The Reality Distortion Field Comes to Biel/Bienne

"Hey, I'm a reasonable guy. But I've just experienced some very unreasonable things."

Jack Burton as played by Kurt Russell - Big Trouble in Little China

Courtesy of the FH

Many business journalists and psychologies have mused about what many early employees at Apple Computer referred to as the Reality Distortion Field that seemed to envelope Steve Jobs. Well, it would seem that this is not exclusive to the computer business in Silicon Valley. According to the FHS, everything is "Jim Dandy" and trending upwards! And in other news, Santa Claus, the Easter Bunny and the Tooth Fairy have all signed on as new Hublot brand ambassadors...

Per those bold prognosticators in Biel/Bienne (just don't ask them for a weather report, or you will be wearing your swimming trunks and sun screen during a blizzard), here is the "happy" analysis -

"Swiss watch exports suffered from a negative base effect and one business day fewer in January, posting an 11.0% fall, to 1.6 billion francs. The result for the month will nonetheless have only a limited effect on the upward trend seen since last summer and a return to significant growth is expected over the next few months."

I can only assume that they can't understand their own graph, or that the words significant and growth possibly don't actually mean what they are implying. Now as the math department at Oberlin High School will attest, numeracy was not my strong suit, but I am fairly certain that when the graph line on the chart keeps heading south, it in fact means that you are NOT improving, but rather doing quite the opposite, and upward trend typically means that the graph line would be heading, well, upward.

Black Friday Repeat

This originally came out nearly a year ago.  And I probably would have let it sit in the closet like an ugly Christmas sweater had I not gotten a promotional email from a "light grey" market site that offered me the rare and wonderful opportunity to purchase "BRAND X's" rare and wonderful price, at the rare and wonderful discount of 65% off!  It also bears mentioning that this "group source e-tailer" also has a section titled:

Sex & Lingerie!

Good to know that after I save a boatload of cash on a grey market watch, I can then purchase some "adult toys", lube, and God knows what else that has fallen off the back of the "cyber truck".

Despite assurances to the contrary, I am still not convinced that the shot callers have really gotten their heads around what is going on right now, and so I am going to air this one out again -

The Myth of Black Friday

So I got the question from more than a few friends and colleagues in Switzerland and Germany -
"What are you doing working, why aren't you out shopping?  Isn't it what you call Black Friday?"

So before going any further I want to be clear that in some retail segments, the carrot of "low, low prices" is a strong motivator.  And as the chaos done to a Nike store will attest, too much food and alcohol, combined a four day weekend and perhaps too much time forcibly spent with family members otherwise only seen at weddings and funerals can drive even the sanest, most rational person to lose their shit.

But what has started to creep into the luxury industry is a growing sense of uncertainty, and this has begun to manifest itself into more random short-term solutions that may (or may not) have the desired impact.  And when we are talking about watches, at least those of a certain price point, we are not talking about the types of things that typically wind up under the average American Christmas tree.  A discounted cashmere sweater?  Sure!  A G-Shock?  Absolutely!  And I have no doubt that there may well be people out there who awake December 25th to find that Santa has left a timekeeper with a retail value of over $5,000 in their stocking.  But I think it's safe to say that in virtually every economy, that is an atypical household.

For those of you unfamiliar with the concept of Black Friday, allow me to inform you that this is a phenomenon that began in the US.  The idea being that the majority of Americans had a day off from work on the day after Thanksgiving (Thursday) and therefore it might be the perfect way to kick off the holiday shopping season.  So that's the Friday part, but the Black aspect was in reference to the ledger books.  As anyone who has suffered through accounting will share, black is good, red is bad.  Black means that you are not losing money.  And the operating theory being that good year or bad, the amount of sales going on would push you firmly into the black for the remainder of the year and that everything after that would be profit.  And from this, we then moved to Cyber Monday.  And in fact, hell, let's just make it Black December because truth be told, nobody can tell the difference any more.

Now in the high end watch business (and let's lower the bar a little and say that is anything over $1,000), there might have been the 10% or 15% deal.  Or retailers would park all of the "pre-owned" or discontinued models in a "Holiday Special" show case.  But it was understood that this display case was the watch equivalent of the Island of Misfit Toys.  If you wanted something desirable you were maybe going to get a small discount, but nothing of the magnitude of what we are seeing this year.  And this discounting mania has moved beyond just the retailer to brands offering 25% off on their own websites.  They are essentially working to move product under the guise of a holiday promotion.  This, in turn, succeeds at then driving the grey market, Mass Drop and Touch of Modern prices to dip even lower than they already are.  I received nearly hourly email promotions on the most recent price discount on Touch of Modern and Mass Drop over the holiday weekend.

Now whether or not these deep-discount sales promotions will succeed in saving the brand's bacon remains to be seen.  But what this really all comes back to is what I've been saying for YEARS - over production.  If your product is scarce, it will be desired.  You can then demand a premium price.  When your product is everywhere, it becomes less exclusive.  Moreover, it manages to lower the desirability of other brands at the same level or price point.  The only exceptions that readily come to mind are Patek Philippe and Rolex.

Put another way, just as a high tide will raise all the boats in the harbor, a low tide will bring them all down.  Supply and Demand is a pretty simple concept, and when you continue to ignore it for years?  Well let's just say it will take years to undo the damage.  And maybe those brand CEOs who refused to forgo the high life for the sake of their brands and their employees should be getting coal in their stockings, and maybe a visit from Krampus ; )

Happy Holidays from Krampus

Happy Holidays, and enjoy your watches!

Well Done Bulgari!!!

As is sometimes the case, this nice little piece of PR did not make the rounds to most of us who write about watches, but here at Tempus Fugit when we're not complaining about watch brands not doing or giving enough, we also try to recognize when they DO.  And this has been a great past few days for saying thank you to watch brands - Hublot, Rolex and now Bulgari!

Courtesy of Bulgari

According to their website (and I see no reason to disbelieve this) Bulgari has raised $35 million for Save the Children since they began their partnership back in 2009.  Pretty impressive?  That is an UNDERSTATEMENT!

And because, well, apparently they felt that they could do more -
Jean-Christophe Babin pledged an ADDITIONAL 500,000 Euros to Save the Children's efforts in Nepal following the earthquake earlier this year.

Forget all the movies and cartoons - the smiling gentleman in the stylish glasses pictured above?  HE IS THE REAL SANTA CLAUS!

Happy Christmas from Finland - via POP-PILOT

Courtesy of POP-PILOT

Where does Santa Claus really live?  Let's be honest, with global warming the North Pole is not as safe a bet as it once was.  And having lived for four years in Finland I can tell you on good authority that Santa lives in Rovaniemi, Finland in Santa Claus Village!

This is the POP-PILOT RVN - named for Rovaniemi's airport.

So if you got coal in your stocking, it's not too late!  Shoot the elves at POP-PILOT a last minute email request to save your Christmas and I'm sure they'll hook you up!