A lot of people have opinions. And a lot of people think their opinion is right. But these people often don't consider other perspectives and the valid opinions of those perspectives. Thus, this post is designed to help build some empathy for the industry professionals who make the horological products we watch collectors adore.
A lot of WatchProSite members see the new shift of watch brands shifting away from multi-brand stores towards mono-brand stores as a bad thing and as purely profit taking move.
I disagree, and I've said this time and time again to individuals whom I've met, taking on the endeavor of building a store and managing a store is a big risk for any brand. It is especially a huge financial risk. As retail operations are extremely costly. Most people don't know this, but a typical luxury jewelry/watch retailer will spend around 10% of their revenue on rent alone! Another 50%+ for cost of goods sold. So there's really not a lot of margin remaining.
Having spoken with multiple CEOs and collectors, I've assembled a few perspectives, most consumers often don't see things from the perspective ..
1a. Majority Collectors' Perspective: we like multi-branded stores as the store; for instance a store that sells Patek Philippe, Vacheron Constantin, Breguet, and Lange & Soehne is neutral, as all of these brands are regarded as the top high horology brands. They let the customer decide, and the staff isn't incentivized to push the customer in any direction as the staff presumably gets an identical commission regardless of what brand they sell.
1b. Minority Collectors' Perspective: we like mono-branded stores for the deep experience they offer. True, as a collector of multiple brands, I have to maintain more relationships, and I occasionally get some sales pressure from a store.
2a. Industry executives have stated, they don't like this multi-brand approach. Breguet's deep history and different approach of making watches is not always well reflected by staff in multi-brand stores says one Breguet employee. A Lange executive informed me last year that Lange will transition to a more mono-brand environment - as Lange is very different from the Swiss brands and they need sales staff to reflect Lange's unique German approach to watchmaking. They hope that the deeper experience and imparted knowledge about the unique aspects that make Lange special will resonate with certain clients who will really appreciate those special differences and thus become long-term Lange clients. The executives do explicitly mention increased profit is not a motivating factor and that starting stores are a major financial risk.
2b. Industry executives have also stated that they do like the multi-brand approach IF there is an EQUITY PARTNER on site. Thierry Stern of Patek Philippe has said that local family-operated jewelers with deep roots in the community give a sense of permanency and build lasting relationships with their clients. This is the best way to sell personal accessories, with these very long-lasting relationships that are forged over decades of relationships. Thierry Stern didn't explicitly say this part, but he implied that with proper training and extensive product knowledge is also extremely important for all dealers.
3a. The Business School Perspective (i.e. my Economics perspective), McDonalds sells three main items; hamburgers, French fries, and Sodas. This is perfect to be integrated in one store as it allows clients to have a one-stop shop. A client can get all three items in one store. It would be inefficient to have three separate stores; one for hamburgers, a separate for French fries, and a third for sodas; consumers would have to make three different transactions and costs would be higher. This McDonalds serves everyone, from the individual who needs a quick meal, to the average Joe. But true gourmands may find the meal at McDonalds a little lacking as nothing is done superlatively well.
3b. HOWEVER, I'm not only a basic pragmatist, I also understand art and luxury transcends logic. What if the three independent stores each with a separate door on the same street? First door has a chef making artisanal handcrafted burgers, and this master burger griller didn't know how to make French fries quite as well... The next door has a French fry maker had been making his own French fries for 40 years and was a Takumi expert in French fries, he even specifies his potato moisture and starch content and oil requirements to his vendors. And the soda maker was a master blender who used to work in Grasse, France as a perfume maker and made the most delicious and botanical sodas... This would mean that the gourmand would have a better experience.
3c. The ULTIMATE... Combine 3a and 3b. An expert high-end restaurant that combines all the arts under one roof with an exceptionally trained team of cooks, servers, and even a certified sommelier whom will advise clients what drinks to order. Combine that with a charismatic owner who is on-site, welcoming patrons, shaking their hand, wishing his patrons happy birthday, anniversary, etc. The restaurant's charismatic owner-manager also donates the uniforms to the local PeeWee Baseball team and donates pies to the local Boy Scouts Troop whenever the Scouts need to have a fundraiser. Doesn't this benefit the community the most?
So... Which of these viewpoints do you agree with? Any additional thoughts? I hope that everyone isn't thinking that going to the boutique model is solely a profit move.
Seems like corporate stores like Watches of Switzerland, Tourneau, Bucherer, and others might be in trouble, as they don't seem to appeal to neither 2a nor to 2b. And they don't usually have an especially well trained staff nor strong ties with the local community like a family jeweler would have. From a manufacturer perspective, these corporate stores don't seem to have a lot of major advantages other than having greater financial stability.
Another thing, most consumers are not rational about their watch dealer/jeweler. Most consumers state the service is superlative and the product knowledge is excellent. Consumers often like their jewelers who feed their acquisition habit so much that they lose perspective. I witnessed one collector rave about his salesperson's product knowledge and we witnessed the same salesperson have extreme difficulty explaining what the difference was from a Tourbillon and a normal balance and escapement wheel was to another client. The collector later admitted he overstated his salesperson's product knowledge. Thus, in order to even out the playing field, we have to go towards a standardized test, the FHH Academy Certification test with Advisor, Specialist, and Expert ratings. This is definitely an area every store can improve. In all my travels through Asia, Europe, and America, I have never once met a store where the majority of the staff were truly knowledgeable. The test only takes two hours, and any retail employee with a competent working knowledge about watches should be able to pass the Advisor level. Again, the build out of the interior of a Rolex store is often in the millions of dollars (the green glass panels, the wood panels, the limestone panels are all expensive), a mid-size mall location in Silicon Valley recently spent $3M on construction likely to be amortized over 10 years. Yet, many stores balk at training costs; even spending 1% of this amount on employee training is a difficult ask for many stores.
I hope you learned a different perspective today. As always, I look forward to reading YOUR PERSPECTIVES as well! Do you like Mono-brand stores or do you like Multi-brand stores?
A boutique with some simulated outdoor space - the new FP Journe boutique in Manhattan!