Story Highlight
– Watches and Wonders Geneva sets trends for the industry.
– Retailers previously determined watch allocations for brands.
– Shift from wholesale distribution to direct consumer engagement.
– Immediate availability of new watches after Geneva shows.
– Manufacturers need retailers’ expertise for better market insights.
Full Story
Rob Corder, editor-at-large for WatchPro, highlights that exhibitions such as Watches and Wonders Geneva serve as a platform for watch brands to announce their plans and ambitions for the coming year. These events typically feature impactful product launches and inspirational talks about the vibrancy and ingenuity of the Swiss watchmaking scene, aimed at press and retailers alike.
In recent years, particularly in the early 2020s, such exhibitions also functioned as critical venues for defining inventory allocations for retailers, especially those brands facing supply issues, like Rolex and Patek Philippe. This marks a notable shift from a decade ago, a time characterized by the competition between Baselworld and SIHH. During that period, these annual trade shows were essential for fostering discussions between brands and retail partners regarding product offerings and sales strategies.
Historically, these events allowed watchmakers to present their new products while retailers provided valuable feedback regarding their preferences. This ongoing dialogue influenced production decisions, ensuring that popular models were manufactured in larger quantities, while those that underperformed were scaled back or discontinued altogether.
Under this model, retailers would typically commit to purchasing those watches they believed would perform best in the market. Consequently, products revealed in January and March would not reach consumers until the summer or autumn, following the completion of this process.
However, this system was not without its flaws. Retailers’ ability to gauge market demand was often limited, and the sell-through data they collected was closely guarded. As a result, manufacturers faced significant risks without comprehensive market insights. Surpluses of less popular models sometimes ended up in the grey market, sold at discounted prices, undermining authorized dealers’ sales.
Additionally, in an age driven by social media and instant consumer gratification, previewing products six months before they hit the shelves proved impractical. This dynamic often shifted too much power into the hands of retailers, who often remained unaccountable for poor outcomes.
In response, manufacturers sought to connect more directly with consumers. They established their own boutiques, which opened up avenues for understanding consumer preferences. Introducing digital warranties also enabled brands to gather sales data even when transactions occurred through third-party retailers. According to research from Morgan Stanley and LuxeConsult, sales through wholesale channels decreased from an average of 79% to 64.5% between 2015 and 2018.
With enhanced consumer data, brands are now better positioned to decide which watches to manufacture ahead of the Geneva exhibitions. Looking ahead, advancements in artificial intelligence will likely facilitate more precise analysis and decision-making regarding design and production.
As a result, new models showcased in Geneva are now available for immediate purchase. Retailers face an ultimatum: to accept or reject these offerings.
Yet, this system is not without its shortcomings. As with many business strategies, there has been a noticeable shift from one extreme to another, suggesting that the most effective approach might lie somewhere in between.
While it benefits the market to have immediate availability of watches launched at Geneva, this advancement hinges largely on manufacturers’ improved access to sales data from both their boutiques and retail partners. However, complex market dynamics cannot be distilled into mere numbers. Retailers’ insights, cultivated through years of experience, remain invaluable. This expertise varies significantly across different regions and is especially prominent among family-operated jewellers.
For manufacturers, it is crucial to create avenues for this accumulated wisdom to influence higher-level decisions. Even seasoned brands often struggle with retailing beyond the financial capacities to establish high-end boutiques in premium locations.
The insights gained from a store manager in a luxury retail setting are not comparable to the comprehensive knowledge held by retailers across various locations. Corder notes a potential underlying issue in the reliance on boutiques in markets like China and Hong Kong, which may contribute to subdued sales in those regions compared to the United States, where authorised dealers maintain a stronger presence.
While local offices do maintain communication with retailers, the balance of dialogue often skews toward directives rather than mutual understanding. Thus, Watches and Wonders represents a crucial moment for executives to engage, absorb feedback, and adapt.
For the Geneva exhibitions to reach their true potential, they must blend the excitement of product launches with in-depth discussions between manufacturers and retailers, shaping the industry’s trajectory for the foreseeable future. Engaging in listening will be essential for watchmakers moving forward.
