Ulysse Nardin Caprice Anthracite Grey Dial Satin Strap Automatic Ladies Watch 130-91FC-609

WORLDTEMPUS - 27 October 2011
After having been in charge of the regional sales for the Movado brand and holding the position of commercial director of Vacheron Constantin for North America, Norm Kushner became president of Rabco Luxury Holdings, LLC in 2000, which carried brands as varied as Breguet, Graham, Arnold and Eberhard & Co. When this firm disbanded in 2010, Kushner founded Swiss Watch Consultants, his own distribution company based in Manchester, New Hampshire. It currently represents Eberhard & Co and Glycine. Considering the increase of mono- and multi-brand boutiques run by watch groups, he is of the opinion that independent brands will become the preferred alternative for retailers in the next five years.

Anaïs Georges du Clos: You think that independent distribution in North America is going through a deep structural evolution. Why?
Norm Kushner: In the old days, the only way for a brand to conquer the American market was to work with a local distributor who had good relations with specialized retailers. In the last several years, big independent brands like Audemars Piguet and Ulysse Nardin have founded their own distribution structures. In parallel, prestigious brands like Cartier, Omega and Hublot have started to open their own boutiques in every big American city. This integration strategy, which leads to a maximization of margins, penalizes both distributors and retailers.
How?
Brands that now own their own boutiques stopped working with many independent retailers. Omega is a perfect example with its 21 shops throughout the USA. Omega only works with one retailer in Manhattan: Kenjo. Brands also invest a lot in communication to promote their own boutiques and reserve special or limited editions for them.
Can you quantify this phenomenon?
After SIHH 2011, I estimate that 15 percent of North American retailers lost their agreements with important brands.
Which cities are most affected?
The biggest ones first: New York, Los Angeles, Beverly Hills, Miami, Chicago. In these cities, there are mono-brand boutiques of Richemont brands like Cartier, Vacheron Constantin and Panerai, and the multi-brand Tourbillon shops (Swatch Group) have also increased. Mid-sized cities are also affected, but are less easy to work in without the help of big local retailers.

Do you think this evolution is definitive?
In the end, I imagine that big brands' watches will only be available in their own boutiques.
What are the consequences for distributors and agents?
As the groups don't want to work with them anymore, they'll have to find alternatives. The independent brands are interesting, also because they don't have enough resources to behave as the big brands do. For them, the agent and the distributor are the best interlocutors. For the latter, the risk is immense as he has to finance a stock of hundreds of watches. Thus, he works almost like a bank during the time the orders are being taken, and is paid only when the retailer can remit. This period can last up to a hundred days. This is the reason why distributors like us zero in on independent brands who enjoy a worldwide reputation and proven financial stability.
What impact does this integration process have on brands that belong to groups?
In the short term, sales decrease and brands make less money in comparison with the time they were working with independent retailers. But, the difference becomes less and less significant with time. In the end, the benefit should probably justify the groups' choices. For independent brands, this tendency will create interesting opportunities in the next five years, but only if they invest in communication. As contracts last three to five years, brands have to support these costs.

And for retailers?
If they want to remain in competition, they must continue to buy large quantities to maintain their margins. Some of them chose an other strategy by opening monobrand boutiques next to their multibrands points of sell.
Are brands so powerful that retailers want to continue to work with them, whatever the price of it may be?
If retailers can afford important sacrifices to stay with the brands they know, then the decision must be based on the profitability of the deal. Many retailers have given up working with certain significant brands.
What is the impact of this tendency on the customer?
Mathematically, we should see more independent watch brands in retail shops. As for products from group-associated brands, discounts should be harder to negotiate now.