique that sells only Richemont watches, only Swatch watches etc.

I agree. The AD I go to is mainly split between Swatch and Richemont brands (although he also has Ulysse Nardin and Breitling). Someday people like him may be forced to choose. Although he has lots of connections and has been able to get me pretty much any brand in the past through other ADs with whom he has a relationship.