Even retailers get the blues, and who can blame them when it feels the ground is slipping from beneath your feet. The business of selling watches has witnessed some major shake-ups, while e-commerce continues to tunnel into the luxury market. Retailers have had no choice than to riposte but how, given that young generations have very different purchasing habits to their elders and an entirely different attitude towards luxury. A panel discussion at Dubai Watch Week considered some of the challenges facing retailers today. Michael Tay, Managing Director of the Singapore-based The Hour Glass group, which operates more than 40 points of sale in ten of the biggest Asian cities, was among the speakers.
“For two hundred years we stuck to the same model,” he declared. “Manufacturers made watches that were picked up by regional agents who were in contact with retailers such as us. Not so today. Over the past fifteen years, say, manufacturers have opened subsidiaries around the world and extended their network of own-name stores. Clearly we saw this as a threat, and while this no longer looms large, there are still clouds on the horizon. One of the obstacles retailers face is the price policy brands impose, which is the same for all markets. Then there is the lack of support during this period of uncertainty.”
Surely there is an urgent need for manufacturers to cut back production with respect for the traditional values of watchmaking.
Retailers point to the investments they make, whether to promote the brands themselves or maintain a network of stores, with no chance of a return on this investment before seven to ten years, depending on the location. As the watch world faces what Michael Tay describes as “a crisis of confidence”, reflected in an abnormal accumulation of stock on certain markets, retailers are less and less inclined to take risks. “This has been the most painful experience in all my thirty-year career,” Tay declared. “We need to be asking the right questions. Surely there is an urgent need for manufacturers to cut back production with respect for the traditional values of watchmaking? As for us, we can no longer content ourselves with living in a transactional world. We need to adapt our organisation.”
I agree with those who see the arrival of smartwatches as something positive. A smartwatch is often a person's first wristwatch.
All and sundry
Not that the concept of a retail store is in any danger. Mohammed Seddiqi, Chief Commercial Officer of Ahmed Seddiqi & Sons, a family business now in its fourth generation, with 65 points of sale across the United Arab Emirates, couldn’t be clearer: “Have Apple Stores been wiped off the face of the earth? No, and for a simple reason. Even in this highly volatile area, customers need to touch, see, talk with the sales staff, and the same is true for our customers. For them, the boutique experience is vital. On similar lines, I agree with those who see the arrival of smartwatches as something positive. A smartwatch is often a person’s first wristwatch. They soon go on to develop an interest in mechanical watches, and that’s when they will come to us to discover veritable works of art.”
Will these young people even get as far as the door of stores which many find intimidating, as Bulgari’s representatives admit. It’s a question that needs to be asked in this age of the Internet and social media. “We should be taking our cue from the platforms that have perfectly identified a certain clientele’s needs and successfully built up a community,” commented Michael Tay. “We must learn to use these techniques, bearing in mind that the greatest challenge is to elicit the emotions. I personally believe in a digital future, even in our professions. First, though, we need to accept that the rules have changed. Nowadays, everyone is selling everything to everyone through every possible channel, including the grey market, and regardless of whether we’re talking about new or pre-owned, brands or distributors, retailers, even customers selling their own watches.” Any which way, one might say, although the watch world may be wondering which road to take in a market heavy with inventory.