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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.

WORLDTEMPUS - 26 June 2010

Concurrent with the JCK Las Vegas Show is Swiss Watch by JCK, held in the upper floors of the Venetian hotel, which is attached to the Sands Convention Center, in luxury suites of varying sizes. Exhibitors here rent suites for various numbers of days during the show and hold appointment-only meetings with retailers and press. Most of the exhibitors in the suites remain there for three to four days, with most opening their suite doors on Friday and closing them at the end of business on Sunday. These suites range in size and offer a more intimate, luxurious way to meet with clients.

"The suites are more spacious and allow us to create an environment to show our brand properly," says Stacie Orloff, president of Bell & Ross in the United States. "It is a relaxed atmosphere and there is room to accommodate multiple retailers at one time. You don't have that on a show floor."

Indeed, most of the brands exhibiting in the suites are those who directly control their distribution and work with only select retailers. Suite exhibitors this year included Harry Winston, Chopard, Carl F. Bucherer, IWC, Bedat, Rebellion, Franc Vila, Corum, Bell & Ross, Bovet, Technomarine, Cuervo y Sobrinos, and Ulysse Nardin.
"Last year was the first year we showed in the suites," says Steven E. Cohen, CEO of Technomarine USA. He opened the Technomarine suite from Friday through Sunday to fulfill 70 appointments. "At our price point, there could be a lot of retailers interested in our brand, but we want to be selective; the suite lets us be discriminating."

Similarly, Don Fitzhenry, U.S. distributor of Cuervo y Sobrinos and Moser & Cie, says he feels it is important to be off the show floor and in a more controlled environment. "The show floor is geographically retarded; there is rope gold sold next to $20,000 watches, and bead jewelry next to that. Here, we all offer similar luxury products to similar customers."
Couture

Also drawing luxury retailers and typically beginning just a day or two before the JCK Las Vegas Show, the high-end Couture Show takes place across the street at the Wynn Resort in its ballrooms and villas. Here again, exhibitors show on the show floor or in villas situated on the golf course. Among those on the show floor Fendi (who this year introduced its $15,000-and-up Crazy Carats watch), Philip Stein, and Tutima can be found. Breitling, Charriol, David Yurman, and others showed in private villas this year. At this event retailers are invited guests, evening soirees are held, and lunch, afternoon coffee and snacks are served on the show floor.

Until this year, it was often a difficult choice for exhibitors to determine which show to set up shop in and where to do so. Watch brands needed to determine if they wanted to reach a wide range of retailers or be selective. But now, as JCK moves to Mandalay Bay in 2011, many exhibitors—especially those currently exhibiting in the JCK suites—say they're not happy with the decision to move all the way down The Strip, Las Vegas's famed gambling mile. A good percentage of the luxury suite exhibitors stated that they recognize the need to stay closer to the luxury exhibitors at Couture and are already considering migrating to that show next year instead of south on The Strip.

"We want to keep the allure of luxury when we exhibit in Vegas; this has to be a destination point," says Johnny Wizman, president and CEO of Luxury Montres LLC, which distributes Bedat, Rebellion, and Franc Vila in the United States. "Simply put, we won't be at Mandalay Bay next year."