Comments:
After a stop at the new Watchbox location yesterday I stopped by the PP salon fully expecting to be ignored. Previously I had chatted with an SA when Tiffany still occupied their temporary space. He had come from Wempe and was a watch guy, we traded watches, I got to look at one of the few display models they had and he got to loupe what I was wearing. Zero pressure since there was nothing to sell but he recommended we chat again after we moved to the new store and allocations should increase with the new dedicated space. While I was there a woman asked if they had any watches for sale, he said no. She asked if one of the display models was for sale despite it clearly saying for display only, no again.
Wonderful!
Such experience does not take much from the AD, but goes a long way. Conversely, a snobbish sales attitude would ruin the chances of future purchases.
This is actually why I think think the AD model is sooooo squeezed...
Staff need to make their numbers and fair play to sell whatever they can however they need to do it or get fired.... But a brand owned boutique can serve a higher cause. There are only two Blancpain boutiques in the US. TWO! And the NYC one is awesome because the team there are more brand ambassadors than sales associates. They aren't burdened with the same sales goals that a typical SA might be and thus, they are all super chill. They'll let you try on whatever you like and then tell you to come back for a drink after work. Same for the Breguet boutique next door. Though, neither brand has a line out the door so....
But consider the holistic ecosystem...
Good salespeople want to go to the hot brands or the hot stores because they want to increase their earning potential and to maximize their effect. Today, a Master Sommelier doesn't want to work at a tiny restaurant with no critical acclaim. A Master Sommelier isn't going to work at a low traffic Panda Express - they want to work at a big famous restaurant like FOUR SEASONS (they changed the name recently), Chef Ripert's, Eleven Madison Park, something big. Back to your salesperson example... Blancpain and Breguet in NYC are corporate run stores that are not big performers. They can't usually get the best salespeople and they don't usually pay the highest salaries neither. The commissions aren't great since the products aren't flying out the doors. But these people who are great have simply adapted to the slower pace. Them working harder doesn't equate to more sales nor more reward. So they work more fun - and they work more enjoyably. They also hired people who aren't mercenaries. BUT, they can't usually get the best salespeople since they can't pay the highest. That's the biggest problem. All the best salespeople want to work at Wempe, Time Machine, or other. Those managers are high strung with high goals and hired mercenaries to help them get there. It's a vicious cycle.
The brand boutique will be there to serve a higher cause. PP isn't about extracting every dollar out of the client. Their sales team at London, Paris, and Geneva have always been patient and more ambassadors of the brand than salespersons from the average boutique. Perhaps they hire people who aren't extremely "hungry for money" or the commission component is smaller and the base salary is higher.
Ah, great point! I hadn't considered the other side of the equation, though PP could afford the best.
For PP, when the product already sells itself and there's not enough inventory for a good sales person to sell, maybe it's a moot point? Maybe they've passed some tipping point where their talent is wasted like a som at a restaurant with an empty wine cellar.... or the good stuff is reserved for VIPS, everyone else gets to choose from the box of white of white or box of red 
This visit someone actually approached me and I asked about the SA I had spoken with, apparently he was gone. Of course. The person I was talking to? Just joined a few weeks ago, wanted to know if I was an existing client or not (not) and then got the line that allocations are impossible. He introduced me to the manager who could not have cared less and barely looked up from her stack of papers. When the demand is so high, they can get away with not having actual watch people working there, anyone in a suit with a smile that can take orders from VIPs and call them when their watch comes in can do the work. While I was there an older gentleman came in just to talk, and talk, and talk. Not even sure he was interested in watches
Then I stopped by Cellini and it was the usual super nice and relaxing visit. While I was there planning what I would do if I won the powerball, a couple of tourists came in looking for Rolexes Clearly no sale was going to happen but someone helped them out all the same with all the normal good manners and common courtesy you could expect.
Clearly no sale was going to happen but someone helped them out all the same with all the normal good manners and common courtesy you could expect. Yesterday made your point so clear, PP should slash and burn all the corporate ADs as far as I'm concerned since I'm not going to be a customer in the current model. Though, maybe that's okay and I'm not their customer anyway. I wonder if the corporate AD model, as distasteful as it might be, is actually super effective. Put the brand at the top of the pyramid and let customers fight (spend) their way up. Once they make it, who cares about customer service and experience, they're in, and the big corporate ADs will always be able to feed that funnel in a way that maybe smaller family owned businesses can't.
The woman was kind of silly to ask...
The salesperson would probably interpret the woman as rude and silly. She's interrupting. And only to ask a really silly question with an obvious answer. Hannibal Lecter would definitely consider her rude. Salespeople have been spoiled lately and are definitely not accustomed to suffering fools. And that woman is probably thinking in her mind that "gee these watch store employees are so nonchalant and lazy to answer questions and rude about it too." Consumers are definitely privileged in their own minds.
Yes. ADs that carry Patek Philippe should realize it's worth more than the Patek Philippe sales alone, as clients will buy more jewelry items too.
Corporate stores are definitely less "bothered" about customers. Employees also don't feel entirely secure there, since they know that one bad quarter and their manager will be transferred and then when the new regime comes in, they may be transferred or fired too.
But you know... In the past, people were true professionals. Customers never got to see this. It was expected to give customers great service no matter what. Customers were also expected to be genteel, gentiles, polite, and have a certain behavior. Today, customers come in, reeking of marijuana smoke, saying, "yo yo yo, where da Paycheck Philippe Watches at?" Goodness, so that's why they have private VIP rooms, too bad the smell comes out of the VIP rooms. And then you've got the great customers who are polite, who make an appointment, and bring their family, they all buy a watch, and then two months later, the entire family has sold their watches on the gray market for a profit and the salesperson has just been told by their manager/buyer that Patek Philippe corporate is upset. So it's really a problem at every level, from every side.
At the end of the day... This is an imperfect world. You've got a luxury world, filled with selfish employees who think about themselves more than the business. You've got lying customers who will say anything to get a watch only to resell it for a quick buck. Do customers as a whole deserve great service? honestly... Not really. And who really suffers the most? People like you and me, who now can't get the watches we want. And can't get access to any service. But this is where we're at. And it's only going to get worse. China has 300 million people whom are considered Middle Class or above (by Western Standards of middle class) which is huge, that's probably as many as USA. Soon, we will have India coming online - much faster than expected. Soon, in another 10-15 years, there will be a hundred million people who will be traveling on planes, buying luxury goods. It's a good time to be in the luxury industry. You can reduce your quality. And the average consumer is so unaware and unsophisticated, and so overly brand conscious...
Yes. ADs that carry Patek Philippe should realize it's worth more than the Patek Philippe sales alone, as clients will buy more jewelry items too.
Corporate stores are definitely less "bothered" about customers. Employees also don't feel entirely secure there, since they know that one bad quarter and their manager will be transferred and then when the new regime comes in, they may be transferred or fired too.
But you know... In the past, people were true professionals. Customers never got to see this. It was expected to give customers great service no matter what. Customers were also expected to be genteel, gentiles, polite, and have a certain behavior. Today, customers come in, reeking of marijuana smoke, saying, "yo yo yo, where da Paycheck Philippe Watches at?" Goodness, so that's why they have private VIP rooms, too bad the smell comes out of the VIP rooms. And then you've got the great customers who are polite, who make an appointment, and bring their family, they all buy a watch, and then two months later, the entire family has sold their watches on the gray market for a profit and the salesperson has just been told by their manager/buyer that Patek Philippe corporate is upset. So it's really a problem at every level, from every side.
At the end of the day... This is an imperfect world. You've got a luxury world, filled with selfish employees who think about themselves more than the business. You've got lying customers who will say anything to get a watch only to resell it for a quick buck. Do customers as a whole deserve great service? honestly... Not really. And who really suffers the most? People like you and me, who now can't get the watches we want. And can't get access to any service. But this is where we're at. And it's only going to get worse. China has 300 million people whom are considered Middle Class or above (by Western Standards of middle class) which is huge, that's probably as many as USA. Soon, we will have India coming online - much faster than expected. Soon, in another 10-15 years, there will be a hundred million people who will be traveling on planes, buying luxury goods. It's a good time to be in the luxury industry. You can reduce your quality. And the average consumer is so unaware and unsophisticated, and so overly brand conscious...
An excellent analysis. Indeed, unacceptably poor behaviour from customers contributed to this unfortunate cycle.
I shudder to think how the situation would deteriorate when there is a surge of rich but unsophisticated consumers....
It happened big time. Starting in 2009...
Starting in 2008/2009, was just as the time the Japanese really started to slow down buying luxury goods. But no problem, the Chinese more than made up for it. Despite the 2008/9 financial crisis worldwide, the Chinese economy was well off and just coming into its stride. Watch companies upped their marketing dollars during this time (as the watch market wasn't hit too badly in the 2008/9 crisis). Soon, magazines started becoming very nice to watch companies (they were the few increasing their advertising spend). The wealthy but unsophisticated customers were great customers. Especially when they traveled to San Francisco, Los Angeles, New York, London, Paris, Tokyo, HK, Singapore, Dubai, etc. - being tourists, they had to make up their minds if they wanted the watch. Yes or no? You don't have a lot of time to decide. Salespeople were spoiled with the easy customers - these Chinese tourists were easier than local customers, they made their decision quickly. And there's no need to service the customer's needs. Plus, there were so many tourists that for 10 years there was a steady supply of them! Soon, knowledgeable sales people who gave longer and thorough presentations were criticized by the manager. Manager would tell Knowledgeable Salesperson - "Mr Knowledgeable Salesperson, your sales are down. You're being beaten by all the Less Knowledgeable people because they can make twice as many sales as you can. Your clients are spoiled with your detailed mechanical descriptions. Cut them short. We're losing sales because you're going too deep into the technical details that your customers are probably unable to appreciate anyways!" Soon, the incentives changed. Salespeople were no longer incentivized to offer great service. Salespeople with little or no understanding of watches or jewelry were top producers. You speak Chinese? Russian? Arabic? You're automatically hired! Don't know a lot about watches? Don't worry! Neither does the customer!
Excellent article and well written
Certainly a new perspective given all the recent developments with Patek ADs…love reading this! Would be interesting to see how ADs will react to more stringent requirements from Patek after the auction of sealed watches this Spring in HK.
The ADs all got a sternly worded letter from Thierry Stern about that...
All the ADs worldwide got a sternly worded letter from Thierry Stern reminding them not to sell watches with the packaging. I don't know personally which AD did that, maybe it was an AD who was going to lose their franchise or already knew they were going to lose their franchise - and thus they didn't care about this detail. But in Patek Philippe's mind, that's done and over with - and if the problem ever creeps up, the letter does imply sanctions will be put in place against that AD. But that's in the rear view mirror now. That's a requirement that could jeapordize an AD's relationship with the vendor. But following that rule alone won't keep the AD's franchise with Patek Philippe. More has to be done to keep that relationship between AD and vendor on good footing.
Thank you for the kind words and for commenting.
Just for the record Patrick, the AD in question is a large chain with, currently, several Patek Philippe licenses in the UK.
I personally made sure their name didn't appear here (and when it did, it promptly got removed), for our forum is obviously not the proper venue for a public trial. A decision on a matter as sensitive and consequential as terminating a dealership should solely rest on Patek Philippe, after they have independently reviewed all relevant information and listened to the parties involved.
This is also why, I believe appropriately, both you and I as moderators never had any *public* opinion on this matter. But needless to say, both for the rogue ADs and for the majority of others, the next several months will be VERY interesting to follow!
Cheers my friend, and thanks again for posting such a good article --- like with all your contributions to our Patek forum, it's a pleasure to see so many valuable comments and different perspectives in response! Have a great Sunday!
Have a great Sunday!Ahh! Good to know!
Yes indeed, I have no opinion about this matter. And I didn't keep a close eye on this problem as I wasn't too concerned about this problem.
I think you're much more of a good boy than I, since I've been careful to say I have no *public* opinion.....in private conversations, I think I made it *abundantly* clear what my opinion (and suggested course of action) is on this matter!😂😉
Thanks Patrick for the edutainment!
Very thoughtful in how the informational was provided and with a fun tone to keep it light. I am actually in awe with the knowledge you choose to share. Thanks and we are lucky to have you and this very special community and platform to share our passion.
Quod licet Iovi non licet bovi ...
This is a marvelous article indeed! However, when you stated at the end that there are several similar strategies from other watch brands, I have my doubts that these have the same high principles in mind as Patek Philippe.
I would rather assume that Patek is - like Rolex on another level - an exception in the industry. Its history showed that the company's essence was barely affected by global political and economic crisis alike. Its emphasis on retail partners with family structure can be explained from this history.
But I saw in my town Salzburg that other, also highly reputed watch brands have an entirely different motivation when thinning down their retail network: quick and high profit.
I can remember the time when brands like Jaeger LeCoultre, IWC, Zenith et al were on the edge of bankruptcy and survived exclusively because of the tireless work of some retailers who still believed that the brands had a future. IWC fully depended on the sales in the - tiny - Austrian market once, Jaeger was not much better. And now? After sixty years of partnership the shop's location was not good enough anymore, because it was not located in the town's main shopping road (where, by the way, the majority now are pop-ups because so many traditional shops have closed their doors), but the one parallel to it. However, the newly-opened fancy dealer owned by a Russian corporation was good enough for JLC. Needless to say, after some four or five years, this fancy dealer is history again and JLC, like IWC are nowhere to be represented in and around Salzburg.
Loyalty is a two-lane road and cannot be demanded by the watch brand solely without any obligation to return it towards long-supportive dealers. And the company-owned boutiques are there only to feed the tourists, who - in a vast majority - are not watch-knowledgeable at all. They enter with a paper in hand where the models and reference numbers are written down, ask for the price and the discount. That's it. The retail staff is trained to accomodate this type of customers, that's fully sufficient.
Finally, even in major Europeans cities like Munich, Berlin or Vienna, the local client base of those able - and willing - to purchase more than one high-end luxury timepiece (meaning at prices of 100,000 Euros/Dollars plus) more often than every two or three years is small. As a premium dealership you need to find your customers in a radius much larger than locally. In the 1950s or 60s a "good watch" tended to cost one or maybe two months' net salaries of a whitE collar worker. A Patek maybe four to six times that salary. And today? Let alone the arrogance of the brands to expect a customer to purchase several expensive watches before being allowed to appeal for a popular or specifically complicated piece! So the wish of a family-to-family relation between dealer and customer is a dream, not more. Maybe this exists between a dealer's family and one or two local "Dynasties", but I would assume this is the exception, not the rule.
Despite having used Patek as an example in my last paragraph, I did by no means intend to challenge your excellent article on Patek Philippe's dealer network, but rather your assumption that other watch brands would be in a position to execute similar retail strategies.
Marcus
You're quite right, there is indeed a double standard.
You're quite right, other brands whom have undergone their retail transformation are not doing it for the same reasons as Patek Philippe.
Lange for instance, having spoken with the Lange CEO about this, has decided that they are going to mostly leave multi-brand stores and go towards a mostly boutique model. Half of these boutiques will be corporate run, and about half will be run with a local jeweler-partner. The mentality at Lange is this; the CEO said, (I'm paraphrasing) "Lange is a very special brand and it's very difficult for salespeople in multi-brand stores to accurately convey what sets Lange apart from other top level brands." Salespeople at multi-brand stores are also very cautious not to confuse the customer - they just want the customer to buy something to get a commission - they don't care too much about what the customer buys. So when a customer is cross shopping a Lange, Vacheron Constantin, Patek Philippe, or Breguet, the salesperson simply tells the customer these brands are all at the same level - the highest level, top-level brands analogous to a Rolls-Royce in the watch industry. Thus, Lange feels that a mono-brand boutique model will allow Lange to stand out better in a more special light to consumers. So yes, the article does perhaps lead some to assume this assumption that other brands are doing the exact same thing as Patek Philippe. Hopefully our readers aren't making the assumption that things are too similar as they are definitely not.
You're right, there are relatively few local clients who can afford to buy a luxury watch more than once or twice a year. But that's considering "organic collectors" and not "investors." We must consider that investors all of a sudden entered the market since they smelled a profitable opportunity. The other problem now is that many investors have come into the watch market - looking at watches like art. And when one comes in with an "investor mindset" then the floodgates of money are released. They're no longer buying a watch for themselves - where the one or two months salary is considered. They're now making an investment, where they're now able to put in a significant percentage of their net worth into this hobby or business. Thus, even just a few upper middle class individuals who wants to divert a significant amount of money to investing in watches (around 200.000 to 300.000 Euros), can buy out a significant percentage of a jewelry store's allocation of fine watches. So many investors came in each armed with a budget of around 200-300 thousand Euros and dealers were really overwhelmed. A mid-size jewelry store before the pandemic was probably doing around 6 million euros in revenue per year, and if they were watch heavy, it was probably 66% watches and 33% jewelry. Thus, 4 million in watches. Let's say you bring in 10 investors a year during the pandemic and things really can move the needle and you immediately have a shortage!
Big cities like Vienna rely on a steady stream of tourists - to pay the bills. Tourists are wealthy. They come in, as you said, model numbers scrawled on paper, they pay quickly, and they don't require any service nor long-term relationship. Salespeople LOVE TOURISTS! They require no effort and no follow up, and they make their decisions quickly. Stores have gotten accustomed to tourists and salespeople have started to ignore the local clientele - except for the best clients who buy big, often, and don't take too long to make a decision. Soon, many of these clients will slow down - and then that means the salespeople will have to grovel and write cards to old clients, begging them to return to the jewelry store... The salespeople's easy days of tourists ended during the pandemic... But now it's coming back.
Always good to read you Marcus!
Lange for instance, having spoken with the Lange CEO about this, has decided that they are going to mostly leave multi-brand stores and go towards a mostly boutique model. Half of these boutiques will be corporate run, and about half will be run with a local jeweler-partner. The mentality at Lange is this; the CEO said, (I'm paraphrasing) "Lange is a very special brand and it's very difficult for salespeople in multi-brand stores to accurately convey what sets Lange apart from other top level brands." Salespeople at multi-brand stores are also very cautious not to confuse the customer - they just want the customer to buy something to get a commission - they don't care too much about what the customer buys. So when a customer is cross shopping a Lange, Vacheron Constantin, Patek Philippe, or Breguet, the salesperson simply tells the customer these brands are all at the same level - the highest level, top-level brands analogous to a Rolls-Royce in the watch industry. Thus, Lange feels that a mono-brand boutique model will allow Lange to stand out better in a more special light to consumers. So yes, the article does perhaps lead some to assume this assumption that other brands are doing the exact same thing as Patek Philippe. Hopefully our readers aren't making the assumption that things are too similar as they are definitely not.
You're right, there are relatively few local clients who can afford to buy a luxury watch more than once or twice a year. But that's considering "organic collectors" and not "investors." We must consider that investors all of a sudden entered the market since they smelled a profitable opportunity. The other problem now is that many investors have come into the watch market - looking at watches like art. And when one comes in with an "investor mindset" then the floodgates of money are released. They're no longer buying a watch for themselves - where the one or two months salary is considered. They're now making an investment, where they're now able to put in a significant percentage of their net worth into this hobby or business. Thus, even just a few upper middle class individuals who wants to divert a significant amount of money to investing in watches (around 200.000 to 300.000 Euros), can buy out a significant percentage of a jewelry store's allocation of fine watches. So many investors came in each armed with a budget of around 200-300 thousand Euros and dealers were really overwhelmed. A mid-size jewelry store before the pandemic was probably doing around 6 million euros in revenue per year, and if they were watch heavy, it was probably 66% watches and 33% jewelry. Thus, 4 million in watches. Let's say you bring in 10 investors a year during the pandemic and things really can move the needle and you immediately have a shortage!
Big cities like Vienna rely on a steady stream of tourists - to pay the bills. Tourists are wealthy. They come in, as you said, model numbers scrawled on paper, they pay quickly, and they don't require any service nor long-term relationship. Salespeople LOVE TOURISTS! They require no effort and no follow up, and they make their decisions quickly. Stores have gotten accustomed to tourists and salespeople have started to ignore the local clientele - except for the best clients who buy big, often, and don't take too long to make a decision. Soon, many of these clients will slow down - and then that means the salespeople will have to grovel and write cards to old clients, begging them to return to the jewelry store... The salespeople's easy days of tourists ended during the pandemic... But now it's coming back.
Always good to read you Marcus!
Thank you for reading and commenting!
It's definitely not easy. But for the right person with that happy joyous outgoing personality, owning a watch and jewelry store and building long-term relationships with clients can be a very natural thing. But yes, it's difficult to find "naturals" in this business.
great article but patek should really do something to help
customers that lost their AD to transition to another AD
They do for some of the big clients...
For clients that they have a relationship with, they do try to help with some transition. They basically offer to introduce the client to any dealer the client so chooses. This is done at mostly the regional level (at the distributor level) and not necessarily done at the HQ level.
interesting, that would be great. surpringly I have heard from many somewaht serious collectors
Im talking 10-15 pateks with a long history at the previous AD such as Shreve in San Francisco that they are out in the cold. Curious who shared this with you ?
Yes. That is the case with most clients.
But there are a few exceptions. It's almost rare. But yes. When I said "For clients they have a relationship with..." the "They" refers to Patek Philippe at the distributor level. So Patek Philippe does help some clients whom they know very well with an introduction to a new dealer. But yes, for the big clients that Patek Philippe (Henri Stern Watch Agency in USA) doesn't have a close relationship with, those people are indeed out in the cold.
Got it makes sense HSWA is the key then
how would you even get a relationship with them ? I guess only thru buying MR or rare handcrafts or making friends if you go on a factory visit
Yes. HSWA.
I've said too much already, but the clients at Shreve - may be the smartest people in the world in the tech and science space but buying watches is probably not their forte. The phrase "they don't know what they don't know" definitely applies nearly everywhere and in this case as well. I can't say much more as I've already said too much. I need to reserve some details - for the collectors who take the time to meet with me - that I unfortunately can't post the answer to your question. It'd be too long of an answer anyways.
Edited by patrick_y for clarity.
I understand - now may I offer you a nice cigar, a drink or even dinner when you are in the Bay Area ?
I am intrigued