The Party line
Brands open boutiques for several reasons: first and foremost, it's about awareness. Having a store on 5th Avenue in New York City raises awareness about the brand in general, getting the brand in front of people who don't otherwise know it. In a brand boutique, the brand completely controls the way its products are merchandized, displayed and presented to customers. In addition, new products are often tested in the boutiques and sometimes there are boutique-only watches, adding to the cachet of the company stores. Brand boutiques showcase the brands' entire collections, something few retailers can or are willing to do, because of space and financial constraints.
“I am strongly in favour of boutiques for brands that have interesting and diverse product ranges since it is always difficult for a retailer to represent the full collection of any company's products so that the consumer can truly get to know the range of that brand,” says Ron Jackson, President, Girard-Perregaux NA. “Most retailers carry only the very best sellers from the many watch brands they stock which is a good commercial strategy but tends to limit the range to only the commercial best sellers and not some of the more unique and truly avant-garde products which showcase the brand’s full range. Boutiques also serve as a front line research centre to know first hand what the consumers' reaction is to the brand. The better a brand can know its potential clients, the more it can improve its product offering to all retailers and partners.”
Antoine Preziuso opened up his boutique in Geneva so he could have direct contact with his customers. “There are too many brands,” he adds. “If someone goes into a retailer to buy a Longines watch, they may buy an Omega because of the skill of the sales person. If you go to the Antoine Preziuso boutique in Tokyo, you can only buy an Antoine Preziuso watch.”
Brand boutiques allow the brand to interact directly with the end consumer. “A boutique is a way for us to communicate in the best way our image and our vision,” says Antoine Pin, Marketing Director, Zenith. “It's a chance that we have to show the wealth of the brand. It's a question of space in our retailers - in our boutique we have 100% dedicated sales space and 100% dedicated sales people. We can give attention to every piece that is presented.”
Louis Vuitton, which just reopened its Geneva boutique on the rue du Rhone, will never use independent retailers, according to Romain Guinier, Europe Deputy General Director, Louis Vuitton. “Owning our stores is a very safe way to be sure of the message the customer receives, to control everything, to maintain and sustain the level of customer service we require,” he explains. “We want people to be part of the dream, to feel the legacy and be part of the brand. We want people to come in, take their time and experience our vision of luxury, and we want to make each and every customer feel comfortable.”
The conventional wisdom coming from the brands is that brand boutiques increase sales across the board, both in the retailer stores and in the boutiques. Because of the amount of advertising, marketing and overall impact, people are made more aware of the brand and those customers who are already going to retailers will continue to go to them.




Louis Vuitton


This is undeniably true for the initial period when the brand boutique opens its doors. So much advertising and marketing is out there that awareness has to increase. Logically, some people go to the brand boutique to check it out, while others go to their favourite retailers to find out what all the fuss is about.
“Brand boutiques help retailers,” asserts Zenith's Pin. “Boutiques help to develop the overall awareness for watches. They do take some watch sales away from the retail stores, certainly, but the visibility of the boutique and the additional advertising and marketing helps expand the watch market in general. People who are informed buy more and more watches and they will buy from the independent retailers as well.”
Brands counter any criticism of their own-store initiatives by pointing out that multi-brand retailers have an advantage over brand boutiques because they have other watches they can sell. If someone doesn't like Brand A, all retailers have to do is walk them over to the display case to show them Brand B.
Jean-Claude Biver, CEO of Hublot, which has just started opening up its own boutiques, also believes that brand boutiques help retailers. “People often buy where they are,” he explains. “If you are in a monobrand boutique, there is no choice and consumers can feel pressured. If you go to a multi-brand store, you can always test other watches and make sure you made the right choice. Because you have choice, it might ensure that it's the right one. If you want to buy a blue shirt, you need other blue shirts to help you make the right choice. Sometimes a multi-brand watch store helps you to be sure that the watch you have chosen is the right one.”
Rolando Braga, President and CEO of Armand Nicolet, SA, which has just opened its first boutique in Kuala Lumpur, Malaysia, says that brand boutiques are a question of visibility. “To make business you need to be seen and a brand boutique gives the customers a better visibility of the brand with a better opportunity to compare your brand with the competitors,” he says. “The reason is that the brand boutiques carry the complete range of your products, which many retailers cannot or will not do, and in the boutique you can enhance the presentation as you wish.”
Milus has just inaugurated a boutique in Hong Kong with the express purpose of accessing the potentially huge Mainland Chinese market. “We expect to profit from Hong Kong's showcasing effect to tourists, especially those from the Chinese mainland, in order to further promote the Chinese mainland market,” says Jan Edöcs, CEO, Milus. “I predict that in six to eight years the Chinese mainland watch market will be the second largest overseas market for the export of the Swiss watch industry.”(See our market report on Shanghai in this issue.)





Milus


Retailer reaction
Retailers are aware of the danger of brand boutiques taking business from them. At the same time, however, they realize that brand boutiques will be part of the retail landscape for the foreseeable future, so they know they have to be ready.
“There are several boutiques opening in our area and my personal opinion is that competition is good,” says Denis Boulle, de Boulle (Dallas, Texas, USA). “However, it should be noted that in the short term, brand boutiques could hurt the local retailer but I think over the long term, the brand boutiques will create more business for the local retailer.
”Dallas is a very big city where people want to be treated like they live in a small community,“Boulle continues.”I know from my own experience, after the initial excitement it takes a long time, years, for Dallas to accept outsiders and establish a steady business...unless of course the brand is an extremely powerful one."
Some retailers agree that there is a sales spike at the beginning, but down the road, for the life of the store and the brand boutique, things might not be so rosy.
“The brands pretend that we are going to do better when there is a boutique in our city, but it doesn't happen,” says Bernard Metzger, General Manager, Horlogerie-Bijouterie Guillard (Lausanne, Switzerland). “When the brand itself opens its doors, if his business isn't that great, the brand ends up trying to shepherd all the customers into his store. I feel that the watch brands will improve the locations of their flagship stores and then they will sell through the Internet. I see a huge danger for retailers.”




Harry Winston


Logic dictates
It makes sense that people who are regular customers will continue to shop where they are comfortable, known and treated well. The other side of the coin, however, is the new customer who goes to the brand boutique - they will never get inside a multi-brand retailer because the brand boutique is intent on keeping them as customers.
If Marion Halfacre, owner of Traditional Jewellers (Newport, California, USA), was able to call the shots in his market, brands would not open their own boutiques. “Retailers lose business,” he says. “Boutiques can increase brand awareness, but it also can dilute from the pie.”
Boutiques have product that independent retailers can't get, which is a draw to any customer, regardless of loyalty and relationships. If one of your customers is a fan of Audemars Piguet and desperately wants the latest limited edition and it's only available at the brand's boutique, guess where that customer is going to go?
“There is always the potential to have a sale moved from one location to another for various reasons,” admits Girard-Perregaux's Jackson. “However if we look to the retail world outside of watches, to brands like Nike, Ralph Lauren, Zegna, Prada, etc. it seems that the boutiques certainly can make sales but their role is more to provide the customer the opportunity to receive the message and feel of the brand through the visual experience in the boutique and also to see the full product range. If the customer appreciates what they see and feel, it is then up to them to decide where and when to make their purchase. The boutiques’ role is to provide a home for the brand without the conflicting messages of outside influences or agendas.”
Retailers all around the world are watching the brand boutique trend carefully. In some cases, brand boutiques have actually boosted sales in retailers, while in other cases, all they have done is cannibalize sales from multi-brand retailers. Ultimately, brand boutiques are competition to retailers.
Competition, pure and simple, and with all the other competition for the almighty dollar, euro and franc, that's quite possibly the last thing a retailer needs.

Shop in Shops
An alternative to brand boutiques are shop in shops which are mini-boutiques within multi-brand retailers, designed to set the brand off from other brands within the store. Companies like Chopard, Montblanc and even Oakley have had great results and success with the shop in shop concept.
The problem is that when too many brands insist on shop in shops or corners, stores can begin to lose their identity and start to look like outlet centres.
As a reaction, some retailers have refused to do shop in shops, preferring a cohesive store look to brand identifiers.
Denis Boulle of de Boulle (Dallas, Texas, USA) is one example of a retailer who is resisting the trend of corners and shop in shops. “We have been approached by many brands about putting boutiques in our store, but we did not want to look like a duty free shop,” he says.

Have an opinion on brand boutiques or shop in shops, e-mail International Editor, Keith W. Strandberg @ [email protected]


Source: Europa Star October-November 2006 Magazine Issue