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Profits vs. Revenues
John,
I agree that supporting a service organization is indeed a costly undertaking in terms of staff, inventorying parts, equipment and facilities. It also is scaled to ensure high utilization. Most routine service takes many months to do because there is a queue and the staff/facility are highly utilized. Most service by brands also costs customers a premium. There is most certainly profit built into this end of the business and I don't see it being a break even business. I think you were perhaps questioning profit of the business unit and not its sales which I was discussing? Here is a link to Swatchgroup USA's Service price list for June 2013:
I still think the time it empirically takes (My routine service has taken 2 months to 12 months) reflects a highly utilized organization. I also think the fees charged reflect a healthy profit target on an assumed utilization of staff, fixed costs and component carry costs.
Regards,
Bob
What do you think about Brand Boutiques?
My feelings are very mixed. Let me explain my very limited experience: A. Lange: I visited their Boutique in Dresden. The lady serving us was very cold but polite but I did not feel very welcomed. Not even a cup of coffee or a glass of water was served. I...
Boutiques in Asia
My experience with boutiques center mainly in Hong Kong and Tokyo. For the latter, the staff were very courteous. No refreshments were served but the guys in the boutiques stores always served with a smile. There was less chatter on watch features but tha...
Why not just tell them?
99% of the stores of any kind I visit, someone asks me if they can help me. I just tell them "No, I'm just browsing right now, but thank you for asking. I'll come to you if necessary". Or something like that, depends on where I'm at at the moment. I don't...
Sorry for not explaining myself properly...
Yea, I do tell them that I'm currently just browsing. Most of them get it right away. However, my point is that when I'm the only one in the store, I always feel their presence a few feet away from me or in some cases accompanying me. If I see that sales ...
Now I see
And I know the feeling. It doesn't happen very often, but I understand what you mean now, you feel their eyes following you, taking mental notes of where you stop and watch for an extended amount of time etc. Although I must say, that only happens to me v...
simple … I don't want them
Not talking about how good or bad they are. I tried a few and had some great experiences. 1 I will mention … Journe in Paris. Wass there about 2 months ago and it was as it should be. Nice staff and they new what they were talking about That aside. I know...
It seems that the Boutique Editions
are a new way to attract people to Boutiques. I'm sure that does not make the AD happy. I had long discussions with a Boutique Manager outside the working hours. He explained that on the long run their Brand wants to sell everything from Boutiques because...
don't think it will work
Panerai was one of the first to try it and I know a lot of their clients didn't like this decission (PAM 448 and 449 for example) I was one of the customers that stopped buying , and I know there were a lot of us. I think they won't make this mistake agai...
My opinions
I had the exact same feeling in the Dresden Lange boutique while I left my Langematik for service. Patek staff in London and Paris were very friendly and warm. I was even offered a nice branded umbrella in the London boutique as it started to rain while I...
My fear is
that if a big part of the watches would be sold from the Boutiques, the level of service would drop dramatically. Last time we visited Paris, we wanted to buy a hand bag for my wife. We went to the LV Boutique on the main street. The staff looked us like ...
Only the nice relationship matters but
the Flagship also adds a controled "image" of the brand. I also have an AD that I love to visit in Paris. If the brand is sold there, then I buy there in priority. If not, then I try to buy to a flagship, but ONLY is I have a good feeling with a seller. I...
They Have a Place
Hi, With respect to the brand boutiques, I believe they play a few important roles for their respective brands and customers. 1.) The boutique should, in theory, offer the standard of customer service, courtesy, and product support that the manufacturer c...
It's all about the employees.
In general, boutiques do add value when the boutique does their job correctly. However, the opposite can happen as well, a boutique with poor service can damage a brand faster than an authorized dealer. Do I see value added with boutiques? Honestly no. It...
I had a similar experience at
the Lange boutique in Dresden. I wasn't expecting any beverages to be offered. I usually decline anyway. But the lady serving me could have been a bit friendlier and warmer. I didn't feel comfortable at all and left as soon as I had seen the boutique edit...
Funny!
I would have not accepted even a glass of water either. Also in our case the person was her. An arrogant woman who was dressed like just coming from a horse ride. After that visit, my interest in Lange started to shrink. Best, Kari
Sorry for the long post...
Here is the "big picture" in my view: 1) Elevate the item from accessory to icon of lifestyle/luxury: As mechanical watches move from a personal accessory to tell time to a symbol of accomplishment and a luxury accessory they need to drive this by a sense...
Thank you for response.
It looks like that the sales are slowing down, even the sales of Patek. I hope that this will lead to a situation where we will have alternative distribution channels and that finally the paid prices start to move towards more sensible ones. Best, Kari
service is seldom (if ever?) a revenue stream
I don't want to get into the other points which I find thoughtful and thought provoking, but I'd be surprised to find any brands make significant revenues on service. Watchmakers are expensive and watch servicing takes time. Polishers, clerks, customer se...
I am with you here, John...
I heard from several brands that after sales revenues cover costs - at best! Magnus
+1, John. This should be more often explained and elaborated, to get the " price under the
Service of our watches " Best, Nicolas
Profits vs. Revenues
John, I agree that supporting a service organization is indeed a costly undertaking in terms of staff, inventorying parts, equipment and facilities. It also is scaled to ensure high utilization. Most routine service takes many months to do because there i...
yes, profits
I can't really say more, but just do some cocktail napkin math for a watchmaker paid $80k a year plus benefits and taking between three and eight hours to overhaul the movement (depending how complex it is). Add in $50 to $100 in parts. Factor in unpaid w...
Some thoughts...
John, Let's follow your line of thinking a bit. If we fully burden the $80k/year salary by almost doubling it and use $150k/year. Divide that by 2,000 hours/year and you get $75/hour. Now, take your 3-8 hour estimate and you get $225 - $600 for your propo...
a little more
Ok, first of all nobody puts in 2000 hrs of real service work per year. Assuming 4-5 weeks of vacation/holidays/personal days (at my company it's more like 7-8) and even as little as 10% time invested in setup/cleanup, training, tool maintenance, etc. you...
... which is the reason why many manufacturers invest to extend service intervals ...
... and reduce repair effort and timaround. Simply exchanging parts, like in the car industry, is easier, quicker,and cheaper for the manufacturer. If I consider this a benefit? At short terms, maybe. But - like for the car industry, where technical knowl...
Very well taken point.. Paradigm change forced.. Or simply tides of time ?
.. your "warning call " should be heard and resonate.. Thank you, and have a good next week ! Best, hs
Excellent reply - very valid points!
particularly on your last paragraph regarding the crowding out of the retailer as the last non-brand controlled entity in the value chain (assuming that brand move towards a verticalised business model). What you write here is not just an assumption but i...
Very well said.. And perceived.. Thanks for explaining the store-in-store model ..
.. and also its repercussions on both sides.. Very educational remarks, thank you ! Best, hs,
Well Said
You have stated my thoughts much better that I could. Boutiques are great for the watch companies... not so much for the consumers. Best Wishes, Glenn
Ummmmm......
My personal opinion is that boutiques are good to visit as there selection is generally wider and a good place to "order" from if there is a reference you just have to have. I prefer to negotiate with a dealer and order what I want for the best price I ca...
I can confirm several of your experiences...
with brand boutiques being a mis-and-match. Sometimes they are excellent, some times there is a lot to be improved. This diverse picture holds true even if you consider different boutiques of the same brand. Is there a difference whether the boutique is b...
A Certain Kind of Information
It really isnt enough to say that a boutique is better informed than an AD, unless you have narrowed your choice to two models from the same maker. Ask the knowledgeable Breguet gent whether you shouldn't buy the comparable Vacheron. Ask the Vacheron gent...
Ladies and Gentlemen ...
Here, on the South Hemisphere of the 3rd world we have quite a few brand boutiques and ... Everything can be summarized to people. Yes, PEOPLE not brands. Some boutiques, of very prestigious brands will see my hard earning money when the hell freezes over...
I must pretty much agree...
Some Boutiques employ people who behave like they would own the entire Brand and people visiting their shop, are like flies spoiling their appetite. Lange in Dresden comes into my mind... Best, Kari
+2 on both your arguments, Nilo.. Very well taken.. It's people, stupid !..
.. I somehow remember that line in Pretty Woman , where Richard Gere, tells Juia Roberts: ".. Stores often are not nice to customers, they are nice to Credir Cards".. Best, hs
I am "generally"not impressed,nor the boutique factor affects me..
The glitz and glamour of a boutique never affects my view on any watch simply because…I don t generally buy from them,especially when the same watch can be sourced with a much bigger discount elsewhere. At the end of the day,I have a much bigger buzz in s...
Do you mean with the better half
the young lady who looks like exploding? I guess during a few weeks time she'll divide into two. Best, Kari
Inventory
One of the most interesting aspects of direct boutique sales is how the conglomerates will deal with inventory in terms of accounting. When they sell inventory to ADs the goods go off their books. When using a boutique/direct sales model, inventory leaves...
Long term goals seem to be different ..
I think that mulli-brand AD's are more inclined to establish long term relationship with the customers. The good ones are taking their time trying to learn you needs, tastes and preferences. I guess the reason for that is the versatility of their inventor...
I will ask my personal shopper how his experiences are :)))....
I hope they don't give him too much champagne as I pay the bill ))) some water is ok though
Champagne or water is not the point
but the point is that if the client is not offered a chair and nothing to drink, it is quite difficult to feel welcomed. Today the watches are so expensive that it is often cheaper to buy an average car. And I guess nobody expects to go to a car shop, loo...
Very interesting answers, I would add connection to the market
We hear often in januray Baselworld or SIHH " we have sold all our production for the year to come". Actually they have sold to dealers, not to customers. The Boutique gives to the brand a more direct connection to the market. That means sale... and stock...
Beautiful Displays & Surroundings but...
I've only been in the brand boutiques in NYC and Texas (Dallas, Houston, San Antonio) but my impression is that they are a nice way to view watches (many more choices than in AD retail shops), but Boutique employees don't seem to be that knowledgeable. Mo...