Sunday, December 29, 2019

Holiday Repeat - North America Might Be Bigger Than You Think...

This originally ran just after BaselWorld 2018.  It has been a curious year in "Watch Town USA".  A few days ago I wrote about the return to the boutique.  The mono-brand boutique is an idea that is getting more traction with brands, but in all honesty, apart from New York, Beverly Hills, Las Vegas, and maybe Miami, it is not a concept that is readily adaptable across the North American landscape.  

So let's then think about the US, and what I honestly don't think some brands are really getting their heads around in terms of the distance and regional differences in customers.  And it also goes without saying that a few brands that honestly should know better still don't really get that they are, in fact, doing business outside of their home country. Nutella vs. Peanut Butter is an obvious and easy cultural gap to point to - and yes it applies well beyond what you want on your toast. I could go and live (again) in Japan.  That in no way makes me ready or able to really understand the Japanese market place.  

NOMOS, in their infinite wisdom of seemingly only hiring (and then platooning at no small expense) Germans (or German fluent Europeans) to their New York office, then commit the second sin of overpopulating their retail ecosystem.  Metro Boston is not a large area. And the brain trust in Glashutte via NYC have decided that it makes sense to have three retail outlets within a 10 minute walk of each other.  Not 10 minute drive, 10 MINUTE WALK.  Do they honestly think that people aren't going to shop on price?  Well they might want to think again. Or they can wait for the complaints from the retail partners to come in before they jettison their stock to the grey market. NOMOS makes some great watches, and they make some strange sales decisions. 

So once again -

North America Might Be Bigger Than You Think...

So it has been an interesting few weeks during and following BaselWorld.  One of the biggest requests I received from potential clients was to help them get a better foothold in North America.  Now wanting to sell watches in North America is, in and of itself, not so unusual.  But what was intriguing?  Some of the brands that these potential clients thought had a good foothold in North America.

Potential Client:  "Look at Brand X!"  They have like, 15 stores in the US!"

Henki:  "Okay, let's look at where they are, and who they are with..."

Potential Client:  "See!  They have 6 stores in New York City alone!  They have 4 in Los Angeles, and 3 in Florida!"

Henki:  "Well, yes and no.  Of those stores indicated on their retail partner list, 1/3 of those are web shops.  That means if you are a potential customer, you are not going to be able to actually go into a store and see the watch.  Of the actual retail stores, several are in the same city, so in fact, their real coverage or foothold is not really as great as it might seem.  And those 3 stores in Florida?  They are all in the same metro area.  Florida is a huge state, so why only be available in one city?"

Potential Client:  "But if you have stores in LA and New York you're covered!"

Henki:  "Well, yes and no.  While LA and New York are the largest and most well known cities in the US, there is an entire continent full of people (i.e. potential customers) in between them.  Also, consider that if you have 10 stores and most of them are in the same city, you have not created an opportunity for those retailers to succeed.  Rather, you have created an opportunity for them to fight it out among themselves to win customers.  This will lead to price cutting.  Wouldn't it make more sense to also be in Chicago, St. Louis, Denver, TEXAS - which could be its own country, Boston, Nevada... I think you get the idea.  Also, what about Canada?".

Potential Client:  SILENCE

This is something that can be hard to understand for a brand that is based overseas, but to me it's just common sense.  If you are only available in very small market spaces, with your product available in several stores within minutes of each other, you are achieving 2 things:
1.  You are ensuring that your watch will not be as "discoverable" as you'd like.
2.  You are ensuring that the stores in the same area that have the same product will compete at whatever level they have to to sell your watch - which inevitably means dumping stock for 30 - 40% off.

Sometimes, smaller markets are better.  As I've said before, if you sell 10 watches in Cleveland, it is the same as selling 10 in New York.  And you probably stand a better chance of the store owner paying you ; )


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