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CORDER’S COLUMN: The power of supportive brand-to-retail partnerships

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Earlier this year I would have said that the tide was beginning to turn against major watch brands opening their own boutiques. Today, I would go further and say that the tide has turned, and brands are watchmakers are urgently rekindling their relationships with their best retail partners.

That is not to say that the world’s most successful brands like Rolex, Patek Philippe, TAG Heuer, Audemars Piguet, Omega and Cartier are opening more doors with retail partners. They are still closing accounts because their products are scarce and they want to funnel them through their very best accounts.

I have sympathy for any retailer that loses one of these key brands, which are rainmakers for any store. I have sympathy for the fact that the watchmakers are demanding investment in the very best on-brand presentation of their products, and this is too expensive for some. They might have been successful for years, but not successful enough to find the money at the moment the investment is demanded by the brands. There is brutal Darwinism going on, with only the strongest surviving.

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However, the seemingly unstoppable march towards direct to consumer sales by Swiss watchmakers has stalled, and for good reasons.

The mathematical logic that the brands would keep a higher percentage of every watch sold directly to a customer might be true, but the cost of owning their own stores, hiring and training their own staff, paying bills and business rates at some of the most expensive locations on the planet have wiped out those profit margins. The brands will not admit it publicly, but many, if not most, of their stores lose money when all their costs are correctly attributed.

It is also increasingly accepted that watchmakers are rubbish retailers. Retail is an intimate business build on myriad personal relationships. Massive centralised groups cannot replicate this, no matter how hard they try.

It seems ludicrous to have to say it, but independent retailers and the major retail chains can only make profit from retailing. They cannot fall back on profits from manufacturing watches, movements or components.

Business owners use their experience to make hundreds of decisions every day that add up to success or failure at profiting from retail. They work their relationships with customers, brands, landlords, suppliers and — most importantly — their staff, to make profits that can be banked or re-invested.

Bulgari’s new managing director for watches, Antoine Pin, makes an additional case for working with multi-brand retailers with physical stores (click here for the full feature). Despite the jewellery side of Bulgari narrowing its focus on directly-owned boutiques, the watch division is going the other way. Mr Pin wants his watches to be compared with other watch brands. If they are good enough, they will sell. If not, they will not. He wants to pass that test, which means making highly desirable watches and persuading the world’s best retailers to stock them.

If he fails, watches will fester in vitrines and authorised dealers will be tempted to dump them on the grey market. Mr Pin accepts that this would be a failure of Bulgari, not of the dealers or platforms like eBay and Chrono24 that find customers for unloved watches, but only once a mutually accepted price for them has been found.

Tags : Corder's ColumnWatch Stores
Rob Corder

The author Rob Corder

1 Comment

  1. Rob, thank you for sharing this point of view. I continue to be intrigued by our very human tendency to want to categorize and pigeon-hole everything, including each other. According to Yuval Harari, in his first book “Sapiens”, this is an age-old behavior of our species. This or that, left or right, black or white, us or them, etc, etc. Combined with our other human tendency, namely, confirmation bias, we could pit the owner of any multi-generational fine watch retailer against the owners of, say, Daniel Wellington, MVMT, or Paul Valentine, and let them argue ad infinitum over who has the better distribution model. Yes we can laugh off the latter as not serious, but they each have been laughing all the way to the bank. And like my Russian brother-in-law says in that beautifully accented English, “Do you want to be the guy who buys the Patek or the guy who sells the Patek?!” Yes, Boris, I’m in business to make money (and hopefully enough to acquire that objet de desir!)

    My counterpoint, I hope intelligent, is that there is a venerable history of brick and mortar retailing, and I’m all in for the store experience, because I like to try on the watches and chat with the sales team about the brands, the novelties, about the cool experiences the brands have been cooking up for their collectors and enthusiasts; my favorite example being Bremont, which I admire tremendously. But we would be gormless dolts to deny that there has also been a disruption over the last decade. I need not enumerate the benefits, real or perceived, of this digital-2-consumer distribution method, because it’s already been hashed over and we understand clearly the arguments for it. Today, there is an approach called BLENDED RETAIL. It is not a static model. It is an idea that puts the customer at the forefront and which therefore requires agility to adapt and implement effective strategies. And there is not a one-size-fits-all solution either. A blended retail strategy would consider the brand or brand portfolio, the customer and prospective customer base, and the geographic location of the store. At the end of the conversation, whether a brand or a retailer, they should be looking at ways to optimize their reach, build their community, curate their customer and prospects voyage across all relevant touch points, and drive turnover. Why not leverage the best practices of traditional and new distribution tools?!

    My hunch is that the solution lies neither solely in brick-and-mortar solutions or solely in digital solutions, but again in an effective and relevant blended retail strategy. We talk about this at length at the Neuchatel-based, Watch Trade Academy, and we invite all readers to deepen their understanding of international watch distribution by taking the 8-week masterclass. Minimally, visit the website to know that there is a worthwhile resource available. http://www.watch-trade.academy

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