Repeat - The Adidas Illness

This first ran a few years back, but several readers asked for a repeat, so here you go -

The Adidas Illness

As has been disclosed here more than a few times, I work from time to time with brands on marketing, sales and pr/media projects as an independent freelancer.   I am currently ensconced in a few very intriguing projects, and in the midst of doing some analysis this weekend I was reminded of some very interesting passages I read in Barbara Smit's Sneaker Wars.

Shamelessly borrowed from the INFOWEB

The brief outline , Sneaker Wars is about the birth of Adidas, and subsequently Puma and the complicated and sad rise and fall of the Dassler family.  And yes, that is very interesting reading.  But what plucked my attention was the parallel story of the rise of Nike and Reebok in the 80s, and the refusal of Adidas to recognize what was happening and adapt.  This was particularly borne out in anecdotes about the "Waffle" trainer from Nike, and the "Freestyle" from Reebok.  In both cases it was a vivid example of an almost criminal lack of imagination.  Clearly, nobody (except maybe Nike) had an inkling as to how big the recreational jogging market would be. And although the Freestyle was admittedly a happy accident due to a mix-up at the factory, it became one of the hottest selling shoes in the US due to the aerobics and fitness boom of the 80s and 90s.

And of course you probably know where I am going with this.  The fundamental issue that the watch industry is struggling against is change.  Change in distribution models, change in marketing approaches, change in purchasing patterns, change in expectations. But here's the funny thing - there are clearly still people buying watches.  But the days of the brands, brand CEOs, brand marketing chiefs, brand PR folks telling people what they should and will buy are now over.  And what is intriguing is that some brands (both solid and dubious) have recognized and harnessed the importance of communication.  Not merely with their distributors and retail partners, but with the actual people who will make the actual purchase.  And they clearly understand that communication is a group activity that is best utilized when the ears are open from time to time.  When you have a focus group of one, it is highly unlikely that you will have an accurate sample, and it's safe to say that the projections will never match the actuals.

Had Nike only focused on what retailers or prevailing logic and sales histories would have told them, they never would have made the Waffle, and likewise Reebok would never have made the Freestyle.  Sooner or later, you have to adapt.

Ironically, a lot of the difficulties the industry faces are not necessarily about product - although that is a familiar and popular excuse.  The North American Sales Manager will insist up and down the if she/he had better product then all would be well.  Sorry, I'm calling bullshit on that one.

The current crisis was not brought on by poor product offerings.  If Hublot is able to still dog-paddle in the rising tsunami of problems, then clearly the product is not necessarily what is holding brands back.  It is back to some very simple points:

1.  Supply and demand - if you flood the market with too much supply, the demand may still be there, but not at the prices you would like to collect.  Discounting, dumping, grey market all ensue.

2.  Performance based employment and pay - sounds harsh, I realize.  But if you are paid a six-figure salary to sell, those six-figures should not be guaranteed.  There has to be a REAL performance component.  But that performance must be REALISTIC.  Meaning that if the expectation for the sales manager is to sell 1,000 pieces in a market that can only support 300 pieces, that is not a "stretch goal".  That is an invitation to cut corners, dump stock, and do whatever it takes (ethical or otherwise) to make the goal.  Realistic performance is what has been forgotten, and that as much as anything is what has got us to where we are now.

3.  Better marshaling of resources - if sales are poor, per diems and travel expenses need to be brought back in to contextual realities.

4.  Connect with your real customers - even if you are a mega-brand, someone on your team should be keeping track of customers.  A gesture as simple, and inexpensive as a holiday card goes a long way towards fostering brand loyalty.  SWATCH, Richemont and LVMH have more than enough people on staff to put something like that together.

5.  And what I mentioned in the beginning - never assume that you're "the nuts".  As soon as you assume that you and only you know which way the industry is going, you should put on your parka and hop on the ice floe.  You are done, whether you know it or not.  

Because let's face some facts - if the big dogs in Switzerland and Germany were always right, the industry would not be in the situation it is now.

Adapt, or die.

The BR-X1Black Titanium

This is a truly cool offering from Bell & Ross and as such, is limited to 250 pieces.

Courtesy of Bell & Ross

The measures 45 mm and is constructed of titanium and ceramic with rubber inserts.

The movement is the BR-CAL.313.  This is a self-winding, mechanical movement.  Hours, minutes, seconds, date and chronograph function.

This is pretty dope!

Here are the pertinents, straight from the source -

Technical specifications

Movement -
calibre BR-CAL.313. Automatic mechanical.
‘X’-shaped upper bridge. 56 jewels, 28,800 vph.
Skeleton chronograph.

Functions -
hours, minutes, small seconds at 3 o’clock.
Skeleton date at 6 o’clock.
Chronograph: 30-min timer at 9 o’clock,
central chronograph seconds.

Case -
45 mm in diameter. Titanium and ceramic with
rubber inserts. Rocker push-buttons.
Back with opening in tinted sapphire crystal,
centered on the balance.

Dial -
grey-tinted sapphire crystal. Metal applique
Superluminova®-filled indices. Metal skeleton
Superluminova®-filled hour and minute hands.

Crystal -
anti-reflective sapphire.

Water-resistance -
100 meters

Strap -
woven black rubber

Buckle -
pin. Steel with Rubber insert.

 

 

Maybe the Numbers are Improving...Maybe Not

Okay pals and gals, the numbers are in for June from our friends at the FH are happily reporting the news of an uptick in Swiss watch exports.  

Courtesy of the FH

I apologize if the image is a bit fuzzy, but that is appropriate because the correlation between increased exports and actual watch sales is equally hard to pull into focus.

If we were to believe that numbers don't lie, then apparently every jeweler in Italy and the UK must be selling boatloads of watches with truly Herculean increases of exported watches arriving in these two locations.  The numbers for the US are, at least, more believable with a further poor month resulting in a decrease of 1.3%, and Japan with an additional decline of 15.4%.  And if the numbers are to be believed, then we can all breath a sigh of relief!

But the problem with fuzzy numbers is they tend to be fuzzy for a reason.  And I will repeat what I said here about a month ago - increased export numbers do not necessarily indicate increased sales numbers.  While I will not claim to be in touch with every retailer in every country, I can say that the reports back do not reflect the very large volumes of Swiss watches that are being exported to the UK and Italy.

Which means, once again, our old friend the Grey Market, the Light Grey Market, and good old fashioned trans-shipping might better explain a part of it.  The other part is the need to get as many watches out of the country before the new "Swissness" becomes reality - and that means only about 6 months left.

So no sports fans, I do not think we are out of the woods quite yet.

Here's To The Crazy Ones...

One of the great privileges of writing about the watch industry is you get to meet some genuinely nice and interesting people who are working to create a brand, maintain one, or in some cases?  Bring it back from the dead. 

These are folks that have never sought out the spotlight.  They come in early, they stay late.  They answer the phone when a call comes in.  These are the people you don't read about, you don't see them on the red carpet.  But they are there.

These are also the people that, had they been dealt a better hand at the big poker game?  Or (if we are honest) had a more mercenary approach?  They'd be running "big boy" brands, rolling in cash and swimming in champagne.  

These are also guys and gals that tend to do whatever it takes to ensure that even in bad times, employees will be taken care of.  But these are also the folks that when they put down their chips and place their bets?  They tend to do it with their own money first.

I have a great, great deal of admiration and respect for these brand owners.  It is no small feat to be a mid-level director or employee for a watch brand.  I do not make light of that.  But to gain that experience, then to find a struggling brand, put your money on the table to buy it, and make a go of not just running it, but saving it from certain extinction?  That's some pretty salty stuff!

I realize that these are not the people you will be seeing at the GPHG, they will not be featured by the "elite" watch journalists because, well, it's not like they are going to spend any REAL advertising money, are they?

And that is why it really sucks when despite all of the effort, the reality of the business steps in.  Even with their best efforts, new investors coming in, a LOT of enthusiastic customers and potential customers out there, they just can't make a go of it.

With the big boy brands and the big boy egos involved in this business, I talk a lot about the "Transfer Window".  This is mostly due to the way that the industry has hyped up the image of being the CEO of a watch brand to similar levels of being a professional football player.  Seriously - have you ever seen a consumer magazine for toothpaste?  We all use toothpaste (hopefully) but it doesn't tend to lend itself to the passion and fan worship that exists out there for the leaders of the watch industry.  

But there is a parallel watch industry reality.  One where brand owners and CEOs are not worried about finding a new car partner so that they can have a sexier company car, or making enough in bonus to finally pay off their third home in the south of France.  This parallel watch world is filled with normal people, leading normal lives.  People working hard trying to make a dream come true without the benefit of multi-million dollar investment funds.  People pursuing what in then end turns out to be an unfulfilled dream.

But I hope that some of these dreamers that have been "transferred out" will dust themselves off and get back in the game.  This is a business that can lead to some extremely cynical behavior on every side of the BaselWorld booth.  Trust is hard to come by, and motives are frequently questioned and doubted.  The industry needs some more dreamers, and a few less egos. 

I'd like to leave you this morning with a quote from Steve Jobs that is often re-shared by my friend Rod Hess:

Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

Steve Jobs

 

Numbers Don't Lie... But Sometimes They Fib

May is now in the books, and it does appear that there might be a bit of a recovery in the works -

Courtesy of FH

As you will note, that pesky little blue line is inching upwards again, welcome news for one and all.  

More interesting to relate are the results from some specific markets:

Hong Kong is now up +18.1%

Italy is up 26.7%

and  China?   34.4%

Sounds really good, right?

Well, sorry to bring ants to a picnic, but there is more behind these numbers than I suspect the happy-shiny press releases are going to address.

Interesting to relate, watch brands are not heralding sales increases of the magnitude we are seeing from these numbers.  And the US?  Still in the red at -1.1%, with Japan still down at -3.2%.  BaselWorld and SIHH were stinkers both in terms of attendance and sales.

So this then brings up the next (let's be honest) obvious question - is something amazing going on in China, Hong Kong... and Italy?

I don't think so.  But there is a looming reality that could be spurring the export numbers to higher levels - the upcoming enforcement of "Swissness".  Because what this really means is that the vast number of watches already dressed-up with nowhere to go in the various Swiss warehouses?  They have to be out of the country, and soon.  Let's keep in mind that just because a watch has been exported, does not mean that it has, actually, been sold.  China and Hong Kong represent "safe harbors" where a big enough brand could shift the stock over to a subsidiary to either dump into the grey market, or to hang onto and strip for what they can get.  Italy while not in the same dire economic straights as, say, Greece or Spain still seems a bit unlikely to be a driver for as much watch "appetite" as these numbers would indicate.  One thing in Italy's favor?  Proximity, just across the border  ; )

So what does this all really mean?  Theories are just that, but mine is this:

We will, most likely, be seeing a very large number of grey market watches hitting the market very soon.  In other words?  Even more than now.  Some very large brands are currently investigating ways to sell their surplus watches via Amazon and other outlets.  And although several brands have cut production and are slowing down their output, there is still a mountain of unsold product which needs to be dealt with - and by the end of this year.

For the watch consumer?  It's going to be a great time to buy!

A Week of Well Wound Watches

This past week (technically going on 2) I  have had the opportunity to test out JUVO Luxury's 3 watch winder here at Tempus Fugit HQ.  

Winders are a funny thing.  Most watch guys (and gals) out there when asked will say that they, in fact, they do not own a winder for their automatic watches.  Many more will say that they don't want or need one because they simply grab a watch, set and hand-wind it and go from there.  And in a perfect world that would sure make sense. 

But the reality is that many of us have watches that have complications that are, well, a pain in the ass to re-set if we don't keep the watch wound (either by wearing them regularly so that they self-wind, or by using a watch winder) and owing to this, we invariably don't wear them as often as we might (i.e. once in a blue moon), and they end up taking up space in desk drawers gathering dust and not being enjoyed.

And to some extent that is where I found myself.  I have a few moonphase watches, and it has been an ongoing struggle to keep them hand-wound between regular wearing.  Needless to say, I am now a firm believer in the value and benefit of a watch winder.

 
Okay, visually, the JUVO winder is an incredibly beautiful item.  Its smooth, clean lines house (in this case) 3 watch winder ports.  Each of these can be independently programmed and can accommodate several different settings (more on that shortly).  The winding action is unbelievably quiet, and more than once I have been somewhat startled by just how quiet the winding action is.

What seems abundantly clear is that JUVO sought to address BOTH sides of the winder debate, which for many watch fans was not entirely dissimilar to the old Lite Beer from Miller ads of the seventies and eighties -




Essentially you typically felt that you had a choice to make:

A quality winder that works well but looks like something you'd rather hide in the closet.
or 
A good looking tabletop chachki that might (and then again, might not) wind your watch.

The folks at JUVO decided that there was really no reason you couldn't have both. 

The winder itself is incredibly easy to use.  Plug it in, mount your watches on the pillows, place the pillows in the winder ports.  

Then select the direction you want the watch to rotate (clockwise, counter-clockwise, or bi-directional)  -

Then select the number of rotations you wish per day with the TPD (turns per day) switch -

These switches are clearly marked and easy to get at at the back of the winder -

And that's it!

In terms of performance, the winder has performed flawlessly and my two moon phase chronographs remained wound and spot on time in between wearings these past few weeks.

So it is fair to say that the beauty of the JUVO winder is more than skin deep.  But having said that, it is a very good looking item in its own right!

And it has one added touch that I really, REALLY love -

And that would be that the individual winders have a lighting system that can be switched on offering three different levels of illumination.  And you don't need to reach around to the back to activate this feature, you simply tap the lock at the lower bottom left hand side of the glass door!

And this makes perfect sense, because we are into watches not just for the technical aspects, but for the aesthetics.  We like the way they look!  And doesn't it make sense to create a winder that allows you to look at and appreciate your collection?  JUVO Luxury thought so, and I'd have to say that I agree!

So I can honestly and wholeheartedly recommend the JUVO  M3 winder.  It is a well-made, elegant solution to the challenge of keeping your automatic watches wound and ready.  And not only that, it affords you the opportunity to enjoy and appreciate your collection without having to dig through your watch box!

What Is Wrong With This Picture?

Some of this is excerpted from a post nearly 3 years old, but amazingly enough, it is still pretty true.  So I thought it might be time to re-heat it a bit -

I will share with you what I think is wrong with the watch industry, our industry, and I encourage reader participation here! This is part one -

Today's topic is:

1.  Unrealistic Expectations -
These exist on several levels and with several "shareholders".

The watch customer believes that "that right watch" is going to change everything!  He'll lose weight. That promotion he's been after will fall into place.  His kids will grow into normal functioning adolescents who can sit still in the same area code for more than 1 minute at a time.  In short, he will be that good looking fellow in the Patek Philippe ad.  Beautiful chronograph on his wrist, tow-headed young scamp by his side actually listing to ANYTHING he has to say.   Essentially the life that we all felt sure we would have, that we now see rapidly disappearing down the hallway of broken dreams.  

But more curiously, the customer believes that the watch (regardless of price point) is going to work flawlessly, is impervious to any sort of manufacturing defect or real-life damage. The customer has oftentimes lost sight of the reality that it is an imperfect world, and sometimes things happen.  This disillusionment can fan into downright frustration, anger and agitation when a service issue rears its ugly head.  Remember the watch store that called you once a week until you bought that moon-phase chronograph?  Now they are avoiding your call like the boyfriend/girlfriend that they just broke up with.  You are a "service" concern now and not their problem.  And to be clear, expecting the retail partner to take care of you after you bought something from them is NOT an unrealistic or unfair expectation. It is, however, unrealistic in the current business climate of sales first, service when we get around to it.

The watch salesperson - who let's face it, might have a tow-headed young scamp of his/her own that they want to make sure doesn't end up in reform school.  They need to make the sale. Moreover, chances are quite good that in fact, your watch salesperson knows about as much about a perpetual calendar as your Cocker Spaniel (and point of full disclosure, me).  I'm right there with your Cocker Spaniel - I am no authority about complications, etc.  No offense to the dog, she works for kibble.

There are a handful of TRULY AMAZING watch sales people out there.  But this is more of a calling for them than a way to pay the rent.  Those who are good and whose talents are recognized can do very, very well.  Those who are phoning it in (and sadly it is likely those are the folks who you might be dealing with) will manage to hit every "frustration button" that you own.  But in fairness, this was not their calling, it is not their "vocation".  It is a job. The point being that the good old days when you could count on your salesperson actually knowing everything that you do (and more) are probably gone.  But in fairness - that is merely an indication that your passion and interest are highly attuned.  The Internet, watch magazines, interest groups, etc. have empowered you as a customer to know A LOT about a potential purchase.  But it is also important that we then align our expectations with reality.   Take what a typical salesperson will be paid, multiply it by your highly developed knowledge, then divide that by the store overhead... you can see where I'm going with this.  As I said, there are some truly amazing sales people out there.  You just might not get the opportunity to meet them.  I worked for Tourneau and enjoyed my time, but realized that it was, at best, a hustle to make your sales goals.  I would like to see the truly exceptional sales people be recognized.  Maybe some day...

The watch brand who wants you to believe that there is this unbelievably close relationship between you and them... but let's face facts.  You are a number.  They are not here to hold your hand and make you feel "empowered" or "fulfilled" by your purchase AFTER you buy the watch.  The only exception to that I have seen is Jean-Claude Biver's participation in the various Hublot fora.  He is the "exceptional exception".  Sadly, he is truly one of a kind in this sense. 
(Editor's note, with the passing of the torch to the current CEO, Hublot's warm 'n fuzzy online feeling has faded).

Otherwise, those "affirmations" were provided for you during the "courtship" phase when you saw each other across a crowded room.  And now the honeymoon is over.  You bought the idea of the watch and what the watch represented.  Sorry, but there typically isn't "couples therapy" for watch & dissatisfied watch buyer.

The REAL OWNERS of the watch brand think a brand is making all of the decisions?  Think again!  The real people calling the shots (albeit sometimes indirectly) are the various boards of directors who are responding to the stock price, sales figures, etc.. Wonder why a seemingly very famous brand with very expensive watches has a "boat-load" of them for sale through grey-market channels?  Simple - produce more, therefore you sell more!  Not always...  But the beauty of the grey-market is that it still counts as a sale!  The board is happy because the CEO listened to their plan. The CEO is happy because he/she manufactured and sold the watches.  The Brand Manager is happy because he/she hit their sales targets.  
(Editor's note - with the over saturation of the grey and light grey market, the old reliable solution of product dumping is no longer viable.  This has led to more than a few heads bouncing down the hallways in Biel/Bienne, Le Locle and other locales where watches are made).
 
The independent retail partner who is dealing fairly - ordering, paying co-op advertising fees, and NOT dumping their watches at 30 - 40% off - well, that's their problem.  And the customer who paid full retail?  Well, let's just say that lately they have been the last puppies at the kibble dish. 

But there is a solution!  Stay tuned!

Fear of Failure

With today's latest report on the export numbers, I thought I'd simply leave you with another quote from Moneyball -

“Managers tend to pick a strategy that is the least likely to fail, rather than to pick a strategy that is most efficient," Said Palmer. " The pain of looking bad is worse than the gain of making the best move.” 
― Michael Lewis, Moneyball: The Art of Winning an Unfair Game