Isaac Mostovicz writes that the Chinese Year of the Dragon may be significant for luxury retailers ...
A recent article in the Wall Street Journal wrote that Richemont, the Swiss luxury goods group, has reported third-quarter sales of €2.6 billion ($3.3 billion) – in no small part down to its Asian, and in particular Chinese customers.
Image courtesy of Luxos
The Asia-Pacific region cemented Richemont’s position as one of Europe’s most important luxury manufacturers, with results of €1.05 billion, 36% up from the previous year. However, it is not only the domestic Chinese market that is prompting such strong profits. Sales in Europe also rose 16% to €914 million as Chinese tourists are purchasing the group’s goods – with items such as Cartier jewellery and Jaeger-Le Coultre watches finding favour – whilst visiting European cities such as Paris, Rome and Geneva.
Bernard Fornas, chief executive of Richemont’s Cartier brand commented: “The number of Chinese tourists is growing… and will help to “cushion the landing” in case things get worse in Europe’s economy.”
As previously discussed, South-East Asian demand for luxury looks set to continue. Sparkle Roll Trading Development, a distributor of luxury goods in China, has five boutiques in Beijing and Shanghai selling Richard Mille and Parmigiani watches – with the average Parmigiani watch costing around 68,000 Swiss francs ($71,882).
“Sales are really good at the moment. At one of our boutiques we sold 60 watches in one month,” commented Mr. Firth, Sparkle Roll’s Chinese Marketing Director. By comparison, their stores in Europe sell on average five or six watches a month.
The year 2012 – which in Chinese horoscopes is the Year of the Dragon – is also affecting luxury sales. Chinese New Year is on January 23, with the emblem of the dragon being symptomatic of wealth, royalty and nobility. To celebrate this, independent watchmaker Parmigiani has created a dragon clockwork automaton crafted of white gold, imperial green jade, rubies, sapphires and a diamond.
At Janus Thinking consumers are characterized into two different groups – or world views – of Lambda and Theta, which explain how different personality types influence our choice of luxury.
The Parmigiani automaton might appeal to Lambda consumers due to the level of its craftsmanship, its uniqueness, and the fact that it there is a meaningful story behind its creation – rather than because of its price.
Theta consumers, however, will be attracted to such an item as it is a one of a kind, high-end design, and its high price helps to establish them within their preferred social class. Thetas seek acceptance, and their purchases reflect that.
Priced at 3.5 million Swiss francs ($3.7 million,) regardless of whether Theta or Lambda, its purchaser will no doubt have a strong affinity with the symbolic dragon.
Isaac Mostovicz writes that there's something beneath the surface for luxury watches...
An interesting article in the New York Times looks at how the continued trend in the luxury market of quality and value as being the decisive factors are affecting the sales of luxury watches. In a previous blog of mine, I discussed how people are keener than ever to find value for their money and that Thetas, who seek comfort, belonging and affiliation are more likely to be sensitive about the value of the purchase and of overpaying than their Lambda counterparts. We can see this shift being translated in the current market of luxury watches. High-end watches with unique and intricate designs and mechanisms are selling better than the lower end, ‘fashion’ watches. According to a post in DNA, watches over $25,000 are increasing while figures dropped in those under. Catherine MacDonald-Home, editor of Luxury Briefing says ‘It has to be something that’s limited edition or of very high quality [in order to sell well].’ Rise in popularity of these more costly watches is helped along by the arrival of new revolutionary, technological advances in the art of watch-making. Editor of International Watch magazine, Michael Thompson talks about the new lightweight materials and components:
“These watches are so light and wispy that when you have them on your wrist, you forget they are there,” he said, speaking of watches from Richard Mille that are made from carbon nanofibers.
As well as being lighter and non-obtrusive, other new innovations include Patek Philippe’s silicon moving parts and Montblanc’s Metamorphosis watch of two different faces and functions.
In the general public, these watches aren’t likely to draw attention the way a jewel-encrusted timepiece might.
“If you wear a million-dollar mechanical watch, or even a $40,000 one, in the average room no one will know,” Professor Drèze said. “The watches are actually examples of inconspicuous consumption.”
These new generations of inconspicuous, luxury watches are perfect for the present money-conscious Thetas; without the compromise of quality, you get value for money but in a manner that is more subtle, more Theta-like. Lambdas are not forgotten in this revolution in luxury watches, as Audemars Piguet will release three new versions of its luxury sports watches which are also lightweight, carbon cased but feature ‘brilliant colors reminiscent of racing cars.’ An aspect that is sure to satisfy and catch the eye of any discriminating Lambda.
Isaac Mostovicz writes that selling luxury to a Lambda personality means understanding both how he sees himself and how he wishes to be seen...
While there was not doubt that Aston Martin is a brand aimed strictly at Lambda personalities, the recent product release by Aston Martin proves it anyways.
Coming optional with the purchase of a new Aston Martin Rapide is a $33,000 watch. And with this watch and your new Aston Martin Rapide, you can lock or unlock their car doors by simply touching the sapphire-crystal face.
Only a handful of individuals can afford to buy even the Aston Martin. Even fewer could afford the optional $33,000 watch. The timing of this is interesting, because while the global recession is receding, it is not completely over, yet.
Watches are a much-loved item amongst Lambda personalities, because they bestow status and are durable. They’re seen as investments and heirlooms.
During the worst pont in the recession, The Wall Street Journal published a column “How to sell a $35,000 watch in a recession”, which offers a look into the new methods that luxe retailers are using to keep sales moving.
After years of double-digit sales growth, sales of Swiss watches have fallen off drastically. Watchmakers like IWC—a 140-year-old company whose watches are considered collectors’ items and generally cost between $3,000 and $300,000—are having to re-learn the old-fashioned art of salesmanship.
The ‘old-fashioned’ art of salesmanship that is used is selling the experience as tantamount to the product itself. In luxe, people buy because it looks good, feels good and it makes them appear important.
He used PowerPoint to impart what he calls the “macaroon technique,” referring to the sandwich-like French macaron pastry. This can be applied to most any product (including, presumably, a Xerox machine) and goes something like this: “Madam, this timepiece (or diamond or handbag) comes from our finest workshop and it has a value of $10,000. If you buy it, your children are sure to enjoy it for generations to come.”
This tactic by Aston Martin to package the watch with the car is an extension of the salesmenship methodology talked about in the Wall Street Journal article: Show a Lambda personality how well their new, ultra-exclusive watch works with their new, ultra-exclusive car.
The expression also suggests the person will have a long family line, which causes them to envision their children and grandchildren as Lambda personalities, enjoying and cherishing this watch that their father, also a Lambda personality, purchased years ago and passed onto them.
A true Lambda Personality won’t be able to resist it, and Aston Martin knows this.
Isaac Mostovicz writes...
As mentioned in a recent post, Bentley has come up with another limited edition invention, this time for luxury watch owners. Worried about damaging yours, Bentley have come to your aid, creating a unique safe box especially designed for your watch.
Rolex, Cartier, Patek Philippe and Piaget; the millionaires and billionaires would not been seen without one of these timepieces fastened to their wrist. They can complement your life, accessorize your wardrobe, or become a family heirloom to pass along to future generations.
High-end watches can have over 800 components, many of them handmade and hand assembled by trained watch makers. The luxury market begins at £500 pounds but many easily cost 30 times that, notes Andrew Block, senior vice president of marketing for Tourneau, one of the world’s largest high-end watch dealers.
However, these pieces of art should not be left on the bedside table or next to the sink, at risk of damage. To truly take care of your watch, Bentley has teamed up with Stockinger Safety First Class to create 400 unique, limited edition safe boxes. The Arnage is perfect for watch lovers and among its many features it contains Stockinger’s automatic watch winding system.
Dominik von Ribbentrop, owner of Stockinger, says:
Style, grace and security: A Stockinger safe will give you freedom and independence and will increase your peace of mind – in style and at all times. Stockinger’s passion is to enrich the grey world of bulky safes with a high-class product that is as secure as a bank, as precise as a master time piece, and as beautiful as a piece of the finest art.
The safe is available in the same exterior colours as Bentley cars and feature 10 interior leather colours and three wood veneers. Giving your timepiece this secure place to rest, you must put a deposit down ahead of time, as each safe requires several weeks to construct, taking 18 stages and 30 different teams. The price has yet to be announced but remember there will only be 400.
Does this seem a little extreme? We may lock cars in the garage, ourselves in at night and our money in the bank, however, a safe specially designed for your watch, to be kept at home; is taking this precaution to a whole new level.
Isaac Mostovicz writes...
A little follow-up on Rolex from an article (subscription only) about the Baselworld watch fair in Monocle magazine:
Swiss watch brands are patriotic to a fault. Rolex is one of the few high-end manufacturers that does not stamp “Swiss Made” on the watch face in the belief that Rolex defines Switzerland rather than the other way around.
An iconic brand is one that defines its country. But is it easy for Rolex to define Switzerland because it’s, well, Switzerland? Can larger, more controversial nations have iconic brands in the same way?
Isaac Mostovicz writes...
This week Tiffany and the Swatch Group announced a new partnership lasting at least 20 years that will expand Tiffany’s small watch business into “one of the most important watchmakers in the world in the next five to 10 years,” according to Nicolas G. Hayek, Sr., Swatch Group chairman and co-founder.
Tiffany will continue its current lines and expand them in a new company, Tiffany Watches, which will be entirely owned by Swatch. Both companies will share their expertise to collaborate on design, engineering, manufacturing, marketing, distribution and service. Tiffany will have a seat on the company’s five-member board of directors, product design and marketing committees, and will get a share of the new company’s profits.
Many consumers associate Tiffany with fine diamonds and Swatch with cheap watches (even though Swatch does own several luxury timepiece brands, including Breguet, Blancpain, Glasshütte Original, and Omega). Tiffany will have to be careful so as not to pull a ‘DaimlerChrysler’–tarnishing the brand image of both companies (bringing the Tiffany brand ‘down’ to Swatch) and losing a great deal of money in the process (when expected synergies don’t actually happen). It sounds like Tiffany and Swatch are on the right track though, as they’ve already said distribution will be “selective” through the Swatch Group global network, Tiffany stores, and areas where rivals like Bulgari watches are sold.