he volatility in purchasing, which has become global and migratory depending on international prices, is posing serious problems for the brands, distributors and retailers as regards stocks, price adaptation, logistics, distribution channels and communications, to cite just some examples. And these are exacerbated by the growth of internet price comparison sites and mobile apps for mobile customers.
“On the So Goods site, customers can compare prices in real time. Logistically, you can send anything anywhere. You can find the best price anywhere in the world and have it sent anywhere. It’s the biggest change of our time, because it has reshuffled all the cards in the distribution game.” Cyrille Vigneron, CEO, Cartier
Wilhelm Schmid, CEO of A. Lange & Söhne, neatly sums up the challenges that these new habits are posing for brands: “What can you do to harmonise prices all over the world? It’s impossible, in concrete terms. You have to accept that. We will never reduce our prices, unless there’s hyperinflation, in Russia or India. We have to maintain a clear price strategy worldwide.
That presents a huge challenge. Another major challenge is finding a balance between local customers and shopping tourism. And the third challenge for us is: how to keep abreast of trends and stay exclusive? It’s a contradiction in terms. If you want to keep abreast of trends, you have to grow. We’re growing. Otherwise, we’ll fall off the radar. Many brands are growing, but are losing intensity. I have to manage this paradox.” This danger of “losing intensity”, as Wilhelm Schmid puts it, is all the greater since “for the first time since 2012, online resellers are viewed as the most important sales channel,” according to the 2016 Deloitte study on the Swiss watchmaking industry. Purely mechanically, this is likely to bring prices down and render supply commonplace as products, on offer here, there and everywhere, lose their exclusivity. But rarity is at the root of the price question.
“Half of the watch executives surveyed indicated that they will be putting the most emphasis on online resellers in the next twelve months, compared to only 19% in 2015,” the Deloitte study continues.
By way of illustration, Deloitte cites the exclusive e-commerce partnership signed by TAG Heuer with the Jingdong Group, a powerful player on the online sales scene in China. But there are plenty more examples of initiatives already under way or germinating on this digital “new frontier” that online sales represent for the luxury sector.
And the repercussions for distributors and retailers, not to mention prices, will be numerous.
FEATURED IN THIS SPECIAL WATCH PRICES REPORT:
The great upheaval
Reshuffling the price cards
It’s the fault of…
An objective look
Denis Asch “I wanted to sell watches, not prices”
Price hike between 2000 and 2010, then the slump
All china’s fault?
“As soon as a price goes up, they look elsewhere”
The internet has changed the rules of distribution
To raise or lower prices?
A paradigm shift for distribution
“Retailers need to turn into gallery owners”