Glycine is Now Owned by...

Invicta.  The official confirmation was just forwarded to me by DKSH about an hour ago.  So press release first, commentary to follow -

DKSH sells the Glycine watch company to the Invicta Watch Group 2016-08-11

DKSH sells its majority stake in Glycine Watch S.A. to the Invicta Watch Group, a US watch manufacturer.

Zurich, Switzerland, August 11, 2016 – DKSH (SIX: DKSH), the leading Market Expansion Services provider with a focus on Asia, sells Glycine Watch S.A. to the Florida-based watch manufacturer Invicta Watch Group. With this step, DKSH continues the restructuring of its luxury goods business which has made good progress since being announced in mid-2015. The parties have agreed not to disclose any financial details of the transaction. 

Dr. Joerg Wolle, President & CEO, DKSH, commented: “Selling Glycine to Invicta is a further important step in the ongoing restructuring of our luxury goods business. At the same time, we are convinced that the Glycine business is in good hands. The restructuring of the luxury goods business is well underway; we are delivering what we promised.” 

Invicta was founded in 1837 by Raphael Picard in La Chaux-de-Fonds, Switzerland. Glycine with its long heritage joins the Invicta Watch Group's other respected brands. Eyal Lalo, CEO of Invicta, stated: "I am very excited about Glycine joining the Invicta family. The synergy between the two brands will create growth for Glycine. It is our commitment to remain dedicated to preserving the quality and long history that made Glycine the respected brand that it is today. We will support Glycine while maintaining its independence and rich Swiss heritage."

Glycine was founded 102 years ago and since then has been producing premium watches at its factory in Biel, Switzerland. Lower demand in Asia, ongoing industry consolidation and the appreciation of the Swiss franc has led DKSH to restructure its luxury goods business – including the possibility to divest. 

Okay, let's discuss!

First and foremost, this is good news for everyone involved.  DKSH had not really been investing the funds needed to anything other than just keep the boat afloat.  And in these particularly treacherous times for the watch business, it is a recipe for disaster to simply keep the lights on.  It was common knowledge that Glycine needed to be sold, and although DKSH had really been working to sell Maurice Lacroix as well, this is at least one under performing asset off of their balance sheet. It also gives Invicta some actual legitimacy as a group, but one mid range brand, bundled with a bargain basement TV brand and an ailing fashion brand does not a "super group" make.  So although this is one acquisition, Invicta has truckloads of money and I suspect that they are circling other brands even now.  And say what you will about quality, customer service, etc.  for better or worse, the one thing that Invicta is good at is selling watches.  

The interesting thing in all of this is the "doom and gloom" being spouted by the various watch forums by fans - not necessarily customers by the way, but watch fans.  The logical presumption is that Invicta could not possibly be a good steward for Glycine.  But that is a wonderfully short-sighted view.  Invicta, in fairness, does have some baggage.  But it's important to understand what Invitcta's role here really is - financier.  Invicta has stated that they will leave Glycine as it is.  While that might be true in terms of staffing for the immediate future, it may likely change by BaselWorld next March.

But what I do feel likely will happen as soon as the ink is dry and the notary has signed off is a fairly aggressive push to clear inventory and bring in cash.  And it is therefore quite likely that Glycine watches might be found on one or more of the "shop at home" television programs in the months leading up to the end of the year.  Because for better or worse, Invicta has oftentimes turned to the short term, quick sale solution.  It is good for sales overall, gets watches purchased and lots of exposure.  On the other hand, it makes it challenging to drive actual retail partners or direct sales through a company website when you are constantly discounting your own products on TV.  It raises the inevitable question of - what is this watch actually really worth?  Glycine at present does not have much of a retail presence in North America, so there are really only so many people you could upset with his strategy. Fortis was dumping watches at less than keystone about a month ago on TV, so maybe this is just what has to happen to clear through the inventory.  Unfortunately, it then conditions future customers to expect the watch to be 70 - 40% of what the actual retail price is.  It is a slippery slope, and one that is not easily reversed one it has started.

From that point on, who knows?  But as is often the case in these situations, time will tell.

Summer Rerun - Blind Discounting

This originally ran nearly three years ago, but given the continuing volatility of the watch market, it seems a good one to air out -


So some time ago, I wrote about the dangers of discounting.  I wanted to relate a story back from my days at DOXA where I would often be selling direct.  This would often involve someone calling in and wanting to negotiate.  The conversation would often go something like:

Customer:
"There's no way it costs you THAT much to make!"

Me:
"I hope not, because they need to pay my salary!" (insert gentle, friendly laugh).

Customer:
"Well, it's still more than it SHOULD be... what is your BEST price?"

Now this is a phrase that I have really grown to hate - your BEST price?  My BEST price is the price on the tag!

So I took a different tact -

Me:
"Just curious, what do you do for a living?"

Customer:
"I'm an orthodontist."

Me: 
"So how much does a full set of braces cost?"

Customer:
"I'm not entirely sure, I don't do the billing..."

Me:
"So, if I needed braces, would I be able to get them for 30% off?"

Customer:
"Of course not!  I can't go discounting braces!"

I then said nothing, and after a moment heard a soft laugh on the other end of the phone.

Me:
Tell you what, I would be very happy to include a rubber dive strap and a hat for you as a thank you..."

Customer:
"Okay, done!"

Now, I already know what many of you are thinking.  And I want to be clear, I am not saying that it is necessarily right or wrong to discount.  Ultimately that is at the discretion of the watch retailer and the brand.

But let me give you an example of where blind discounting threw a brand off the rails - Anonimo.

I have no doubt that there are a million reasons offered as to why Anonimo didn't quite make it.  But I want to make one point - Anonimo were in a MULTITUDE of retail locations, and often did not have good follow-up/support for the retail partners.  This was also an issue for customers, often waiting half a year or MORE for service and support. 

And I want to make something very, very clear - they could have possibly recovered from that.  But check the discussion forums and their were typically two topics - poor service and support, and discounting - i.e. where can I get an Anonimo for 30% or less? 

When I worked at Tourneau 1.0 in San Francisco we had Anonimo and they sold well enough.  But often there was such a desire to move the watch quickly, that before a customer even asked, they would be offered 30% off.  So from that point on, the perception is that the watch was over-priced by AT LEAST 30%.

Whether right or wrong, blind discounting has a few definite effects:

1.  Most retail stores will shy away from carrying the collection if it is readily found on Grey Market sites or Shop NBC.

2.  With those retail locations drying up, the brand will have fewer and fewer options other than to sell their watches almost exclusively on, yes, Shop NBC.  Gevril had momentum, had a beautiful watch with the Avenue of the Americas - and now it would seem pretty difficult to find Gevril in a retail environment.  But there it is on Shop NBC.  And of course, as with all things Shop NBC the price has been discounted - at least that is our presumption.  So does that mean we were paying too much before? 

3.  Customers who bought the watch at full retail now feel, to quote my Canadian friends, HOSED. 

4.  The re-sale/trade value of the watch plummets. 

5.  The public perception of what the watch is "worth" heads south along with the "price" and its associated "re-sale" value.

Now, a certain blog out there will say that Shop NBC is, in fact creating a new way to shop, etc.  Maybe, but at it's heart Shop NBC is essentially a mechanism for brands to offload stock that isn't selling without trying too hard.  People who shop there get a better price than they normally would - fair enough. 

But you don't get a little bit pregnant.  If you sell on price, you will lose on price because someone is ALWAYS willing to go lower.  This is fine if you are selling socks and t-shirts.  Not so good when you are selling watches that are supposed to be "exclusive" and priced at several thousand dollars each.

Blind discounting is a short-term solution to a bigger problem.  A watch might not be selling for quite a few reasons:

1.  It was priced too high to begin with
2.  The brand do not have sufficient support in a given market
3.  The brand over produced the watch and now have too much stock
4.  The brand has not supported their retail partners
5.  The brand and the retail partner have given their customers poor to non-existent after sales service

So watch brands - consider this, it is far less expensive to price your watches appropriately and pay for the support than it is to try and continually re-launch your brand.  Anonimo right now is STRUGGLING, Hanhart is missing in action.

I mean no offense to anyone - customer, brand owner/manager, retail store or even Shop NBC.  I only ask that the next time you demand a deep discount on a watch, consider whether or not you are ready to  discount the next set of braces you sell ; )