Watch brands hoping to sideline the most successful retailers in the United States are beginning to think again, according to Michael Pollak, chief executive of Hyde Park Jewelers.
Hyde Park operates multibrand stores with its own name above the door in Denver, Phoenix and Newport Beach, CA, along with franchised single brand boutiques in partnership with Rolex, IWC, Breitling and Hublot.
In The Big Interview to be published in WatchPro July, Mr Pollak says that brands are discovering that buildings their own direct to consumer retail is expensive, complicated, and rarely as successful as executives in Switzerland hope.
“We have already seen some brands that have had very aggressive bricks and mortar retail roll-out strategies begin to re-evaluate. They are either closing stores or slowing down their rate of growth. They have realized that it is not quite as easy as they thought. The investment is significant and it takes a while to grow sales. It does not happen overnight,” Mr Pollak says.
The red hot state of the luxury watch industry in the United States in the past two years has encouraged watchmakers to withdraw from some retail partners and set up in competition with those that remain.
That strategy, Mr Pollak suggests, is high risk. “Most brands, if they had to depend solely on their own distribution, they would quickly fail. A couple of companies that have gone that way have found that it may work in the very robust market we are in, but will not survive a more challenging time,” he describes.
The current economic high tides are keeping all boats afloat, but the cycle will turn, Mr Pollak warns, exposing low margin business models.
“We are experiencing a market that is unique in the history of America. There will be a time when business slows down and that will be the test for brands that sell direct,” he suggests.
The Big Interview with Michael Pollak will be published in the July edition of WatchPro. Click here to subscribe for free.