The digital economy is transforming watch retail sales – Robb Report

In January, when Omega announced the sale of its limited-edition Speedmaster “Speedy Tuesday” chronograph on Instagram, all 2,012 pieces sold out in four and a half hours. In a business that has been painfully slow to embrace e-commerce, the sale was a milestone, especially for industry insiders who were among the potential buyers.

“I’m absolutely disgusted that I missed it,” says George Bamford, founder of Bamford Watch Department, a London-based company specializing in customizing sports watches. Bamford found an opportunity to redeem itself in June, when Hodinkee teamed up with TAG Heuer to sell the limited edition Carrera Skipper for $5,900, a modern take on a vintage Heuer reference limited to 125 pieces. “I fell down the stairs in my boxers, and sat down at my computer and bought the watch on the spot,” Bamford says. “Then I cooled off to buy one for my wife and it had sold out.”

Five years ago, a serious collector like Bamford would have been ridiculed for suggesting that a reliable source of fine watches could be found on the internet – on a social media site, no less. Five years, however, is an eternity in web years. Today, the world of watch retail, once ruled by multi-brand brick-and-mortar stores, is being invaded by digital companies that are revolutionizing the way new, used and vintage watches are bought and sold.

“There’s no doubt in my mind that 65% of watches in the next three years will be delivered online,” says Andrew Block, president of TrueFacet, an online marketplace for jewelry and pre-owned watches. “The online experience is much better than in stores,” says Block, who spent nearly 30 years in traditional watch retail as the former executive vice president of Tourneau. “You can get all the information you need; you can find a price; you can do it from your sofa, your garden, your car. Multi-brand stores have become showrooms. People behind the counter don’t give customers the experience they deserve. And that’s a problem.

The online action on TrueFacet.com, a player in second-hand watches

Photo: courtesy

It’s hardly the only one. The high-end watch industry is in the midst of an existential crisis resulting from forces set in motion a decade ago when Swiss watchmakers embarked on overproduction to supply the Chinese juggernaut – and have continued to overproduce, even when it became clear that falling sales in China and elsewhere had created a market saturated with inventory. At the same time, many big brands have embraced the idea of ​​opening boutiques exclusively dedicated to their brands and offering a full margin to their bottom line. Many companies went down this path, unaware of the damage it was inflicting on their longtime partners who had historically nurtured them with their new customers.

“As a traditional retailer, you have a real problem,” says Hamilton Powell, CEO of Crown & Caliber, 5, one of the biggest new entrants to a crowded field of online watch sellers. “You are forced to buy $10 million worth of inventory, but you can only sell $4 million. What happens to the remaining $6 million? The retailer sells the inventory at a great discount. »

Much of this excess inventory found its way to the online market, fueling a boom in “never worn” wristwatches being sold as “pre-owned” by websites offering discounts of up to 40% on the list price. Although models no longer come with their original factory warranties, top online players including TrueFacet, Crown & Caliber and Govberg Watches, a Philadelphia, PA-based operation that recently acquired WatchUWant .com, will reflect the brands. warranties using their own internal service capabilities. But all these new offers have effects that are likely to have a lasting impact on the retail landscape.

“Customers are getting smarter — they don’t want to pay full retail price,” says Reggie Brack, a former Christie’s executive who recently joined Detroit-based startup StockX, an online exchange for collectible sneakers and , from May, watches and handbags. “With online resources, you have that sales data and know how a price should be set.”

Even independent watchmakers, long considered too niche to be viable online, are getting in on the digital action. In July, Skolorr.com debuted as an organized platform for 20 artisans and independent brands, including Czapek & Cie, Hautlence and Manufacture Royale.

Panerai PAM00731

Panerai breaks tradition with its PAM00731, available only online

Photo: Courtesy of Panerai

“There are so many areas where no one sells Czapek,” explains Xavier de Roquemaurel, CEO of the Geneva brand. “You have to leave a lot of doors open.”

But while survival may be a priority for many boutique makers in the industry, the same cannot be said for extremely well-distributed companies like Panerai, which in June released an “e-commerce micro-edition” of the PAM00731 Luminor Submersible Automatic. Acciaio. Limited to 100 pieces, the model marked the first time the brand had created a piece as its first e-commerce. “If you don’t evolve, you die,” says Angelo Bonati, CEO of Panerai.

John Simonian, founder of Westime, a respected watch retail chain based in Southern California, agrees with this sentiment. The future, he says, will be “survival of the fittest”. As owner of Westime, one of the country’s most successful multi-brand retailers, Simonian has ably played industry trends by opening a number of franchise mono-brand boutiques for Audemars Piguet and Hublot. Nevertheless, it is far from abandoning Westime’s foundation as a retailer closely tied to its customer base. “Overall, the multi-brand retailers that remain will be strong because not every brand can open their own single-brand store,” he says. “They need some kind of scene. Our job is to educate. We have many wealthy customers who can afford expensive luxury watches but they don’t know [which is] better. It is our job to educate them to increase the market.

The two most successful watch brands in the United States, Rolex and Patek Philippe, are also loath to change a system that works effectively for them.

“There is little urgency for Rolex to sell online as they are almost fully represented in almost every market in the United States,” notes Andrew Block.

“People buy these watches for a specific event in their life,” says Larry Pettinelli, US President of Patek Philippe. “They graduated, sold their business. When you’ve done that, pressing a few buttons on a computer doesn’t match the experience.

That’s certainly true for Billy Ruvelson, a Los Angeles-based collector. “I’ve never bought a watch off an internet site,” the property developer says, showing off the stainless steel and rose-gold Rolex Yacht-Master he picked up from Gearys Beverly Hills, the retailer he buys almost all of it from. -all of its timepieces. “In the watch world, the cheapest price is often not the best deal.”

Also, says Ruvelson, no website can offer him the perks he enjoys as a loyal Gearys customer, such as invitations to the Patek Philippe factory in Geneva and dinners hosted by the brand where he sits next door. of Patek Philippe President, Thierry Stern.

“Jumping from dealer to dealer for price – ultimately collectors will pay the price,” John Simonian echoes. “Those who show loyalty to the same retailer, they will be invited to more events, more trips, and they will have access to unobtainable watches. If I receive an unobtainable watch, who will I call first ? “

Of course, for every old-school buyer like Ruvelson, there’s a collector obsessed with finding deals or looking from the comfort of their home. This could explain why the most savvy retailers invest equally in physical and virtual environments to provide customers with a seamless omnichannel experience. However, given how new all of these options are, it remains unclear which one will prevail over time. Will watch companies provide the financial incentive to nurture internet shoppers? Or will customers, deciding that the experience is part of a luxury purchase, avoid the shortcomings of a digital-only experience?

“Before, a customer’s journey started with the visit, that was the first point of engagement,” says Michael Tay, Group Managing Director of The Hour Glass, a Singapore-based multi-brand retailer with 22 stores in six countries. “Today that line has moved into the digital realm, so our first point of engagement has to be online.”

In August, The Hour Glass unveiled the first part of what Tay calls its “customer experience management platform,” aka e-commerce. But he doesn’t believe that will outweigh the sensory experience found in-store.

“Online gives you the ability to research the price, the ease of finding a watch you want, and the convenience of delivery,” Tay concludes. “But there’s one thing a salesperson can do in person that you can’t get online: they can make you smile.”

Floyd N. Morlan