When The Carpet Isn't Big Enough...

Watch Town is a funny place. 

Barry B. Kaplan, knows a thing or two about a thing or two. One of them is market research in the watch industry. And yesterday he dropped a truth bomb which laid bare a lot of the presumptions that many brands would be happy for you to maintain about the price stability of their wares and the true market value.

A brief synopsis:

BBK & Co. did a deep data dive through their access to a database of roughly 5 million new & "gently used" watches throughout the world. While a lot of facts and figures wouldn't surprise anyone or raise too many eyebrows, it's is at mid-table where some interesting questions come up.

Here is an excerpt:

"Mid-tier luxury watches have a price problem. Just look at all the unsold new/unworn inventory.

At BBK & Co., we have access to a database of approximately 5 million new and pre-owned watches worldwide.

Across the world's top timepiece brands, we ranked the relative concentration of new and unworn watches in the retail, wholesale, and parallel markets for every global region. We adjusted for each market’s tendency to carry new stock and for relative market weight.

The index below uses 100 as the benchmark. A score of 200 means twice the benchmark concentration after adjustment—not twice as many watches.

1. NOMOS — 202.5
2. Casio — 192.1
3. Frederique Constant — 158.4
4. Citizen — 156.7
5. Tissot — 156.5
6. Glashütte Original — 132.5
7. Bell & Ross — 131.5
8. Hamilton — 126.6
9. Longines — 126.5
10. Montblanc — 121.4
11. Maurice Lacroix — 117.9
12. Baume & Mercier — 111.9
13. Oris — 111.8
14. Rado — 109.0
15. Breitling — 104.9

These brands span very different price points. In my wholesale and retail experience, the mid-tier luxury names here have pushed prices beyond what many customers will pay. Too much unworn stock is competing for the same buyer, and dealers have to discount to move it.

Breitling deserves attention. Alongside the new and unworn Breitlings on the secondary market, I’m seeing many recently manufactured Universal Genève watches offered through private parallel channels, with more waiting in the wings. Universal Genève is a sister brand under the same ownership.

Swiss export figures put this in perspective. According to FH industry statistics, Switzerland exported 29.8 million watches in 2011 and 14.6 million in 2025—a 51% decline. Over that period, wristwatch export value rose from CHF18.1 billion to CHF24.4 billion.

Much of the lost volume was quartz, so those numbers alone don’t prove a collapse in mid-tier luxury. But in the first half of 2026, export value in the CHF500–3,000 segment fell another 5.7%. Those are export prices, before retail markups.

My view: parts of mid-tier luxury are collapsing under their own pricing. The inventory ranking is a signal; the wholesale offers and discounts are where I see the pressure becoming real.

There are also scores of start up watch brands willing to fill the pricing gap for the current crop of watch buyers who don't really care whether the brand's provenance is Swiss or otherwise."

Now in fairness to you, gentle reader, I do not have nearly the analytical data on hand to match Mr. Kaplan. But as I shared with him, I am very appreciative of the work he put in as it validates the anecdotal data I've been leaning on for years. Because what I could see with my own eyes was a flood of product available at eye-watering discounts, and retailers who would often feel like they were getting spanked with a cricket bat. And I will go a few steps beyond this analysis and point to the bigger issue - over production with the ongoing practice of offloading surplus product on the grey and light-grey market.

I am, without a doubt, a skipped record on Watch Town's turntable. But it is also clear that a flock of canaries will die in Watch Town's coal mines if some of these brands can't adjust their operating practices to more closely reflect the reality that they are living in. Because as Mr. Kaplan has much more succinctly made clear to us - when you try to sweep too many watches under the rug, you'll need to invest in wall to wall-to-wall carpeting ; )

Summer Repeat - Yogi Berra on Brand Management

Repeat - Yogi Berra on Brand Management

I originally came out with this just over three years ago.  At that time I was in Malmo, Sweden for the launch of Kronaby.  After a fairly successful launch, followed by a strong BaselWorld 17, and  a BaselWorld 18 that was off the chain (the booth was jam-packed and I saw someone in front of the booth with with a can of grease and a crowbar trying to get more people in), shortly prior to BaselWorld 2019, word leaked out that Kronaby was, in fact, toast.  Now it's funny looking back, because at the time I was somehow thinking that maybe the folks at Kronaby (and let's say that's the four shot-callers and a few key employees that, in hindsight, never should have been anywhere near a watch brand), might be approaching things differently.  Shortly after launch, it began to become clear that, in fact, that was not the case.  Just prior to their first full-on BaselWorld (I'm talking about a week prior) the brain trust in the marketing department thought it made sense to cancel a large chunk of media appointments that had already been booked.  The result, a lot of press took that particular fuck-you at face value and not only didn't bother to re-schedule, but wrote Kronaby out of their collective consciousness.  Ironically, that BaselWorld found all four of the shot-callers hanging out in front of their booth, not unlike used car salesmen prowling the lot, looking for a possible mark.  Curious to relate, the next year was quite good, with people literally spilling out of the booth!  So what happened?  Well, a few things and some that parallel another fairly spectacular fall from grace, Klokers.  And if and when I am asked to deliver a Ted Talk I will endeavor to boil it down to ten minutes or so ; )

But for now, it seems like a good time to re-heat this one!

Yogi Berra on Brand Management

A late night (in Malmo) Face Time call came in waking me from a peaceful slumber.  Clearly I need to figure out some sort of "out of office" message for that when I am out of the country ; )

Worrying that it could be Wendy and there might be something important, I picked up.  At first, relief as it was not Wendy but a fairly senior fellow who works for a company in Switzerland that produces, markets and sells watches.  We had not spoken in 11 months and he was unaware that I had moved to Salem, MA and was no longer in California (and clearly he did not know I was in Sweden).  This turned into the semi-annual call where X (no names, so don't ask!) was on his latest talent hunt.  It generally starts out with some pleasantries:

X:  "How's Mary?"
Me: "Who is Mary?"
X:  "Your wife!"
Me:  "Well, that's news to me as I've been calling her Wendy since 1992."

So let's just say that X's memory is not razor-sharp, and therefore it is safe to say, he's not so good on every detail ; )

X:  "We're looking for a brand manager for  (no names).  Any suggestions?"
Me:  "What happened to (no names)?  You were so sure they were perfect."
X:  "Well, it turns out that (no names) was not a good manager."

And then X split open like an over-stuffed piñata.  And out it flowed.  X shared all of the problems and I listened.  And to quote that other great commentator on the luxury industry, Yogi Berra:

It's like deja-vu, all over again.
Read more at: https://www.brainyquote.com/quotes/authors/y/yogi_berra.html

"It's like de-javu, all over again."

You see, X and I have a very similar conversation approximately every 18 months.  It is not always exactly the same date, but generally tends to fall between the close of the year and JCK.
And every 18 months I tend to ask the same thing:
"Why do you keep hiring the same type of person and expect different results?"
Long time readers will know that Moneyball is my default reference, and I even gave a copy to X as a gift a year or so back.  I don't think he ever read it and it's pages were probably used to start a fire in his swanky ski chalet.  So I thought I would dumb it down in the hopes that he might get it this time.  So without further delay, here's some hiring advice from Yogi Berra himself -

"We made too many wrong mistakes"
As an English teacher, I realize that this sentence makes no sense.  But look a little deeper and you will find a kernel of wisdom.  Essentially it reminds me of the anxiety and fear of looking foolish that compels recruiters, hiring managers and even CEOs to go with the same type of candidate again and again.  Simply put, the belief when hiring a brand manager in North America (I honestly can't speak to the other countries) is that they (usually he) must be a sales person.  Now, in and of itself this is good because, you know, you need to sell watches.  But there are several other elements that oftentimes get overlooked:
Management/coaching/mentoring.  Sales is, by its very nature, a fairly solitary pursuit.  While sales people get managed, it is very seldom that they have been called upon to manage the diverse group of personalities that typically make up a brand's office.
PR/Marketing/Media.  Again, frequently a lack of understanding of ROI vs. money actually spent.  If brand managers had a better understanding of this, then certain magazines and "influencers" would probably stop attending BaselWorld as the gravy train would clearly be shut down.  In addition, certain brands would not be the watch world equivalent of "Christmas/Easters" (i.e. people who only go to church two days a year).  Some of us call them Basel/Vegas.  You will only hear from these folks just prior to these two events.
Customer Service. Again, dealing with angry customers is an alien experience for a lot of these folks.

There are some people who, if they don't already know, you can't tell 'em.
Simply put, X, and plenty of other shot-callers in the industry just can't bring themselves to believe that there might be a different way to approach things.  As a friend of mine who works behind the scenes as a very in-demand consultant in Switzerland put it -
"these guys at Richemont, Swatch, and a lot of the others?  They're like trains running on the tracks.  They only move one way, and that's because the 'station master' (i.e. senior management) is following the same schedule they always have.  Which works great in normal times, but quite differently in a heavy snow storm".  And that snow storm started a few years ago and is still screwing up traffic ; )  Perhaps it is time to invest in an alternative "vehicle"?
Now X will probably go out and hire another big group loyalist who is expecting a base salary of 6 figures, business class travel, and a very deep marketing budget.

X:  "But they worked for Cartier for 20 years!"
Me: "So they are still with Cartier?"
X:  "No, but they were there from 92 - 2012."
Me: "So, essentially you are telling me that they have not worked for 4 - 5 years?"

At the risk of sounding mean, there is usually a reason why these people are available.

Nobody goes there anymore.  It's too crowded.
At the risk of sounding crass, X has a boner for big name, fancy retail partners.  The logic being that If you are in "so and so's" store in Las Vegas, LA or New York you will have made it big.  Sounds good, but the realities are something very, very different.  Those stores will most likely be MEMO. (Our old friend of the watch retailer meaning the brand provides the watches and waits for them to sell, and then maybe the retail partner will pay for them.  Then again, maybe not.)  So essentially the brand is acting as the bank, as well as the "supplier".  And if you think that is the only expense, consider the travel to visit the retail partner to do the safe count, the money that will be demanded for co-op advertising, the POS collateral materials that the retailer needs.  In other words, a shit-ton of money that the brand will be putting out there without any confirmed sale in sight.  And once the brand is in the store, they are fighting for case space, because frankly there are just too many brands.

So my strong advice for X after a few hours of sleep is this -
If you come to a fork in the road, take it. 
This is a perfect opportunity to consider a different approach.  There are plenty of talented people (some of them are even female) who despite not being solo artist salesmen might have exactly the talents and more importantly, the temperament to steer the Good Ship Watch Brand through the stormy seas of North America.

Or, you can go ahead do the same thing again, hoping for a different outcome -
Even Napoleon had his Watergate.

I Could Do It Better Myself - The Volunteer Media - An Update From Henki

I wrote this back when I still owned and operated Tempus Fugit. A fair bit has happened in that time. I opted out of a job with a brand, I sold Tempus Fugit to someone who handed it to someone else, and it now appears to not be publishing anything, I accepted the job I have now which is working for MassHire - we help people find jobs and train for new careers. It is very satisfying work albeit with very long hours. Owing to this the publication pace and nature of Henki Time is not as manic as others. With that said, I still feel I have something to say, and this piece is one that I think still rings true. So brand owners and brand managers - don't forget to support the volunteer press. 

Even when we say things that might cut a bit too close to the bone ; )

A much younger Henki teaching English in Villa do Conde Portugal in 1995. You might recognize the gentleman on the far right as the current Secretary General of the United Nations.

I Could Do It Better Myself - The Volunteer Media - An Update From Henki

Despite what some folks think, the majority of the press covering the watch business these days is of a voluntary nature.  This is largely the result of brands cutting advertising budgets, and people going back to former occupations, getting married, or finding better ways to earn a living and spend their free (and not so free) time.

So gentle reader, an inside look at a day in the life of Henki -

5:30 - Whether I like it or not, Tallulah (the older cat and Executive Publisher) is awake and waiting to be fed.  Sabrina (the younger cat and Editor in Chief) is waiting as well.  I head downstairs, turn up the heat in the house, and feed the cats.  I gulp down my morning tablets with a glass of water, have the first of several espressos and head back upstairs to the office.

5:45 - emails reviewed, and...
Not a sausage! 
Not only has watch advertising money dried up, watch brands are producing fewer and fewer models, and some have made their PR functions redundant.  News is scant, and unlike some of my colleagues in the Fourth and Fifth Estate, I prefer not to manufacture it.

6:15 - Go down and make a coffee for Wendy who is up and getting ready for work.

6:25 - I receive a follow-up email from the PR manager at Brand Y.  Y for "why won't you write a paid piece about us?", which I have explained a few times - I don't write advertorials.  I realize my unwillingness to do so is probably holding me back financially, but a man must have a code ; )

6:45 - Email in-box pings, and... 

Good news! I am the winner of the Nigerian National Lottery! Maybe I'll buy Watch Time from Ebner so I can finally have my own magazine!

7:15 - Finally I decide that as no news is forthcoming, I will write an editorial type piece. The Grey Market is always good for a few hundred words, and is showing no sign of slowing down.  Oh, wait! A PR staffer from Brand X has sent me a personal email with a story about a watch event featuring their brand, in Marblehead, Massachusetts (which I could literally have walked to from my house as it is the next town over), with several "Important and Respected" watch journalists who were flown in from New York and Europe a few days previous. The PR person feels that as I live nearby it would be great to have a story about this wonderful and glamorous event (lots of swag, 4 star meals, etc.) from a local perspective! I take a beat, decide to ignore the irritation that essentially - this person wants me to write a pr piece about an event that I wasn't even invited to even though my attendance would have cost Brand X $0... and I simply don't reply.

8:00 - Kiss Wendy and wish her a good day as she heads out the door.

8:35 - Hastily showered and dressed, lunch made, it's off to work.

8:55 - Parking lot duty.  Where I work we have very limited parking, and as such the students have been informed that they cannot park in the back lot.  Needless to say, it is a game of cat and mouse as several try to slip in anyway to avoid parking on the street.  This, in turn, prevents other staff members and board members (who have a meeting today) from parking.  While being the Director of Adult Education and Workforce Development has its perks, playing parking lot "sizzler" is not one of them ; )

9:05 - Call with my contact at the Dept. of Education office.  Nothing major, clarifications regarding programming made, and all seems under control.

9:35 - Call from reception, someone is interested in learning English, could I come down and speak with them?

10:30 - Class break time.  I try to speak with each of the four teachers, make sure everything is under control.

10:45 - Back to work on the grant application.  It is due on Friday, signatures are needed from the boss, and I still need to nail down the budget.

12:15 - Text message from brand manager in Switzerland.  Could I recommend a sales manager in Florida.  I file that under "not pressing" and dive back into "grant writing land".

12:30 - Lunch with the teaching team.  Brief ad hoc meeting to review a few items coming up.

13:45 - Call from former student of mine who is interviewing for a job. Would I act as a reference?

2:30 - 30 minute walk around the surrounding area to clear the head.

3:25 - Personal email pops on my iPhone, and I see that the watch from Brand X that three of the big outlets already wrote about 2 days ago is suddenly now a press release for "the rest of us".  I delete the message.

4:15 - draft of the grant application is finally ready to be reviewed by the boss.

4:45 - The phone rings just as I am leaving the office.  Meeting arranged for Wednesday morning to review our proposed adult education program with a new partner one town over.

5:15 - Stop at Trader Joe's for dinner items.

5:35 - Feed the cats dinner, scoop out the litter box, make a coffee and fire-up the laptop.

5:55 - Complete text edit for one of the brands that I "side-hustle" for, and respond to a customer query for another.  Yes, the watch in question is available, yes, it does cost that much, no there will be no discount!

6:17 - Phone rings, it's Japan (not the whole country, but one of the brands with whom I have a relationship) with an urgent request for a special event, could I help organize it?

7:25 - Dinner is nearly ready, and Wendy arrives home after a long day.

9:26  - Story lined up for tomorrow involving a review of a new brand's watch.

10:25 - After 15 minutes of futility, I give up trying to read any more of the book I've been working on since Christmas.  Turn out the lights and off to sleep.  Tomorrow is another exciting day in watch media!

Tales From The Light Grey Market

"They have one great redeeming feature: their wallets. More capacious than an elephant's scrotum and just as difficult to get your hands on."

Rowan Atkinson as Edmund Blackadder

News reached the North Shore offices of Tempus Fugit this morning that (insert gasp here) Watch Brand A was being offered at discount prices on (insert second, more profound gasp here) unauthorized retail webstore X!

And to read the commentary on the official Brand A discussion forum, it is clear that several fans of the brand are walking around feeling as if they've been "two-timed" by an unfaithful boyfriend / girlfriend the night before the Junior Prom. This has left them with that awkward sense of anger, disappointment and bewilderment:

"Should I cancel the whole thing and lose the deposit on the limo, or just act like I don't know and go as if nothing has happened?"

The simple reality is that Brand A version 3.0 has made a lot of watches, maybe too many. They have over 10 different dive watch models currently available, and that's just the model versions. Multiply that by the number of color options available and that's a lot of similar SKUs. Whether or not the watches that have now been dumped into the grey market by an official retailer, a distributor, or the brand itself is irrelevant. Irrelevant, that is, to the customer who bought at full price through an authorized retail partner. 

For many Brand A owners and those who dream of owning one, buying one is a financial stretch. And if we are being completely honest about it, a watch that costs more than $100 is a stretch for a lot of people. It is a luxury. Now imagine how that customer feels when the same watch that they bought from the brand at full price one week ago shows up on an unauthorized (but legitimate) retail store's website at 28% LESS than what they just paid?

Now to be fair, the watch business is just that - a business. And this is the thing that is often misunderstood or overlooked by watch enthusiasts. For many folks working for the brands, it is a job, not necessarily a calling. And that's as it should be.

Courtesy of Wikipedia, Richard Nelson Bolles author, Ten Speed Press, Berkeley, CA publisher.

And before you (the watch enthusiast) points your finger and chides the brand employee who is not as enamored by the world of watches as you are, have a look in the mirror. It is a truly small number of people who are lucky enough to work in a field that they are passionate about. Do you go to bed each night looking forward to going back to work the next day with the same sort of enthusiasm you had as a kid when you were on summer vacation? If it were normal to be 100% passionate about your job (hell, even your life in general), the self-help sections of bookstores around the world would be dramatically smaller than they are, and What Color Is Your Parachute? would never have seen the light of day. 

Ultimately, it is a business. So let's hope that the passionate and the pragmatic can have a meeting of the minds and find some common ground. Until then, whoever is actually handling the brand's communications might want to get a wee bit more involved on the forum that they pay to sponsor and try to actively engage with their fans.

“Desperation: it's the world's worst cologne.”

Those bon mots were delivered by Debbie Hunt (at least as her thought) as played by Sheila Kelley in seminal 1992 film Singles.

Movie Poster (Warner Bros. 2009)

The export numbers suck, but honestly?  The real numbers have been iffy at best for quite some time now.  As a quick reminder to those of you playing at home - exports do not equal watches sold.

Courtesy of the FH

With COVID-19 and the inevitable shutdown of most factories, in some ways it stands to reason that production and shipping will, inevitably, suffer.

Now curious to relate?  The US, China and Japan are all up.  As the US is home to several not insubstantial grey market outlets, it only makes sense that the US would be up 20.9%.  Please do not kid yourselves, that is not because of some genius plan on the part of brands to sell direct or on the less-than rapid move on the part of retailers to truly leverage their potential.  Everybody is watching and waiting.  Having said that, the land of the free and the home of the grey market is one of the only places that can realistically absorb so much of the brands' stock and push it out the back door to the grey market for a (relatively) quick turn.

And this makes sense given some other very uncomfortable new realities.  A lot of people are out of work here in the US,  and it does not seem likely most people are going to pay "Full Pop" for something that is not 100% necessary at this point.

Another interesting tidbit is that people are still buying watches, simply doing it online.  And as the majority of "normal" retailers did not move as quickly as they could have, a lot of those sales are either "legit" pre-owned and "faux" pre-owned (i.e. new watches sold by brands directly to the grey market but labeled as "pre-owned").

But as we've all got a bit more time on our hands than normal to spin various conspiracy theories.  Stay tuned, because I've got a doozy to air out in our next chat.

February's Numbers

The export numbers are in for February, and if I am honest they are better than I thought they would be, but also indicate that things are heading south.  

Courtesy of the FH

Overall exports are down by 8.7%.  Keep in mind, as always, that a watch exported is not a watch sold.  Curious to relate, a lot of watches went out to the US, which if reports are to be believed saw an increase of 17.8%.  I'm calling bullshit on that one.  Yes, the number of watches leaving Swiss Cantons bound for a recipient in the US may indeed be 17.8%.  In reality?  A great majority are heading, ultimately, for trans-shipment to the grey market.

You see, some things are going to start happening pretty quickly.  Those of you who might occasionally purchase the odd bottle of wine will be pleased to know that there are some amazingly good deals to be had.  Why?  Pretty simple, with things on lock-down, companies are sitting on stock, with fewer customers and people getting nervous about spending money?  Let's just say that  if you thought the grey market was offering some staggeringly good deals in the past?  Brace yourself, there are about to be some stunningly good deals.  How good that is for the health of the watch industry is, of course, a separate conversation.

So let's see what happens.

Be well -

Tis' The Season

I woke up this morning a wee bit conflicted.  On the one hand, it is the holiday season which is meant to go hand-in-hand with giving gifts and buying things for others (and as a watch retail veteran I can attest) ourselves. And that part of things can be fun.  

On the other hand, it is also the time of year where brands will try to subtly and quietly make changes, redeploy troops and open the transfer window.  

It is now well understood that Swiss Watch exports remain down, and it is also clear that things in Hong Kong are not turning around any time soon.  A few exit visas have been processed and former loyalists are now "in the wind" looking for the next campaign to join.  And sitting where I do, somewhat uniquely sandwiched between Brand, Retailer and Journalist I thought today would be a good day to offer a few observations and a few suggestions.

1.  Good things, believe it or not, often take time.
In an industry where the most common excuse/admonishment to outsiders is:
"You just don't understand this business".  It seems to be rife with quick-change artists.  How often do we read about how Person X single-handed turned things around?  

Remember Nataf?  How about Perriard?  I could offer more recent examples, but I think you take my point.  Brands take more than months.  In all honesty?  They take more than a few years.  And this is true whether it is an established brand like Zenith, or a new creation like HYT.  But that's at the top level.  The same is true at the lower / middle levels as well. It strikes me as oddly puzzling that for several brands, some in the big groups, a CEO is viewed almost like a utility midfielder in a football (soccer) team.  Instantly interchangeable and replaceable.  Ever wonder why brands launch into a series of seemingly unrelated PR initiatives and sales strategies?  That's because they've churned through a serious of seemingly unrelated employees.

2.  Less is more - short and sweet.  Stop intentionally over-producing with the notion that you can sweep it under the China/Hong Kong trans-shipping carpet.

3.  Stop feeding the Grey and Light Grey market.  It's a poorly kept secret that brand executives (present and past) have invested in grey and light grey market outlets by selling their brands' watches directly down the river.  Ever wonder how a grey-marketeer has Brand X's watches for sale at 40% off BEFORE their authorized retailers and brand boutiques have them?

To quote Anthony Bourdain -
"Can't believe it's not butter?  I can."

Pete Rose can be banned from the Hall of Fame for betting on baseball games, but apparently it's perfectly okay to bet against your own brand's boutiques, retail partners and direct customers.

What it all comes back to is change.  The fear of it, the anxiety created by it, the pain of undertaking it.  

We are on the cusp of yet another new year, another 12 months of possibilities.  Let's see what develops.  

Things Were Great, Until They Weren't - Klokers

Courtesy of Klokers

News reached the North Shore offices of Tempus Fugit that Klokers has ceased operations as of yesterday - July 2, 2019.  

This announcement was sent from Klokers HQ:

Dear Partner, You have been supported klokers for the past 5 years and we would like to thank you warmly. We are proud of the innovative watches we have created for passionate Time Travelers. Your contribution helped us to develop the whole concept and the brand. We owe you transparency and therefore we inform you that klokers has been through major difficulties.  We have done our best over the last few months to allow this fantastic adventure to keep going but we are sorry to inform you about the ceasing of the activity as of July 2nd, 2019. It has been a pleasure working with you, Best regards The klokers team

And their Facebook page reported this:

We are sorry to inform you that the klokers adventure has come to its end.
Many of you have been following us and adopted the klokers’ attitude and we are proud of it.

If you are the owner of a klokers and need information about your KLOK-01 or KLOK-08, please refer to our instructions on https://bit.ly/2FPpegd.

We would like to warmly thank you for your support over the past 5 years and wish your watch may live at your wrist as long as possible.

The Real State of the Union

So another update from the FH squirts more ink into the water, further clouding the reality of where things stand. 

For the record, here are the numbers as reported -

Courtesy of the FH

So the short and sweet?  Exports are down.  But let's take a deeper dive, shall we?

Remember mighty Singapore?  They were up 25% last month!  Guess how they did this month?  Down 49.4%.  Un petit mystère, n'est-ce pas?

Not really.  Because what you will come to figure out if you dig even a little into the uncomfortable reality?  Sales, overall, are down.  Actually, let me re-phrase that.  Sales through traditional, traceable, "normal" channels are down.  And our old friend the Grey Market?  Boom times!

And this is where it gets even murkier - the rise of the "limited edition" / "collaboration" watch.  Not so long ago, a watch brand would not go near anywhere near such limited series.  Anything below a certain threshold would be dismissed out of hand.  It was more headache for smaller margins than they thought it was worth.  And interestingly enough, the margins now seem worth it.  What does that tell you?  Very simple, the brands realize that they need to grab ahold of any margins that they can.  There is a wee bit of marketing thrown in, but simply put, the realities are starker than anyone wants to admit.

And once again, if you think I'm full of it, ask the most recently departed CEO as to just how good real sales really are.  You can make a million watches, you can export a million watches, but if you don't sell a million watches?  Well that is a totally different story.

As a commentator on this sort of stuff, I find myself in a weird place.  I work with brands, both big and small as a consultant.  And I find generally that I have two types of clients - those who are ready to listen and self-reflect, and those who are not.  And in fairness, that is human nature.  

I think what is (for me at least) painfully ironic, is that in many ways we have already been here before.  And the brand CEOs who are frequently finding themselves right back in the same situation that they were before.  

The watch industry, as it is currently structured, is not sustainable.  It simply isn't.   It is currently predicated on some very unrealistic expectations that are based on some very general presumptions without any real hard analysis about population, real income, real levels of disposable income.  When you have a brand that proudly tells you that they only make 50 watches per year, priced at $45,000 each, it raises some very real questions, and this is a summary of one such conversation I had this past BaselWorld:

Q.  How many employees do you have?
A.  Ten
REALITY CHECK - Figure that the CEO is getting at least 100,000 CHF per year.  The other 9 must be making at least 50,000 but likely more.  So that's about half a million right there in payroll.

Q.  Do you sell direct to the customer?
A.  No, we work with distribution agents who then sell to retail partners.
REALITY CHECK - That means that the $45,000 retail is actually 30% coming back to the company.  If we go by the old UN rule of 7% production costs, that really translates into 23% (but it is likely less) which comes out to 10,350 per watch.  Let's multiply that by 45 and we come up with 465,750.  So right away, we have already. outstripped our payroll.  You are already operating at a deficit.

Q.  What do you do if you don't have enough stock?
A.  Well, we still haven't had a year yet where we sell completely through our stock.
REALITY CHECK - SEE ABOVE

Q.  How many foreign travel trips do you make?
A.  Oh, I am always on the road.  I typically have 2 trips to the Middle East, 2 trips to China, and several trips to other locations.
REALITY CHECK - SEE ABOVE

Q.  How many fairs do you participate in addition to BaselWorld?
A.  Probably 5 major fairs.
REALITY CHECK - SEE ABOVE, and the administrators have come in and taken everything.

But somehow, some of these brands magically keep going.  Up until recently it was Chinese money coming in.  But the Chinese have begun realizing that they were throwing good money after bad.  So several of those brands either did a Sleeping Beauty, or they have or are in the process of untangling themselves from these losing enterprises.

What next?  Investors, and by investors I mean money fund managers who (most likely) are passionate about watches and are convinced (often wrongly) that they can turn things around.

Every BaselWorld you see the third entity, the wealthy people who can't afford a Premier League football club, but owning (part or more) of a watch brand is a safer, slower way to flush their money down the toilet.  And up till now, several brands have kept going with what can best be described as a semi-annual search for new investors.  And for the smaller brands, they can probably float along for another 3 - 5 years.

But this year it seems that brands are finally hitting bottom.  And I truly do feel bad for all of the people that this is going to hurt, the midlevel employees.  It remains unclear whether the (now former) CEOs will land on their feet again and live to spend foolishly another day, but the number of brands pulling out of BaselWorld is a true sign, whether or not anyone wants to acknowledge it.  There is a very real culling happening right now.  Some people see it, others will probably only accept it when they are no longer in the positions that they currently enjoy.

What is interesting to me is that we have come somewhat full-circle from where we were in the 70s, then 2008, and we are really right back there again.  

But it's not all doom and gloom.  Because what I think is going to start happening is that the truly talented managers and leaders are now going to be sought after, boards and directors are going to realize that good things will take time, and that yacht sponsorships and celebrity partnerships will not pay the milk bill when wages are due.

The Back Door - from Truck to Store

So a brief smile crossed my lips yesterday morning as I read someone waxing lyrical about the addition of yet another "prestigious" brand joining website X's (also) "prestigious" stable of "curated" brands selling their authorized pre-owned collections.

So a little inside baseball for all of you fans of bargain priced watches.  In this instance, prestigious means about as much as you, the customer are willing to invest in it.  

And the word curated?  Let's face some realities.  We are talking about a Internet sales channel, not the Louvre, Tate or MOMA.  The watches you are seeing are only curated in the sense that brands Y and Z had surplus stock.  Surplus either due to over-production that has partially gone out to grey market sites already, or pieces re-po'd from retail stores where the brand either had to do a buy back (okay, these didn't sell, so if you agree to continue carrying our watches and accept this new model, we will take these back in trade), or as is more and more the case?  They closed a store's account.

It is easy to think that you are having an experience like buying a factory authorized pre-owned BMW.  Maybe 10 (more like 15) years ago this was more likely.  More and more you are buying overstock that has been dispatched by the brands themselves.  In some instances, in order to try and preserve brand integrity, they will platoon out their overstock under the guise of pre-owned so that although it is going at a discounted price, it is not being sold as new through a known grey-marketeer.  For the brand?  They get the same margins, and to the outside world the perception is that they are merely re-distributing watches that were "traded in".  The truth?  9 times out of 10 these watches are pre-owned only in the sense that they were in one distribution center, and now they are in another.  Because, if we are being honest about this, you don't tend to see too many watch brands incentivize you to trade in your watch towards a new one.  Watch stores?  Absolutely!  But that is a completely different thing.  

So here's to those carefully curated pre-owned collections!  Takes some of the stigma away from saying grey-market, doesn't it ; )

Father's Day Repeat - Jumping the Shark with Mido

This originally ran back in 2016, and with my 50th birthday rapidly approaching, I have been feeling a wee bit nostalgic about his Mido which I passed on to my niece a few years back.  And the nostalgia turned to bile rising in my throat when I received the email announcement from a certain "soft-grey" marketeer proudly crowing that I could buy a brand new Mido watch for better than 40% off of retail price.  Here's the thing - watches are not milk or eggs.  They don't tend to "go off".  I also realize that you may have more stock on hand than you know what to do with, owing to over-production.  Here's a crazy idea, try to deal with it privately, quietly, subtly, as opposed to selling it to a discount outlet.  All this succeeds in doing is convincing people that your watch was maybe not worth what you were trying to sell it for. 

But for those shopping for bargain lingerie, sex toys and other items, you never know, you might be able to combine shipping with this shopping site and bundle your new watch with some lube and something called "exercise balls" which does not resemble anything that I ever saw in gym class.  But then again, I did grow up a Northern Youth in a small Ohio town...

It is hard to build a brand when you are constantly dumping old stock in the same market you are trying to build.  Just saying.

So for those of you looking for a brand new Mido at nearly 50% off, go for it.  For myself?  I'll stick to my memories.

Father's Day, Mido and Jumping the Shark

So with Father's Day here again (seems like only a year ago) I look back at the image of my father's Mido and feel a pang not necessarily for the departure of someone who was ready to go, but maybe for a place and time when things were clearer.  As anyone who writes about this stuff will tell you (provided enough liquid encouragement) it is hard not be romantic about watches.

And just as we are attached to watches, we who follow this sort of thing are perhaps a bit emotionally involved with the companies that produce them as well. Right or wrong we feel that tie. And in all truthfulness that is one of the major things that the marketing and pr arms of the brands are counting on. Nostalgia, connection, belonging.  And in truth, that is what we are all looking for as well - whether we acknowledge it or not.

The Mido that made my father's watch has, not unlike Elvis, left the building.  And yes, many would say that they have lost their way.  While they may have joined forces with the Miami Hurricanes, in doing so they have also jumped the shark. 

But life moves forward, doesn't it?  You can't live in the past.

So while it is easy to feel disillusioned, I have found some wisdom about life's impermanence and propensity for change in the words of that famous poet philosopher - Master Po from TV's Kung Fu:

Caine: Is it good to seek the past, Master Po? Does it not rob the present?

Master Po: If a man dwells on the past, then he robs the present. But if a man ignores the past, he may rob the future. The seeds of our destiny are nurtured by the roots of our past.

Happy Father's Day to all you dads out there.