Govberg Jewelers is a 100-year-old luxury start-up, merging the traditions of an established retail institution with technology to support the modern consumer in a changing marketplace.
Govberg has made major investment in technology + media to educate the consumer.
- The app offers a phenomenal array of educational resources that complement Govberg’s approach to ‘learning commerce’ –
- NEWS AGGREGATOR – Content from 20+ of the leading websites, magazines and blogs with the ability to curate your personal newsfeed based on your interests, with tools to filter out all the rest.
- GOVBERG BLOG – Explore the blog, Govberg OnTime, for watch education, collection exploration, buying guides, ‘on the wrist’ reviews and more.
- VIDEOS – Govberg has embraced the power of video to bring hands-on reviews and exploration of novelties, line extensions and models from Govberg’s brands’ core collections to our clients. By leveraging the expertise of Govberg associates, with influence and guidance from individual watch brands, Govberg now has a comprehensive catalogue of videos suited for product discovery, sales training, education prior to purchase and general horological appreciation.
- SECONDARY MARKET PRICING TOOLS – For the first time in the watch category, Govberg has initiated a dialogue/transparency into what pieces trade for on the secondary market. The app serves as an educational forum for consumers to start learning about what their watches are worth.
Govberg conveniently supports behaviors of watch enthusiasts (buying, selling and trading of luxury new + pre-owned timepieces) through functionality offered in app.
- Govberg offers a ‘one stop shop’ for watch interests and needs – buying new or pre-owned watches, trade-ins, selling pieces from a personal collection, LEARNING about watches and having direct access to highly educated associates.
- Govberg cultivates an experience that is streamlined, enjoyable and ultimately SAVES OUR CUSTOMERS TIME while addressing their needs.
- App represents the first foray into secondary market pricing transparency.
Govberg’s business represents the marriage of the primary and secondary markets.
- Serving as one of the nation’s largest and most specialized authorized dealers of new timepieces and an absolute leader in the pre-owned watch marketplace, Govberg’s unique approach propels the growth, quality and perception of the secondary (or pre-owned) market and encourages MORE WATCHES ON MORE WRISTS.
- Pre-owned increases the path to more NEW watch purchases.
- As watch interests/tastes evolve we help clients recognize the value in pieces they no longer wear, enabling them to use “old” watches as currency for future purchases.
- As a leading retailer, we invest in bringing pre-owned product as close to ‘new like’ condition as possible before it is listed for sale, and we offer a warranty on each pre-owned piece purchased at Govberg. These behaviors elevate the perception and quality of the category.
Govberg’s app offers asset management functionality to organize, maintain and valuate the your watch collection.
- Add to your collection at ease by using our models database.
- Keep track of the value of each individual watch in your collection as well as the total value of your watch box.
- Maintain concise and organized records with warranty details, serial numbers, service history, purchase details, paperwork and more.
- Connect with Govberg’s estate buying experts with ease and receive quotes to sell pieces directly from your watch box.
We did some advance research for you on industry trends to save you time on your story development. Here are excerpts from articles or reports written on the future of luxury, retailing and the Swiss watch industry.
Danny Govberg is available to speak with you on these trends and more.
McKinsey & Company: How retailers can keep up with consumers
The North American retail landscape looks quite different today than it did even ten years ago. The way that consumers make purchasing decisions has dramatically altered: they stand in stores, using their smartphones to compare prices and product reviews; family and friends instantly weigh in on shopping decisions via social media; and when they’re ready to buy, an ever-growing list of online retailers deliver products directly to them, sometimes on the same day.
These shifts have led a number of industry observers to forecast the end of retail as we know it. Some predict that retail will change more in the next five years than it has over the past century and that the extinction of brick-and-mortar stores isn’t far off. Our view is less dramatic, but we do believe that big changes are inevitable and that retailers must act now to win in the long term.
Yet history also offers incumbent retailers some hope: industry shifts have actually tended to unfold slowly—over decades, in most cases—providing time to react. While it is true that powerful forces are at work in retail today, we believe their full impact won’t be felt for years. (For instance, despite the e-commerce boom, brick-and-mortar stores should still account for approximately 85 percent of US retail sales in 2025) That said, incumbent retailers can’t expect to stay successful by going about business as usual.
PwC: E-commerce is capturing almost all the gains in retail sales. Should you care?
Viewed broadly, these anecdotes depict various activities of today’s global consumers, who want to move easily across channels, have many retail and product options at their fingertips, and demand full visibility into inventory and pricing. Omnichannel shopping is here to stay, and we expect that over the next 12 months and the years to follow, it will evolve in unpredictable, organic ways as consumers increasingly create their own paths to purchase. In fact, as we see it, shoppers are moving so effortlessly among channels that it will soon become a futile exercise to pinpoint the share of online sales in total retail revenue; before long, that number may be of interest only to the accounting department, not to the retailer’s buyers, senior executives, and stockholders.
To win in this complex, shifting environment, global retailers should take three critical steps:
- Invest in digital technologies with a clear understanding of how they can enhance the in-store experience. Some retailers know that today’s digital tools are restoring the lost art of personalized customer service. Supermarkets now have to compete with online subscription models, such as Amazon Mom and Target Subscriptions, which allow customers to conveniently stock up on recurring purchases while the retailer builds a loyal customer base. But the same principles can be applied in physical stores — in a way that encourages consumers browsing in person to “top off” their regular needs with a few high-end purchases. Here, retailers have the opportunity to partner with large brands; for example, the two organizations could combine purchasing and other transactional data to send tailored offers to customers on their smartphones based on their physical location within the store.
- Offer a convenient one-stop-shopping experience that responds to the shoppers’ path to purchase. One-stop-shopping convenience is no longer about selling everything from a single supercenter or website. It’s more profitably targeted at giving the right omnichannel experience to shoppers who are budgeting for both time and money. That’s why department stores in the U.S. such as Macy’s and Nordstrom, and superstore Tesco in the U.K., among others, are offering services that combine their in-store and digital capabilities. For instance, many are turning stores into distribution centers, pickup sites, and return locations. Meanwhile, Amazon, the very model of e-commerce, will be opening its first physical store in the heart of New York City.
- Rigorously examine resource allocation. As online sales grow, many retailers will be compelled to spend heavily on new digital capabilities, including website design and functionality, user-friendly interfaces, enhanced content, data collection and analytics, price modeling, and advanced customer communications. Perhaps less glamorous but no less critical, they must also invest in efficient and seamless logistical and inventory management. These types of new initiatives will increasingly become a strategic imperative. But if they occur while retailers simultaneously maintain the large fixed outlays to manage the traditional store network, the shift to omnichannel shopping may result in higher costs and falling net margins.
To avoid this outcome, retailers need to be unrelenting in identifying their strengths, weaknesses, and opportunities in their physical and online target markets to determine the capabilities that are critical to success in both and in the new retail landscape — and to pare back expenses in less valuable areas. For example, it’s critical for retailers to understand inventory flows through their disparate channels to avoid stranding inventory where it is not needed. Similarly, retailers must pinpoint the most important consumer needs to address: Should financial resources be directed at improving the in-store service desk or the website’s call center, or both?
Business of Fashion: The Dark Side of Digital Luxury
Luxury brands spent much of the last decade trying to tighten their grip on distribution. These efforts coincided with the growth of the broader online marketplace, sowing widespread fear of digital threats to both price discipline and control of distribution, two fundamental pillars of modern luxury. As a result, the luxury industry was relatively slow to adopt — and adapt to — digital media.
But after a slow start, the industry has raced forward to seize the e-commerce opportunity, the only bright spot in a stagnant luxury market. Being late to the party has allowed players to take advantage of established technologies and learn from the missteps of first movers and, today, the luxury industry is evolving towards a new reality where the physical and digital worlds are merging, allowing brands to tap a deep pool of profitable growth. At the same time, exploiting the digital opportunity is not without its dangers.
New York Times: Luxury Isn’t Having a Very Good Year
One trend that has gone out of fashion in the luxury world this year? Stellar sales growth. The global market for high-end personal goods is headed for its weakest year since 2009.
Thanks to a potent cocktail of turbulent currency exchange rates, political volatility in Britain and the United States, and fears about terrorism in Europe, the world’s wealthiest shoppers are being more thrifty, according to a study published on Thursday by the Italian luxury goods association Altagamma and the global consultants Bain & Co.
Sales of designer handbags, shoes, cocktail dresses and the like are expected to flatline this year at 249 billion euros, or $273.4 billion, at constant exchange rates (that is to say, excluding currency swings), according to the study. At current exchange rates, sales have slipped 1 percent when compared to the €251 billion in sales of personal luxury goods last year.
“After years of unstoppable growth, this is the new normal for the luxury industry,” said Federica Levato, a Milan-based partner at Bain.
PMX Agency: 2016 Luxury Brands Online Trend Report
Luxury consumers are among the most digitally savvy, and for several years now they have visited luxury sites through mobile devices more often than computers. Beyond site traffic, purchasing via mobile also continues to grow. Shifting consumer behavior is the primary driver, but Google will soon give this general momentum a boost with its rollout of AMP (Accelerated Mobile Pages) for E-Commerce sites. Luxury mobile users are everywhere – home, work, traveling, and often near or even inside a store. With consumers more accepting of location-based marketing, some luxury brands like Michael Kors are automatically pushing nearby retail information on their mobile site. Look for even more targeting advances that will enable luxury brands to deliver hyper-relevant, micro-targeted offers. Direct purchase capabilities within social platforms, all overwhelmingly mobile, will also drive more luxury M-Commerce.
Wall Street Journal: Menswear’s New Shopping Playbook
Now, you’ll find direct-to-consumer brands with shoppable social media feeds as well as physical “showrooms.” E-tailers range from monoliths with offerings as boggling as department stores to tiny, sharply curated virtual boutiques. The made-to-measure route offers both traditional tailoring and custom-fit casual wear. And don’t forget the burgeoning resale market which can net you deals on everything from gently used sneakers to Swiss watches.
Overwhelming? Absolutely. And perhaps that’s why some men aren’t tempted to venture down new retail avenues. “There are more options, but I think that for men, one of their basic requirements has always been shopping with efficiency and speed,” said Robert Burke, CEO and co-founder of retail consulting firm Robert Burke Associates.
You may be asking, if my shopping routine works for me, why should I give it another thought? Well, there’s always a better way to do everything in life, and that includes buying clothes.
The fact is, you’re probably missing a lot of what’s out there—which could in turn make you a better-dressed man. Even if you’re shopping online, you might not be clicking on the “Just In” or “Latest” tab on e-commerce sites like Matches Fashion and East Dane, which can give you a snapshot of what’s available for the season, week by week, including pieces you might not have searched for otherwise.
Finding a single store or e-commerce site that works for you can make your life easier, but limiting yourself to just one retail resource narrows your scope. That means not taking advantage of, say, the smart mix of Japanese, Italian and American labels at a boutique like Magasin in Los Angeles or the unique woodsy-cool selection of a shop like Askov Finlayson in Minneapolis.
Pounding the virtual pavement a little can also help price-conscious shoppers, who are well served by the increasing number of direct-to-consumer brands, such as Greats (sneakers) or Everlane (clothes and accessories), which offer quality merchandise with easier-to-swallow price tags since they’ve cut out the wholesale middleman. You won’t see their wares in any store—only on their own websites and social media feeds.
Digiday: How top digital luxury brands create a premium e-commerce experience
Luxury stores need to offer a high-end experience that will ultimately end in the customer dropping a few thousand dollars on a new handbag. A glass of champagne may be handed off during the visit while a warm and knowledgeable salesperson guides the shopper through the store. The store itself is pristine, a foil to the chaos of the fast fashion stores that seek to imitate the same high-end designs.
Online, however, luxury e-commerce is shouldered into the same playing field as any other retailer, and pixels alone don’t make for a premium experience. How to make a webpage feel luxurious is a challenge high-end designer brands are still trying to figure out.
What luxury looks like in a digital landscape is currently being interpreted by designer brands. Here’s a look at how digitally-savvy luxury brands — Burberry, Hermès and Louis Vuitton — are building a premium online experience.
Content plays a key role in defining an online experience as something more than just a listing of products. At the Hermès’ e-commerce site, you’re exposed to a more fun and whimsical side of the brand you may not get in a store setting. The Hermès House of Scarves is designed with illustrations, and it’s shoppable — customers can click on different parts of the house to add items to a wish list, a shopping cart, and watch product video.
Hermès’ House of Scarves.
Burberry and Louis Vuitton imitate their in store branding online, but they’re able to play video of their fashion shows and create online fashion editorials, which won’t show up in a regular brick and mortar store.
“Content is key because it’s part of what justifies the price tag besides the product,” said Neda Whitney, group account director at R/GA. “Brands just have to be tactful when they put a product page right next to their heritage — but ultimately, it’s storytelling.”
The online relationship
For those high-value shoppers who frequent luxury stores, a personalized experience elevates the retailer. At Hermès, when an item is added to a cart, more question fields pop: the preferred method of delivery and location. The site will then show more options for the customer, and remember the customer’s preferences and location. Louis Vuitton and Burberry both store customers’ location to offer exclusives down the line.
“For luxury, personalization is about the relationship,” said Christina White, vp of user experience at Huge. “And where these brands can really get ahead is the follow up. Use what you know about the customer to offer them an exclusive offer or event invitation down the line.”
A superior experience online, for luxury retailers, means seamless customer service. Burberry, Hermès and Louis Vuitton all offer free shipping, free returns possible either by mail or in store, and a buy or reserve online, pick-up in store function. Louis Vuitton and Burberry have both launched live chat — customers must seek it out, it doesn’t pop up on its own. Burberry has a “call back” function that will prompt a consultant to either contact a customer immediately, or at a designated time. Louis Vuitton offers its social media services, directing those looking to contact the company to tweet at @LVServices or send a Facebook message to the brand’s inbox.
“There are the key functionalities that all luxury retailers should be adopting, but right now, only the top guys are doing it,” said L2 analyst Jane Thornleeson, who added that 11 percent of all luxury retailers offer buy online and pick up in store. “The main strategy isn’t necessarily to drive people in store, but to innovate around the entire multichannel experience.”
Bloomberg Pursuits: Luxury Web Battle Looms as LVMH, Hugo Boss Develop E-Commerce
“The industry is finally moving from dipping their toes in online to jumping into the pool,’’ said Bernstein analyst Mario Ortelli.
While Ortelli estimates as much as 9 percent of luxury sales will take place online by the end of the decade, almost double last year’s share, the Internet isn’t just a battleground for revenue. As more shoppers turn to mobile devices to browse and buy, the Web is key for capturing customer data.
Business Insider: This one group suffers the most from poor customer service
Luxury shoppers typically expect retailers to offer customer service beyond the traditional means, such as a private and exclusive way to communicate with representatives. This is because personalized services such as stylists and custom-made items, which are of a high priority to luxury shoppers, typically cost an additional fee.
Most luxury brands have yet to provide such a service, but ContactLab notes that Louis Vuitton is the only such brand that has offered personalized services through live chat, phone, and email.
Luxury shoppers are highly coveted customers for brands and retailers, so it would behoove companies to provide a positive customer service experience in order to strengthen brand loyalty. The top 10% of U.S. household earners (those taking home $120,000 or more annually) account for approximately half of all consumer expenditures.
This demographic’s growing preference for online shopping is changing the face of luxury retail, and it has significant implications for how brands target luxury consumers.
Luxury Daily: Luxury facing a digital-or-die dilemma: BCG
Seven percent of personal luxury goods sales are made via ecommerce today, but online retail will represent 12 percent of the luxury market by 2020, according to projections from the Boston Consulting Group.
About six out of every 10 luxury purchases currently are influenced by digital channels, as social media, a brand’s Web site and mobile feed into buying decisions, whether the transaction is completed online or in-store. While many luxury brands have been avoiding the shift toward digital that many of their mass counterparts have made, BCG warns that the business models of digital laggards will no longer suffice in today’s market.
“Historically, product, artisanship, quality, creativity and the dream or aspiration created by the designer or steward of the brand was sufficient to motivate consumers to seek out the product and brand,” said Christine Barton, senior partner and North American luxury lead at BCG and co-author of the report. “In many instances, if that experience was exclusive or even difficult, all the better in terms of the brand mystique and appeal.
“[It is] less true now of even luxury consumers who are 35 years old and younger,” she said. “They, as well as some of their boomer counterparts, in particular, are spending away from personal goods toward experiences. They are more diverse generations in many populations, like the U.S., for example.
“Generally speaking, their values and beliefs are more social and inclusive. Their shopping behaviors and preferences are distinct from older consumers in that they are confident shoppers, preferring convenience, ease, immediate gratification, range, customization, self-service even at luxury price points.”
BCG’s report is based on a survey of about 10,000 consumers in 10 countries and interviews with luxury industry leaders.
Rather than looking at digital as a threat, BCG points out that it can be a boon to the luxury industry. Digital holds with it opportunities for personalization and reaching a wider geographic clientele.
Whereas luxury brands drove growth previously by expanding their physical footprint into emerging markets, these hot markets have cooled their spending, requiring brands to look elsewhere. Digital channels enable brands to acquire and retain new clientele.
“Digital, for example, through analytics and segmentation, allows luxury brands and retailers to have so-called precision—or segmented—and personalized dialogue and communications with current and potential customers, which is consistent with individualized, special, intimate, rich interactions,” Ms. Barton said.
“In other words, not all communications or offers need to be public or broadcast,” she said. “On the other hand, when a brand or designer is launching and looking to build excitement, energy or awareness, social media allows broad reach and engagement.
“The digital and attendant analytic capability is required, whether it is primarily applied to better know, anticipate and deepen existing relationships or to attract entirely new clients or, ideally, to both purposes.”
Digital touch points, however, challenge the exclusivity and control that luxury brands have established over decades or centuries. With the touch of a button, consumers can check a price or share their thoughts of a brand to the world.
This is especially true of millennials, who will be luxury’s buyers in the future. They are more apt to share their opinions about a purchase, with 60 percent posting reviews, 60 percent posting about products and 45 percent checking prices via a mobile device, often while they are shopping in a bricks-and-mortar environment.
Neiman Marcus’ Memory Mirror
Fifty-eight percent of all luxury sales are the result of online channels, leaving only 42 percent of purchases that are driven exclusively by in-store interactions.
Showing the importance of omnichannel, about four in 10 luxury sales are completed in-store after online research, while 9 percent are bought online after first viewing products in-store.
While millennials are eager adopters of digital, their generation is not alone.
Quartz: How do you sell a $6,000 bag your customer can’t touch?
Luxury sales have remained more rooted in the real world than other industries. Estimates vary slightly, but experts say that more than 90% of luxury sales still take place in stores. One of the reasons these companies may have been able to get away with staying offline so long is that luxury customers tend to be older. Amanda Knauer, a senior brand strategist for Cadillac, said at the panel that it has allowed brands “an opportunity to lag.” But that’s changing as wealth shifts to younger generations.
The challenge, said Marie Audier D’Alessandris, head of global and North American marketing at Coach, at the event, is “to have exactly the same experience in-store and online.”
That’s easier said than done. At least today web speeds allow brands to use 360 views and high-resolution images of their products. That wasn’t always the case.
And while some brands, such as Burberry, have excelled in this arena, even top brands are still learning. A design consultant told Digiday last year that Hermès had a “disappointing online presence because it doesn’t feel luxury.”
The good news for luxury brands is that the internet now lets them connect with customers long before they enter a store. They can collect information and tailor offers and experiences to a specific shopper. That personalization has always been part of luxury, and that’s one thing that isn’t changing.
And luxury customers aren’t all luddites: Online sales are growing quickly, and the vast majority of luxury customers research their purchases online first.
Wall Street Journal: Swiss Watch Industry Outlook Worsens
ZURICH—A consulting-firm study released Tuesday painted a bleak picture of the Swiss watch industry, with four-in-five executives saying they are pessimistic about the outlook for an industry that is as synonymous with the Alpine economy as chocolate, banking and skiing.
“According to the vast majority of watch executives surveyed, the downward trend in the Swiss watch industry will continue over the next 12 months,” according to Deloitte’s annual study of the Swiss watch industry.
The survey found that 82% of watch executives expect a negative outlook for the coming year, up from 41% in 2015 and 19% in 2014. Only 2% had a positive outlook.
“Weaker foreign demand poses the key challenge at the moment—and the industry believes this will remain in the next 12 months,” the report said.
The results were based on an online survey of over 50 watch executives between May and July, as well as personal discussions and consumer surveys.
Barron’s: Swiss Watch Demand Slows in a Sign of the Times
Consider these dispiriting data from the Fédération de l’industrie horlogère suisse, or the Swiss Watch Industry Federation: Swiss watch exports recently declined for – gasp – an eighth straight month. For January and February (the most recent months for which data was available), the total value of watch exports shrank 5.3% from 2015 levels, the first decline since 2009. Particularly galling was the gloom in three of the biggest markets – value of Swiss-watch exports declined 29% to Hong Kong, 5.4% to the U.S., and 4.3% to China. No wonder the cognoscenti converging on last month’s Baselworld 2016 were a bit glum.
But while the slump in Swiss watch exports bears watching, it’s too soon to mourn its passing. After all, a confluence of factors, some of them idiosyncratic, explains why shipments have slowed recently.
A Boom and a Glut
Perhaps the biggest reason shipments have stagnated is simply because there’s a big glut of inventory. After all, the watch industry is coming off a very long boom during which watchmakers were lulled into over-producing, and retailers into over-stocking.
Between 2000 and 2014, Swiss watch exports saw their average price more than double to CHF 730 from CHF 310, with the total value peaking in 2014 at CHF 21 billion, according to a 2015 Deloitte study on the Swiss watch industry. In particular, watches made with precious metals saw their average export price climb to CHF14,600 from CHF4,000.
In his December 2015 report on luxury goods, Bernstein analyst Mario Ortelli expected watch sales to remain “subdued due to sustained destocking from wholesalers.” The over-stocking is why watch blogs these days are rife with accounts about how coveted timepieces can increasingly be purchased in so-called “gray markets” for discounts compared to prices listed at authorized dealers.
Competition from Computers
Are smart watches eating Swiss watches’ lunch? Watch snobs will say that the Girard-Perregaux Bi-Axial Tourbillon is a watch, or even the Rolex Yacht-Master with its 18-carat everose gold case, but that what Apple peddles is a computerized gadget on a wristband. Conventional wisdom also suggests that the two compete in different categories and at different price points. But the watch industry increasingly is taking notice.
The Apple watch was launched in April 2015, and a basic sports model starts at $299. Already, luxury brands are rolling out their own iterations; a Hermes’ version, for example, starts at $1,250 and features its familiar long double straps.
Is it a coincidence that shipments of high-end luxury watches are holding up, but the lower end is feeling more pain? For the full year of 2015, higher-end watches with export prices exceeding CHF 3,000 saw total export value tick down 3.1% from 2014 levels. But for watches priced between CHF 200 and CHF 500, the decline was more pronounced, at 8.7%. This February, exports of Swiss watches priced below CHF200 were down 11% from a year ago.
Last year, one in four watch executives said they consider smart watches a competitive threat – up considerably from just one in 10 the year before, according to Deloitte.
How many of these factors will still weigh on Swiss watch demand in a year or two? Industry experts expect pressures from de-stocking and China’s corruption crackdown to moderate this year, and it remains to be seen if shipments will start lifting with re-stocking. Only time will tell.
Business Insider: This may be the end of the Swiss watch as we know it
The industry has also suffered from a lack of response to the growing threat of technology and attractive gadgets like the Apple Watch. More wearables than Swiss watches were shipped globally in February, according to Bloomberg. With many would-be customers saying they can just check the time on their phone instead of wearing a watch, this trend isn’t likely to slow down.
Traditional watch brands have also been reluctant to transition to online sales in an attempt to maintain their air of prestige, but this runs counter to customer’s overall changing preferences for online shopping. Respected watch news blog Hodinkee, for example, has seen some success selling vintage and modern timepieces in its online shop.
Switzerland doesn’t seem fazed by this. In fact, only one Swiss watch company, Tag Heuer, has even released a smartwatch. Only 25% of Swiss watch CEOs see wearables as a threat, according to a 2015 survey from Deloitte, even though the hardest-hit watch category this year is the one that wearables like the Apple Watch typically fall into ($200-400 export price).
Brands will be forced to adapt to these growing forces, however, simiarly to how they did during the quartz crisis. What comes out the other side may not look similar to the watch industry we have now, but the sooner the industry can adapt, the better off it should be.
Fortune: Swiss Watches Are Getting More Affordable
The elephant in the room
Among the many issues rattling the industry, however there’s another, less openly talked about reason for the downturn: the tremendous glut of inventory. The robust sales of recent years created a hyped-up market, spurring manufacturers to increase production.
Now the flood of timepieces largely intended for Asia and Europe aren’t moving; rather they’re turning up on the “gray market,” where new models, unlike those sold at authorized retailers, can be had at steep (15% to 60%) discounts. “Watch brands saw big numbers everywhere, and they started overproducing,” says David Sadigh, the founder and chief executive of the market research firm, Digital Luxury Group in Geneva. “But sales have not been at their level of expectations.” The surplus stock ends up in these gray markets.
That is why elite brands and models, usually found in boutiques lining Rodeo Drive or the Bahnhofstrasse in Zurich, are now sold on eBay, Amazon, and a plethora of dedicated watch sites – and even at Costco COST 1.54% .
Loss of status
The flourishing of the gray market is taking away the patina of exclusivity and rarity. “The reality is you can now get anything you want anytime,” says Adam Victor, a vice president at fashion house Narciso Rodriguez and a longtime watch collector. “There were pieces you had to be on a waiting list for at retail, that’s not the case anymore.” Victor now says he’s only collecting vintage pieces.
Such thinking is helping to take the air out of the Swiss watch balloon – and draw more people, especially young people, to the gray market. To a large extent this problem stems from the brands’ own success – particularly among the major luxury conglomerates like Swatch, Richemont and LVMH, which have been aggressively pursuing growth strategies and relying on the Asian market to keep up demand. With that demand dropping, watches are ending up in gray market sites, at lower prices.
To be sure, there will always be a market for high-end Swiss watches. But given global economic uncertainties, few see this as a short-term downturn. Notes David Sadigh at Digital Luxury Group, “It will take a while to sell those watches.”