Watchmakers know that if they open their own stores, and are able to maintain the value of sales, then profits should rise.
Analysis by investment bank Morgan Stanley finds that around 90% of Swiss watch sales in value terms are still via third party retailers. “This is much higher than other sub-segments of luxury goods, most of which have seen steady increases in the retail share of total sales over the past few decades,” its report for 2018 states.
Watches are not like other luxury categories that require less intimate brand and technical knowledge. They are also different because sales are less frequent so deep knowledge of local customers is key to matching the right watches to the right people.
It is reasonable, however, for watch brands to want to work with the very best partners, and increasingly this means working with fewer but larger groups with multiple locations and proven growth.
And with the biggest brands gaining market share at the expense of a huge number of smaller watchmakers, these rainmakers also want bigger monobrand stores and space within multibrands so that they can tell their stories better.
Whether brands and retailers maintain, grow or end their partnerships comes down in a large part to the balance of power between the parties. Watches of Switzerland, Bucherer and the likes of Harrods and Selfridges, have strong negotiating positions with all but the top few (arguably the top two) brands.
Single store independent retailers take years nudging and nurdling their way into the good graces of the most desirable watchmakers.
There is a chilling Darwinism to this process because weaker retailers without clout tend to lose the best brands, and without those brands they die.
These are facts unlikely to alter in the near future, which begs the question, what can retailers at risk of losing brands do about it?
The answer was given to me in an interview last year with Swiss watchmaking supremo Jean-Claude Biver who said that retailers need to look themselves in the mirror every morning and ask, what are the four things I can do better than anybody else?
Convincing Rolex to take them on as a partner should almost certainly be ruled out. Sulking about not having Rolex would also be counter-productive.
Working with brands that are looking for partners gives the retailer more negotiating power, particularly if they come with a plan that chimes with those brand’s own view of the world. And what all brands want these days is space in which they can express themselves.
You do not have to look far outside the top five Swiss brands to find fantastic brands that fit this bill. Carl F. Bucherer, Ulysse Nardin, IWC, Frederique Constant, Panerai and Tissot spring to mind. There are also fabulous watchmakers from Germany and Japan like Nomos, Muhle Glashutte and Grand Seiko that have great stories to tell.
Avoid brands that have weak prices on the secondary/grey market. No matter how much we would like the grey market to disappear, if there is too little demand in parts of the world to match the supply of watches at authorised dealers, they will be dumped at discount prices and undermine demand for all dealers committed to maintaining full retail prices.
The majority of top watch brands now have their own e-commerce sites that compete with their authorised dealers, but this should not rule those brands out. Most customers want to try before they buy, so ecommerce sites stimulating demand should not necessarily steal sales.
Finally, learn from what the best retailers are doing, which is working towards selling fewer brands, but treating each one of them like kings. Selling watches that you adore and know intimately is crucial, and if you are the only stockist in a 50 mile radius, that enthusiasm should excite an almost captive audience.