AP CEO : « I don’t need four walls to sell you a watch tomorrow »

queriver · Aug 11, 2020

What I found more interesting than the online vs bricks-and-mortar debate, which isn't new, was the CEO saying he "guesses" (he said this twice for emphasis) the manufacturers get directly involved in the secondary market. This has major implications. The buyer trades their old brand XYZ watch in for a new model. XYZ company services/repairs/restores the old watch and sells it as a guaranteed pre-owned. So the watch companies want to clip the ticket more than once and that makes sense. The CEO said the 2ndary market is perhaps 10 times the new market, why wouldn't they want a share of that? (view from 14:45, from 15:50 min)

arturo7 · Aug 11, 2020

Capt Cave Man
There are plenty of sites who have reviewed these items as well as Which in the UK who list the top x based on their tests and reviews etc.

The problem is that most of these so-called review sights are pay to play.

mzinski · Aug 11, 2020

queriver
What I found more interesting than the online vs bricks-and-mortar debate, which isn't new, was the CEO saying he "guesses" (he said this twice for emphasis) the manufacturers get directly involved in the secondary market. This has major implications. The buyer trades their old brand XYZ watch in for a new model. XYZ company services/repairs/restores the old watch and sells it as a guaranteed pre-owned. So the watch companies want to clip the ticket more than once and that makes sense. The CEO said the 2ndary market is perhaps 10 times the new market, why wouldn't they want a share of that? (view from 14:45, from 15:50 min)

^ This!
It’s surprising they haven’t gone this route. In addition to the economics, they’d have an opportunity to bring watches back in house after they’ve been worn to evaluate for R&D.

TechFounder · Aug 11, 2020

What they should really be doing is what the audio cables loaners do. Pay a fee to them to lend you watches that you can try at home for 15 days. If you decide to buy the watch you can use the rental fee towards a new one. If not, they keep the fee and you return the loaner. Of course there will be additional charges if you damage the watch in any way.

This will be a better way of making sure that the people who do this are serious about buying in the first place.

OmegaRody · Aug 11, 2020

noelekal
If I'm going to make a big ticket purchase I want to see it. We bought a piffling new refrigerator the other day. We wouldn't even order it out, but had to go see the models, make comparisons, and take our measure of relative quality.

No way will I purchase a new watch of consequence online.

Exactly me neither. And for watch stores they can adapt easily to health safety protocols I dont see big deal on that.

lillatroll · Aug 12, 2020

I like talking to the people who I am going to spend my money with. If I think they are a Dick, they are not getting my money. I don't care if it costs a little more somewhere else.

I don't really like all this e commerce because as as soon as their is a problem you have to deal with some faceless bot. I have just been shafted by booking.com, all I get is AI standard response. Will never use that site again.

SpeedyPhill · Aug 12, 2020

Always better to hold & see the real thing... e-commerce, well the future will tell ...

queriver · Aug 12, 2020

Flagship boutiques selling luxury goods on high-end retail streets and shopping malls don't come cheap. As long as there were busloads of Chinese tourists queuing up to buy they probably paid their way but those days may not return. While retail rents will go down it may not be sufficient to offset lost revenue. Change is certain.

Capt Cave Man · Aug 12, 2020

arturo7
The problem is that most of these so-called review sights are pay to play.

Agree to some extent i.e. Which, I'm fortunate to have access via work...

There is also, in general, a huge amount of freely available reviews on-line as well... just like buying a watch, you do your homework on the item and then the best price.

kov · Aug 12, 2020

I gave this some further thoughts and the first thing that came to my mind was "again some layoffs to come" where tech is going to make people redundant. Then I had a good laugh : I hope that not all the luxury brands are going make the same move same way - their boutique agents will have really some hard time to find another similar job or to accept a similar job in another sector where the rules of the game are totally different... considering how arrogant and jerk some of the boutique guys use to behave, their ego might take a hard hit in their next jobs. 🤦

michael22 · Aug 12, 2020

queriver
Flagship boutiques selling luxury goods on high-end retail streets and shopping malls don't come cheap. As long as there were busloads of Chinese tourists queuing up to buy they probably paid their way but those days may not return. While retail rents will go down it may not be sufficient to offset lost revenue. Change is certain.

If luxury watch brands can't afford such premises, no-one can. So which businesses will be there instead?
It gives credibility to a brand, to have a small number of boutiques in high end centres. There is a value in it, not just a cost.

OmegaRody · Aug 12, 2020

michael22
If luxury watch brands can't afford such premises, no-one can. So which businesses will be there instead?
It gives credibility to a brand, to have a small number of boutiques in high end centres. There is a value in it, not just a cost.

Agree and holds true even more for luxury watch brands

STANDY · Aug 12, 2020

kov
I gave this some further thoughts and the first thing that came to my mind was "again some layoffs to come" where tech is going to make people redundant. Then I had a good laugh : I hope that not all the luxury brands are going make the same move same way - their boutique agents will have really some hard time to find another similar job or to accept a similar job in another sector where the rules of the game are totally different... considering how arrogant and jerk some of the boutique guys use to behave, their ego might take a hard hit in their next jobs. 🤦

The whole world will see a shift from bricks and mortar, not just in shops but in all businesses. Seeing that all the working from home worked over the last few months many companies will have a smaller office footprint.

Many shops have sold just as much online than in store and many shops that never had a online presence now do.

Only selling from a boutique and having them closed for several months will push many brands onto online.

The lack of flying international will hit every brand that has a airport presence.

The COVID experience is not by any means over. 6 months to hit 10million then 6 weeks more to hit 20million

kov · Aug 12, 2020

michael22
If luxury watch brands can't afford such premises, no-one can. So which businesses will be there instead?

Are you saying it's not the right moment to invest in commercial premises? 😉

Archer · Aug 12, 2020

STANDY
The whole world will see a shift from bricks and mortar, not just in shops but in all businesses. Seeing that all the working from home worked over the last few months many companies will have a smaller office footprint.

Yep, and this will have massive ripple effects through all kinds of industries...

STANDY
The COVID experience is not by any means over. 6 months to hit 10million then 6 weeks more to hit 20million

I believe the worst is yet to come...

kaapstadflaneur · Aug 12, 2020

queriver
What I found more interesting than the online vs bricks-and-mortar debate, which isn't new, was the CEO saying he "guesses" (he said this twice for emphasis) the manufacturers get directly involved in the secondary market. This has major implications. The buyer trades their old brand XYZ watch in for a new model. XYZ company services/repairs/restores the old watch and sells it as a guaranteed pre-owned. So the watch companies want to clip the ticket more than once and that makes sense. The CEO said the 2ndary market is perhaps 10 times the new market, why wouldn't they want a share of that? (view from 14:45, from 15:50 min)

I think this is the big takeaway from that interview. The big brands with waiting lists for steel sport watches are looking at the secondary market feeding frenzy and they're wondering why can't they have a slice of that much larger pie. If those brands take-in older pieces in trade, refurbish them, and then sell them as certified pre-owned with a several year warranty (just as Mercedes-Benz and Porsche do), I imagine there will be a sizeable number of buyers who will be willing to pay that premium for the peace of mind that they aren't getting a fake and that the watch has been properly serviced.

queriver · Aug 12, 2020

michael22
If luxury watch brands can't afford such premises, no-one can. So which businesses will be there instead?

That will be decided by retail shop owners and potential tenants. Prime retail spaces will go to those who can afford to pay the most rent but it is no foregone conclusion it will be luxury goods brands in future. For an example about changes in the retail sector, read this article in The Wall Street Journal, August 9th, about spaces in shopping centres formerly leased by department stores potentially being occupied by Amazon as fulfilment centres. Who would have thought?:

https://www.wsj.com/articles/amazon...y-stores-into-fulfillment-centers-11596992863

Amazon and Mall Operator Look at Turning Sears, J.C. Penney Stores Into Fulfillment Centers

The largest mall owner in the U.S. has been in talks with Amazon.com Inc., the company many retailers denounce as the mall industry’s biggest disrupter, to take over space left by ailing department stores.

Simon Property Group Inc. has been exploring with Amazon the possibility of turning some of the property owner’s anchor department stores into Amazon distribution hubs, according to people familiar with the matter. Amazon typically uses these warehouses to store everything from books and sweaters to kitchenware and electronics until delivery to local customers.

The talks have focused on converting stores formerly or currently occupied by J.C. Penney Co. Inc. and Sears Holdings Corp., these people said. The department-store chains have both filed for chapter 11 bankruptcy protection and as part of their plans have been closing dozens of stores across the country. Simon malls have 63 Penney and 11 Sears stores, according to its most recent public filing in May.

It wasn’t clear how many stores are under consideration for Amazon, and it is possible that the two sides could fail to reach an agreement, people briefed on the matter said.

The talks reflect the intersection of two trends that predate the pandemic but have been accelerated by it: the decline of malls and the boom in e-commerce.

JwRosenthal · Aug 12, 2020

kaapstadflaneur
I think this is the big takeaway from that interview. The big brands with waiting lists for steel sport watches are looking at the secondary market feeding frenzy and they're wondering why can't they have a slice of that much larger pie. If those brands take-in older pieces in trade, refurbish them, and then sell them as certified pre-owned with a several year warranty (just as Mercedes-Benz and Porsche do), I imagine there will be a sizeable number of buyers who will be willing to pay that premium for the peace of mind that they aren't getting a fake and that the watch has been properly serviced.

I think Rolex’s closing of independent watchmaker accounts in the last few years was the tell-tale of this move. If they make it near impossible for watchmakers to service their watches, then the likelihood of a customer taking it back to Rolex (and possibly trading up) goes up.
Audio Research Corp. has admitted that a large percentage of their income comes from servicing their older equipment- not new sales. McIntosh has offered buy-back/trade in incentives for years- and they have third parties lined up to service and sell the used equipment As a pass-through.

Although a different industry, the business model has worked for them and I can see the heritage watch companies moving in this direction. Why lose the sale on a $10k GMT in a boutique in which you have to pay overhead when you can sell 40 year old ones for $25k all day long online with a factory warranty.

lillatroll · Aug 12, 2020

michael22
If luxury watch brands can't afford such premises, no-one can. So which businesses will be there instead?
It gives credibility to a brand, to have a small number of boutiques in high end centres. There is a value in it, not just a cost.

I was reading an article from the NY Times yesterday about many brands pulling out of New York shopping malls. Victoria Secrets has a flagship store that they pay 937000 usd per month for. You need to be selling a lot of sexy underwear to cover the rent every month.
The article said that many big brands are closing down in New York city because of low footfall and sky high rents.

Archer · Aug 12, 2020

queriver
What I found more interesting than the online vs bricks-and-mortar debate, which isn't new, was the CEO saying he "guesses" (he said this twice for emphasis) the manufacturers get directly involved in the secondary market. This has major implications. The buyer trades their old brand XYZ watch in for a new model. XYZ company services/repairs/restores the old watch and sells it as a guaranteed pre-owned. So the watch companies want to clip the ticket more than once and that makes sense. The CEO said the 2ndary market is perhaps 10 times the new market, why wouldn't they want a share of that? (view from 14:45, from 15:50 min)

It's already happened - Richemont bought out Watchfinder 2 years ago I'm sure some do this in other ways that are not so open, but this isn't all that new either.