Nomos Glashütte’s decision to appoint global secondary market businesses Chrono24 and Chronext has created a backlash from Wempe, which de-listed the brand in protest. Jean-Claude Biver, chairman of LVMH’s Watchmaking Division then weighed-in with his view that long term loyal partners like Wempe and others should have been treated with more respect by the German watchmaker, while recognising that Nomos has the right to make its own choices on how to promote its watches online and offline. Responding to both the Wempe decision and the opinions of Mr Biver, Anke Fuhrhop, head of communications for Nomos spoke at length to WatchPro’s Rob Corder.
WatchPro: Why did Nomos choose to sign Chrono24 and Chronext as authorized dealers? What led to that decision?
Anke Fuhrhop: We made the decision earlier this year to work with Chrono24 and Chronext because of the grey market. We saw Nomos watches appearing on both Chrono24 and Chronext. We spoke to Philipp Mann, CEO of Chronext, and they were selling more than 1000 Nomos watches per year at reduced prices. We thought we could not ignore this. He made an offer to us that Chronext would only sell our watches at full retail price if he became an official retailer.
Chronext told us, and you reported on WatchPro, that they are already working directly with more than a dozen other watch brands, but in private. We decided that, for the prize of Chronext selling at recommended retail prices, we would go public.
We were the first company to do so, but he said that another five or six would do so by the end of the year. Right now, none have done so, but we expect others to go public.
After a few months working with Chronext, we achieved our goal of all new watches sold at recommended retail prices. Also, the number of watches that Chronext sells has dropped by about 50%.
This is our aim. We want customers to buy our watches at recommended retail price. We think that a lot of customers go to the internet looking for discounts, and if they do not find discounts on the web, they go to local retailers, so this is our attempt to support local retailers.
We sent our German retailers a two page letter explaining to them why we took this decision. The letter was only sent to German retailers because we thought this was only an issue for Germany and we were a little surprised it became such a global story.
Of course, after Wempe made the decision [to de-list Nomos] it gained in significance.
WP: What about Chrono24? Is it the same deal as with Chronext?
Anke Fuhrhop: Our strategy concerning Chrono24 necessarily differs from our approach to Chronext, since Chrono24 is a secondary market platform where grey marketeers offer new watches, mostly without certification, and end customers offer used watches. It is mainly targeted at collectors.
Here, we do not offer new but refurbished watches only—watches that have been used in photo productions, for PR, or at trade fairs. They are offered at a discount of about 15 percent compared to the actual list price. Since some of them are already several years old, the price does not differ much from the original price that the watch was brought to the market. This helps us to further push back the grey market, because the grey market has many obvious disadvantages for the customer: e.g., no visible case number, no guarantee, and settlement risks.
Nomos explains to the customer why this unique reference number engraved on the case back is important: Most of the grey marketeers erase the number to disguise the watch’s origin.
The more Nomos watches are sold at such stable prices the better for the customer and the retailer. The customers can be sure that their watches retain their value over the years and if they learn that the reduction for a refurbished watch is negligible they might even choose to buy a new watch in the first place—as Biver says, “people like to be the first person to wear a new watch, especially if the watch brands have created something new that people desire to own.”
WP: You said that retailers were sent a two page letter explaining why you have appointed Chrono24 and Chronext as authorised dealers. Was that before you made the announcement?
Anke Fuhrhop: The letter was sent at the same time as the announcement. We decided to go public with our German retailers at the same time as we sent a press release about the plan. We have been quite open and transparent with our decision.
WP: How does Nomos feel now, given the reaction from Wempe, feedback from other retailers and the opinions of Jean-Claude Biver [chairman of LVMH’s Watchmaking Division], who said he thought Wempe had not been treated fairly. The sense I get is that the whole industry is questioning why Nomos would appoint secondary market platforms like Chronext and Chrono24 as authorised partners.
Anke Fuhrhop: Jean-Claude Biver also said in the full interview WatchPro published that retailers have to live with online competitors, they have to offer something different to online and reinvent themselves. He is not as negative as displayed on the WatchPro website. He said that Wempe helped Nomos raise its status and helped it become big but that the watch brand has to take care of its own image.
We think online retailers can help build up our image. We are on Mr Porter, for example, and Manufactum here in Germany. They help to build up our image. Journalists help to build up our image, it is influencers, bloggers, all kinds of people. It is not just one retailer.
WP: If you could rewind the clock 12 months and go through this year again, do you think that Nomos could have, or should have handled this process any differently?
Anke Fuhrhop: Well, since this has caused such an upstir, perhaps we could have, but we would not have changed our decision. We still think it is the best strategy to combat the grey market, to try to make it less important. We would not want to stop working with Chrono24 and Chronext. We could have explained it better to our retailers and we have underestimated their worries.
Retailers tell us that 50% of shops could die within the coming years, and we probably underestimated these worries. But we believe that if retailers reinvent themselves and work on what their advantages are compared to online sales, they will survive.
We have around 500 retailers worldwide, including around 200 in Germany, and we are quite sure that most of them will survive. At the moment, nine out of 10 customers buy our watches offline at their local retailers. There are estimates that this will go down to 8 out of 10, but the proportion of people that buy watches online will not go above 20%. There is a good chance that most of the retailers will survive.
WP: That makes the decision to appoint Chrono24 and Chronext even more baffling. Let’s take two huge retail partners for Nomos: Wempe and The Watches of Switzerland Group, if Watches of Switzerland went the same way as Wempe, you would be losing a huge number of doors from two of the world’s biggest and best retailers. Surely that would make the decision with Chrono24 and Chronext look wrong?
Anke Fuhrhop: It might look that way. We are in talks with Watches of Switzerland. We are talking to all of our retailers who have said they do not agree with our decision. We are sending a new letter and Roland is in talks with the most important retailers at the moment to personally explain our decision. We have had very positive feedback from them, so far. We do not know of any other big partners that want to stop working with Nomos. We are also thinking about explaining it better to them in a more detailed mailing.
WP: The fact that you are having to use so much energy convincing your retail partners demonstrates just how risky the decision has been.
Anke Fuhrhop: It has been. We probably have not explained it well enough. But, rather than take back the decision, we want to explain it better so that they can understand what made us take the decision.
We are convinced that retailers will survive if they keep their margins. Roland is quite convinced that retailers are not worried about the 10% of customers that buy their watches from the internet, they are more worried about the 90% asking for discounts in their shops because they have seen discounted prices online. This is what we have to explain to the retailers.
It is not about a small number of customers shopping online, it is about the large proportion of customers asking for discounts when they go into shops. This is why we are so keen on only displaying recommended retail prices online.
WP: In which case, the details really matter. When I asked about whether Chrono24 had agreed to stop selling below RRP, as Chronext has agreed, that is key. The other even bigger player is Ebay. Even if you have convinced Chronext and Chrono24 to sell new watches at RRP, you have not shut down Ebay as a channel for grey market discounting, so you could still get 90% of customers asking for the discounts they can get on Ebay. Unless you solve the problem completely, you do not really solve it at all.
Anke Fuhrhop: We think that Chronext is one of the biggest players that works with multiple brands and worldwide. It is growing and we wanted to start somewhere. This is the start of our campaign, and we will continue.
WP: Could you see a situation where you could work with Ebay?
Anke Fuhrhop: We have not discussed that yet and I would have to discuss it with Roland. I am not sure what he thinks about Ebay. Chrono24 and Chronext were the most important for us to begin with. Of course we will extend the strategy, but we have not spoken about further steps yet.
WP: If you were able to tell retailers, including Wempe, that customers would no longer be able to buy a single brand new watches at a discount from the grey market, then I think they would understand the strategy better and see the upside. But if you can only deal with 25% of dealers offering new watches at discounts, then you have really achieved nothing except upsetting your long term partners.
Anke Fuhrhop: We have started with two, but I cannot talk about the next steps.