The Rise Of The Boutique-Exclusive Watch

The Rise Of The Boutique-Exclusive Watch

The Rise Of The Boutique Exclusive Watch   watch buying

Swiss watch making is all about control. Parts are machined within tolerances of one thousandth of a micron. Assembly is done in near-clinical environments. External influences such as moisture, temperature, position and magnetism are not allowed to interfere with the operation of these precision machines. This quest for mechanical perfection has always been the case but in recent times, this desire for control has reached out ever further.

Brand image is tightly policed, whether it is a no-expense-spared advertising campaign featuring a Hollywood luminary, a carefully worded statement from the company CEO or an artfully massaged representation of the brand history on the corporate website.

The Rise Of The Boutique Exclusive Watch   watch buying

So far 'so in-house,' and the problem begins when you want to sell your products to the public. For years, watch brands have built partnerships with retailers to develop a distribution network. Using a variety of ‘carrot and stick’ techniques they try to ensure that their products are sold in the ‘right’ way, displayed in the best part of the window and only next to ‘appropriate’ competitors.

The big unspoken subject is price. The brand will have in mind a price that they believe each watch should be sold for. This can only ever be communicated to the retailer as a ‘recommended’ retail price with heavy emphasis on the element of ‘recommendation’. Any suggestion that the price is fixed or that penalties will be applied for discounting will lead to swift intervention by the relevant competition or anti-trust authorities, with expensive results. For the retailer, there is a delicate balance to strike. They want to maximise their profits, offer an attractive deal but also avoid a price war with other local agents and all the time maintain good relations with the watch brand.

The Rise Of The Boutique Exclusive Watch   watch buying

This has been thrown into sharper relief as watch brands start to take the next step along the path of control. Unless you look at jeweler / watchmakers such as Cartier, watch brands are not natural retailers but this has changed. A walk down London’s Bond Street or New York’s Madison Avenue is a roll-call of the finest names in horology and most of these stores will be brand owned. Becoming retailers allows the brands to control their image all the way to the customer, presenting their product and history in the best light possible, getting feedback directly from the watch owners and also allowing them to keep the retail margin and control the price.

But why would you enter one of these palaces of excellence if a better deal is to be had elsewhere? Surely you would use them just to wrist-test your chosen timepiece from the widest stock possible, ask all the questions you can think of and then place your order with your regular AD for a nice little discount?

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5 comments
Spiman
Spiman

There is an incredible price game played by the major watch companies and their distributors, in my country Greece, at least. With the excuse of the local financial crisis, the factories give huge discounts to their reps in the country of aprx 30%  and the market has been flooded by Piguet, Hublot, Rolex etc that are addressed to the hordes of foreign tourists, mainly Chinese and Japanese who just buy xl Big Bangs etc. On top of that, the 23% VAT included initially at the price, is deducted as these watches are bought for export purposes and they end up buying watches with an amazing 50% discount.!!!! If they declare them and pay local duties when they go back, its entirely their problem. The big companies SELL A LOT and the local reps the more they sell the bigger discounts they get. This is why the less expensive watches you only find them through e-shops.   

BermudaTriangle
BermudaTriangle

Apparently the manufactures choose to ignore all the discussions of boutique-mania on so many watch enthusiast sites.  And they also choose to ignore the popular reaction to the move into boutiques, which is overwhelmingly split between complete indifference and total negativity.

The swiss mechanical watch industry is inflating a bubble - riding a temporary widespread enthusiasm for their product that is pushing prices to levels never seen before.  Fixed on ever-increasing sales and profits the industry has surrendered to greed.  They don't just want their slices of the pie as just reward for their R&D and manufacture - they want the entire bakery. Closing out long-standing agreements with independent retailers. Cutting off trusted distributors and wholesalers. Developing product available only in boutiques. They justify their behavior with transparent claims of rooting out unsavory back-alley sellers, providing a purchasing experience appropriate to the cost and prestige of the product, and managing the public's care for the timepieces invested in.

Hogwash.

The management of most of the manufactures has little memory, if any at all, of the dark days of the 1970s when the Asian quartz movement makers nearly wiped out the swiss mechanical watch industry.  Those now in management were not involved in the extraordinary efforts of Hayek and a few visionaries who understood how the manufactures had to chase wholesalers and retailers and clients and beg to get their attention again.  Just like stock traders who have only worked in a bull market these current managers cannot bring themselves to imagine that someone may pop their bubble one day without warning.

There will be no boutiques in Saskatchewan, Canada, or Cody, Wyoming, or Bermuda, or the Maldives, or any other places of small and medium size around the world that are not enormous centers of business or tourism. But there will always be potential customers in those places - and those customers have long-standing relationships with their local independent retailers. Those customers are not going to get on an airplane and fly to New York, or Paris, or London, or Singapore to purchase a watch.  They are going to talk with their trusted local retailer and they are going to buy product from him because they trust his judgment and endorsement.

There is nothing wrong with having a few showplaces owned by the manufactures that provide a spotlight for product.  There is everything wrong with abandoning the retail establishments and wholesale distributors who have faithfully supported (and have given a lot of free advertising for) the manufactures by moving the entire product distribution into company-owned stores.  The CEO of Audemars-Piguet justifies his company's slashing of the number of retail outlets for their products by claiming that he cannot make enough watches to satisfy demand.  But what he is saying is he cannot make enough watches to stock all his company boutiques and have product left over to supply a retail network - so he is making the choice to terminate the independent retailers so he can reserve all of the sales without discount or margin for his company through their boutique outlets.

Bubbles burst.  Usually without warning. Those who have been so energetic in casting away their long-standing retail relationships are going to find it the hardest to recover their position when the tables are turned.

Chronoman
Chronoman

I agree that you can find desirable/collectible pieces as used items and often at a great discount. Vintage watches sell for much less than the watches that replaced them, even 30 years on. I recently bought a military watch of which only 36 were ever made, which was actually used in military service, with original box and papers (and battle scars) and original bracelet for just more than half the price of the current models.  

Lesthepom
Lesthepom

Shame I won't get to see any of them the only boutique near me close down after only 18 months and you could get up to 25% off

Ulysses31
Ulysses31

That's a VERY nice Chopard...