"Free-fall"
"Worst first quarter ever"
"Nothing is selling"
"Nobody is buying"
Does any of this sound familiar?
For those of us who were in the industry in 08 we remember a lot of this pretty well. Actually, let me rephrase that - we SHOULD remember a lot of this pretty well, but it seems many folks suffer from short-term memory loss.
Sales are dramatically low. So low that most brands have given up on the usual fix of terminating their mid-management/sales managers. They probably realize that this is a bit beyond the usual.
Don't start relaxing yet, these folks will still get the axe - fairly or not. But have no doubt about it, many will be "entering the Carousel" just before or just after annual watch maker's holiday this summer.
In 08 it was pretty easy to understand. The entire US banking system nearly imploded. People lost their jobs. Many lost their homes. What we had taken for granted was the stability of a false economy. For "civilians" out there it was largely due to spending more than they made. But careless spending was not limited to individuals. Banks,"financial institutions", auto makers, you name it. Everyone had over-extended.
It seems that the watch industry did not learn anything from this experience. Think I'm being unfair? Let's examine a few realities:
1. Ridiculous spending by brands on dinners, events, partnerships, ambassadors and sponsorships is still rampant. I have yet to see a realistic report on ROI (Return On Investment) that will bear out that a brand actually got ANYTHING out of sponsoring a yacht other than satisfying the brand owner or CEOs passion for, well, yachting. But yet and still, with sales swirling around the toilet bowl of despair, there is no shortage of dumb-assed partnerships that offer nothing more than the reinforcement that Brand X is for RICH PEOPLE because it only partners with RICH PEOPLE.
Flying 50 PLUS watch journalists/bloggers across the country, putting them up in a hotel, feed and water them for two days, show them a few watches, take them out to wine country for the day... is that a good use of your company's marketing money? Especially considering the dramatically low amount of actual, you know, journalism that it generates. Possibly a negative ROI on that.
And this irresponsibility with money goes beyond these things. Brand managers flying coach class only in an emergency and posting their suffering on Facebook... really? A brand with sales that are beyond dismal spending $350 or more a night insisting on staying in a hotel in Beverly Hills when visiting LA instead of staying somewhere a little more in line with the reality of their company's financial situation. Dinners at REALLY expensive restaurants, cause hey - it's not like THEY have to pay for it ; )
Life on the road is tough, but as the brand sales manager/agent you are supposed to be a responsible steward. $125 - $150 for dinner is not acting responsibly with your employer's check book. Posting selfies of the expensive dinners, "suffering" through another business class flight... it is getting harder and harder for many of us in the fourth and fifth estate to have any sympathy for you. You WASTE a LOT of MONEY and frankly, you should not only KNOW BETTER, you should DO BETTER.
But in fairness, this is exactly how the more senior Swiss and German management acts as well.
Put simply, brand managers on both sides of the Atlantic have been bad babysitters.
2. Continued over-production with the unshaken belief that the reason why inventory isn't selling isn't because there is too much of it. It is because your sales team "suddenly sucks". Now in fairness, maybe they do and maybe they don't, but for those of us who have been watching, this situation has been coming for some time. There is a FINITE number of potential luxury watch customers out there. Until CEOs start understanding that, they will continue to over-produce.
3. China is no longer that magical place where you could pump all of that production to. Blame it on the government crack down, blame it on the retailers in Hong Kong saying enough is enough and demanding more equitable terms from the big three, blame it on the reality that China's economy had to eventually plateau or even dip.
4. Pressuring good retail partners to the point where they no longer wish to carry the brand that they have actually carried and down well with for years. "Hey, we need you to take ANOTHER 50 pieces". Sooner or later, the brand goes back to the well one time too many and that door will be closed.
5. Continuing to insist that a product that costs you $200 should be sold for $10,000 - there is ROLEX, OMEGA, Patek - and everyone else. Everyone else needs to wake up and smell the espresso.
6. Failing (or more honestly) REFUSING to accept the reality that this situation is NOT likely to correct itself in the foreseeable future.
"Worst first quarter ever"
"Nothing is selling"
"Nobody is buying"
Does any of this sound familiar?
For those of us who were in the industry in 08 we remember a lot of this pretty well. Actually, let me rephrase that - we SHOULD remember a lot of this pretty well, but it seems many folks suffer from short-term memory loss.
Sales are dramatically low. So low that most brands have given up on the usual fix of terminating their mid-management/sales managers. They probably realize that this is a bit beyond the usual.
Don't start relaxing yet, these folks will still get the axe - fairly or not. But have no doubt about it, many will be "entering the Carousel" just before or just after annual watch maker's holiday this summer.
In 08 it was pretty easy to understand. The entire US banking system nearly imploded. People lost their jobs. Many lost their homes. What we had taken for granted was the stability of a false economy. For "civilians" out there it was largely due to spending more than they made. But careless spending was not limited to individuals. Banks,"financial institutions", auto makers, you name it. Everyone had over-extended.
It seems that the watch industry did not learn anything from this experience. Think I'm being unfair? Let's examine a few realities:
1. Ridiculous spending by brands on dinners, events, partnerships, ambassadors and sponsorships is still rampant. I have yet to see a realistic report on ROI (Return On Investment) that will bear out that a brand actually got ANYTHING out of sponsoring a yacht other than satisfying the brand owner or CEOs passion for, well, yachting. But yet and still, with sales swirling around the toilet bowl of despair, there is no shortage of dumb-assed partnerships that offer nothing more than the reinforcement that Brand X is for RICH PEOPLE because it only partners with RICH PEOPLE.
Flying 50 PLUS watch journalists/bloggers across the country, putting them up in a hotel, feed and water them for two days, show them a few watches, take them out to wine country for the day... is that a good use of your company's marketing money? Especially considering the dramatically low amount of actual, you know, journalism that it generates. Possibly a negative ROI on that.
And this irresponsibility with money goes beyond these things. Brand managers flying coach class only in an emergency and posting their suffering on Facebook... really? A brand with sales that are beyond dismal spending $350 or more a night insisting on staying in a hotel in Beverly Hills when visiting LA instead of staying somewhere a little more in line with the reality of their company's financial situation. Dinners at REALLY expensive restaurants, cause hey - it's not like THEY have to pay for it ; )
Life on the road is tough, but as the brand sales manager/agent you are supposed to be a responsible steward. $125 - $150 for dinner is not acting responsibly with your employer's check book. Posting selfies of the expensive dinners, "suffering" through another business class flight... it is getting harder and harder for many of us in the fourth and fifth estate to have any sympathy for you. You WASTE a LOT of MONEY and frankly, you should not only KNOW BETTER, you should DO BETTER.
But in fairness, this is exactly how the more senior Swiss and German management acts as well.
Put simply, brand managers on both sides of the Atlantic have been bad babysitters.
2. Continued over-production with the unshaken belief that the reason why inventory isn't selling isn't because there is too much of it. It is because your sales team "suddenly sucks". Now in fairness, maybe they do and maybe they don't, but for those of us who have been watching, this situation has been coming for some time. There is a FINITE number of potential luxury watch customers out there. Until CEOs start understanding that, they will continue to over-produce.
3. China is no longer that magical place where you could pump all of that production to. Blame it on the government crack down, blame it on the retailers in Hong Kong saying enough is enough and demanding more equitable terms from the big three, blame it on the reality that China's economy had to eventually plateau or even dip.
4. Pressuring good retail partners to the point where they no longer wish to carry the brand that they have actually carried and down well with for years. "Hey, we need you to take ANOTHER 50 pieces". Sooner or later, the brand goes back to the well one time too many and that door will be closed.
5. Continuing to insist that a product that costs you $200 should be sold for $10,000 - there is ROLEX, OMEGA, Patek - and everyone else. Everyone else needs to wake up and smell the espresso.
6. Failing (or more honestly) REFUSING to accept the reality that this situation is NOT likely to correct itself in the foreseeable future.
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