Cartier - Cuts Doors in U.S.
WORLDTEMPUS - 12 March 2010
For proof that the high-end watch trade is changing its post-recession ways, simply look to its newly rigorous approach to distribution. Earlier this year, Cartier, for example, notified up to half of its retail accounts in the United States that as of April 1 they would no longer be authorized dealers.
By way of explanation, the company issued the following statement: "Cartier continually re-evaluates its luxury watch distribution networks in order to have the most qualitative network with the goal of maximizing the Cartier client experience wherever Cartier products are sold."
Behind the diplomacy, however, lies a more complicated rationale. Often, success in the luxury watch business has less to do with technical genius or artistry than it does with a skillfully managed system of distribution. Do the right partners have the right amount of merchandise to keep the market perpetually wanting more?
The question was moot during the boom years, when an excess of demand for expensive timepieces was met with an excess of supply. Post-crisis, however, retailers found themselves sitting atop piles of merchandise. Desperate for cash, many began discounting their products or dumping them into gray market channels such as eBay.
The brands have responded by slashing their dealer networks and stepping up efforts to go direct with their own boutiques. Omega's global president, Stephen Urquhart, confirmed that the brand has fewer than 500 doors in the U.S. today, down from 800 a few years ago. He also indicated the trend would continue.
"Decades ago Omega was the watch to get before the company made the almost fatal policy decision of opening up countless doors, thereby diminishing the brand's prestige," said Ruediger Albers, president of the New York branch of Wempe—which, along with Tourneau in New York, was cut from the brand's dealer network last fall. "Now Omega is reversing course once again and embarking on an ambitious endeavor—going retail," Albers continued. "Time will tell if mono-label store networks can not only enhance a brand's image but also replace the traditional retailer network."