Hong Kong has become Swiss Watch central, a shopping paradise for watch lovers. While covering the Hong Kong Watch and Clock Fair for Europa Star, I visited Frances Yip, Assistant General Manager, King Fook Jewellery Group in the company’s newest location at The One, 100 Nathan Road.
Europa Star: How’s business?
Frances Yip: Overall, business has been very good. We have had an increase over last year. The strong economy in China has really helped us. Most of the brands are focusing on the needs of the Chinese customer, with more classical styles and more diamonds on watches for the Chinese customer.
There is a benefit for the mainland Chinese to buy here, because there is no luxury tax in Hong Kong. If a collector is buying a watch for half a million Hong Kong dollars, for example, he can save enough money to pay for his entire family to come here for vacation. The saving is over 20%. Add to that the fact that the RMB is quite strong against the Hong Kong dollar, which makes buying here even more attractive.
ES: How has business in Hong Kong changed over the years?
FY: I joined the company in 1973 and there has been a lot of change since then. Before, when I started, in an area of 1,000 square feet, we would carry 40 brands, and now we may only carry six brands. The stand alone concept, which we have here at The One, performs better than the multi-brand concept in some locations. The consumer, especially the Chinese tourist, has more confidence in the brands because of the environment and the experience. They feel safer.
ES: What is your relationship like with other retailers?
FY: We have a very good relationship with other retailers. We respect our competitors. In Hong Kong, we have a watch federation and we have meetings to discuss best business practices. We are not cutting the prices like before. About 20 years ago, retailers from Hong Kong were always blamed by the Swiss watch manufacturers for being discount city – there was a discounting war here.
Our supply of the best products is enough, so we don’t need to give discounts. For our regular customers we will give them priority for the hot items instead of offering them big discounts.
ES: What makes King Fook unique among Hong Kong retailers?
FY: Hong Kong is small, only 460 square miles, so things are more concentrated. The density is high, so we have a lot of watch stores packed into a small area. For us, we are keen on working with the brands where we have room to expand. We have a few exclusive brands, like Laurent Ferrier, Jacob & Co, Robert & Fils, IceLink, HD3 and others.
We want to have different segments with the brands. Our main revenue is from the big brands, there is no doubt. In the meantime, we want to develop some more niche watch brands that we can carry exclusively.
In the future, we will add more niche brands that are exclusive. We know that we need this, because there is a gap in the market. They are harder to sell than Rolex, for example, but we need to have something new and different to offer our customers.
ES: What is the biggest challenge facing your store right now?
FY: The biggest challenge is finding locations because the rent here is the highest in the world. The lease terms, compared with other countries, are too short. Here, the lease term is usually three years. In the first year, we are establishing our store, in the second year, we have good growth, and then in the third year we have to renegotiate the lease again. It’s almost impossible to get longer lease terms. To counter that, we do own some stores outright.
ES: What is the biggest challenge facing the watch industry right now?
FY: The focus of the brands is on the Chinese customer right now, but there is no way to know how long their buying power will last. If the Chinese customer disappears, what will the watch industry do? There has to be a plan and the industry has to focus on developing other markets as well.
ES: How do you market your store?
FY: We do a great deal of co-op advertising with our brands – we have billboards, magazines, selective newspapers, private events, some Chinese in-flight magazines and more.
The newspaper and the magazines are to remind the consumers that we are here. The one that has the most immediate effect is the billboard. If we advertise a certain model on a billboard, we see sales on that model spike.
ES: Do you do repairs at your store? How do you handle repairs?
FY: Over 90% of our repairs we send back to the brand’s service center. Every brand has their own standard, so we feel it’s better to send the watches back to them, as they can provide a more complete service. It takes from about four weeks to several months, depending on the brand and the complication, and our customers are o.k. with that length of time.
ES: How do you do training?
FY: The individual brands do training for us and they do a very good job. Most of the brands have a very complete product book. Our staff can read and train themselves about the brands. Today, most brands really concentrate on training our front line staff, because they are the ambassadors of the brand to the customers. In Hong Kong, it takes about two years to train someone completely.
ES: Are you optimistic about the future?
FY: Yes. I think the quality of our service is improving all the time. I think Hong Kong is a shopping centre for people all around the world and people have a lot of confidence buying in Hong Kong – it has become a Swiss watch retailing centre. People come here and they can buy the newest models and they can see the brands’ full ranges, and Hong Kong is tax free.
ES: Do you carry any Chinese brands?
FY: We don’t carry any Chinese brands in our shops, yet. The well developed international brands require a high-quality presentation, with a lot of space, which has resulted in improved sales. There is not much room for other brands. In addition, the quality of Chinese brands is not yet up to an acceptable level. The majority of our customers are coming from China, between 50% and 70% per cent of our customers are from the mainland. In ten years time, I think the Chinese brands will be stronger if they continue in the right direction. If they can move towards the Swiss way of production and concentrate on quality control, I think they will have a great future. They are very competitive with their prices.
ES: Are you looking to add more brands?
FY: At every watch fair, we are looking for new brands. When an opportunity comes, we will explore it.
ES: What is your favourite watch?
FY: My favourite watch is my Patek Philippe Ref. 3940, a very thin perpetual calendar. Today, I am wearing my Rolex Daytona with a black dial. This is good for everyday use, with a 64- hour power reserve.
- FACTS AND FIGURES:
- Name: King Fook
- Location: Total of eight (8) stores in Hong Kong
- How long: since 1949
- Employees: 250
- Average sale: $10,000
- Range of price: $500 to over a million
- Best selling watch: Rolex, for both value and quantity
- Brands: Audemars Piguet, Ball Watch, Baume & Mercier, Breitling, Bulgari, Clerc, Franck Muller, Gucci, HD3, IceLink, Jacob & Co., Jaeger-LeCoultre, Laurent Ferrier, Montblanc, Panerai, Patek Philippe, Piaget, Rado, Robert & Fils, Rolex, Seiko, TAG Heuer, Tiffany & Co., Tissot, Tudor, Vacheron Constantin
Many thanks to Frances Yip for taking the time out to talk honestly and openly with Europa Star.
Source: Europa Star October - November 2011 Magazine Issue