All luxury businesses want scarcity, but that does not necessarily mean making minute quantities.
Most Rolex professional watches are scarce, but hundreds of of thousands are produced every year.
Patek Philippe Nautiluses and Audemars Piguet’s Royal Oaks are made in much smaller quantities, but are still produced on an industrial scale.
Scarcity is nothing to do with production quantities, it is simply a result of demand exceeding supply and is essential to keeping prices high across everything from Hermes handbags to vintage Champagne (the French are masters of the strategy).
Watchmakers have never been much good at matching supply to demand. Sometimes this leads to a favourable outcome, like the hysteria around scoring a Rolex Hulk or Batman that propped up the entire industry last year.
Other times, like when Chinese customers stopped buying Swiss watches after a crackdown on ostentatious displays of wealth (particularly by State officials who would not possibly have afforded them legitimately), you got a glut of unsold watches flooding the grey market that Richemont had to spend half a billion dollars buying back.
This year, fitting supply to demand is even more difficult. Coronavirus cases could flare up anywhere in the world, forcing cities to lock down retail, and leaving watches stranded and unsold in shuttered boutiques.
Around one quarter of this year’s production of Swiss watches looks certain to be lost, and this is already making shortages of unicorn watches from the likes of Rolex, Patek and AP much worse in recent weeks (prices initially dipped in the early weeks of the pandemic as the market froze but have started rising again).
The biggest producers are rightly taking a cautious approach to manufacturing new watches with untested commercial appeal.
Most have rolled back retooling of their factories— retooling typically takes place at the start of the year to make the new watches that will be unveiled at SIHH and Baselworld — so that they maximise manufacturing of known bestsellers.
Authorised dealers approve.
What retailers are less impressed with is the way brands are only making small quantities of anything new and hoarding these exciting limited editions for their own direct to consumer boutiques and ecommerce sites.
Although, in any normal year, around 80% of watches sold through all channels are existing models from core collections, brand new watches are vital to get customers excited and coming into stores, particularly at this time of year.
News of desirable limited editions tears across social media in a nanosecond, and authorised dealers start taking calls from their best customers asking for these exciting watches.
This is a double whammy for the retailer. Not only are they missing out on a valuable sale, they also have also frustrated a customer who might be lost forever.
There should be a level playing field so that authorised dealers have the same opportunities to delight their customers as the brands do. This won’t mean that a highly limited watch will be available to every AD, but the default approach should be that the brands should help the retailer to find that watch for their customer, not steal the customer.
Enormous watchmaking groups do, of course, have the right to make money for themselves, their foundations and their shareholders even in these trying times, but it is my profound belief that this is best achieved by working in harmony with global networks of retail partners, not trying to keep all the sweeties to themselves.