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Watch brands attempting to bypass retail partners are beginning to wise-up

Michael Pollak cropped

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.

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“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.

Tags : Direct to ConsumerecommerceHyde Park Jewelers
Rob Corder

The author Rob Corder

1 Comment

  1. There is no doubt we have are witnessing an evolution of the traditional distribution model, and not just with watch brands, but also with luxury brands, and consumer brands in general. This evolution is not mandating an immediate and full changeover of all brands to a straight B2C model, and it may never be a fully black/white dichotomy. But this much we can be sure of: companies are moving toward greater profitability be reducing their dependency on traditional distribution models, and concurrently are able to offer a better value proposition to their end-customers, invest more in digital marketing and growing their brand community, better curate the customer voyage from introduction to purchase and beyond, and increase their profit margin. They may also minimize risk that their unsold watches will end up heavily discounted on the gray market. This does not mean that strategic partnerships with existing brick-and mortar retailers should be foresworn. They can and should remain an integral part of a strategic business plan, even while the number of physical doors are being reduced and even as the brands develop an omni-channel commercial platform in order to better capture and manage the continuum of customers in their market (retailers should be doing the same). Brick-and-mortar stores still provide an important sales channel for mostly established watch brands. Very few are dedicating resources or retail space to take a chance on discovery brands and new launches, all of which have leaned heavily in the direction of the B2C model, offering greater transparency and savings, while better connecting with their customers in a more relevant and effective manner. This seems to be the way things are headed.

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