These past few years, not a single luxury goods firm has neglected to develop its network of stand-alone stores. Image is one explanation. Profitability is another as the substantial initial investment, amortised over a number of years, is balanced by attractive returns. Today, this strategy is converging on one country: China. Barely a month goes by without a watch brand proudly announcing the opening of a new stand-alone store in one or other Chinese city.
Take these recent examples: DeWitt has opened its first international store in the Legendale Hotel, a prime location in the centre of Beijing, and is already planning a further two openings in China. After Hong Kong in 2006, F.P. Journe – Invenit et Fecit chose a location just minutes from Tienanmen Square in Beijing for its sixth store. Roger Dubuis also fell for China’s eastern promise for its first store, when it cut the ribbon in Shanghai in October last year. Corum also chose China’s largest city for its third flagship store, after Hong Kong and Geneva. The opening is scheduled for October. Corum is also extending its presence in China with six new points of sale, bringing the total number of Chinese retailers to represent the brand to sixteen.
Still in Shanghai, Swatch Group has restored the Peace Hotel, an imposing listed building on the Bund which now houses the Breguet, Blancpain, Swatch and Omega brands. Now with 180 points of sale in Greater China (including Hong Kong, Taiwan and Macao), Omega is forging ahead as one of the highest-profile watch brands in China. Cartier is adopting a similar strategy and has declared its intention to add five to ten new sites to the 30 stores it already has in 19 Chinese cities.
The lure of China
As Jérôme Lambert, CEO of Jaeger-LeCoultre, observed at the Salon International de la Haute Horlogerie: “Our principal customers are now Chinese. They appreciate form watches, ultra-thin models as well as complications such as moonphases. They also pay attention to price, quality and the movement.” As for Corum, it makes 40% of its revenues in the Far East. Swiss watch brands have found an audience of connoisseurs whose purchasing power is constantly increasing. The Chinese miracle which, crisis or no crisis, is producing annual average growth verging on a phenomenal 10%, has sent the luxury industry into a spin.
Should this be cause for concern? Juan-Carlos Torres, CEO of Vacheron Constantin, is in favour of cooling things down, despite being at the head of a brand that came to China in 1829. Swiss watchmaking has to avoid the “all-you-can-eat buffet syndrome, at the risk of jeopardising the entire sector.” As he explained at the SIHH, given the rate sales are progressing in China, the country could easily swallow up the brand’s entire production. The Celestial Empire could indeed spell paradise for the watch industry as it picks itself up from one of the worst crisis in its history. Will the lure of China always be this strong? Watch companies are certainly hoping so!