Global per­spec­tives

Why brands need to adapt if they are to thrive in new mar­kets

Hong Kong Tatler - - Style -

The lux­ury watch industry in Asia has seen sig­nif­i­cantly fewer sales over the past few months, with the lat­est fig­ures show­ing a de­cline of 20 per cent or more. Long gone are the high-fly­ing years of dou­bledigit growth when it seemed that in­sa­tiable shop­pers, many from Main­land China, would con­tinue flock­ing to lux­ury bou­tiques in Hong Kong and around the re­gion. Now the re­cur­ring theme is the de­cline in the num­ber of main­land shop­pers and the im­pact this is hav­ing on lux­ury sales.

How­ever, a closer ex­am­i­na­tion of the data shows global sales of watches are not fol­low­ing this trend; they’re hold­ing steady or grow­ing a lit­tle. The down­turn in the Greater China re­gion is be­ing coun­ter­bal­anced by a sig­nif­i­cant in­crease in other parts of the world. Ac­cord­ing to the Fed­er­a­tion of the Swiss Watch Industry, which rep­re­sents 90 per cent of the coun­try’s watch sec­tor, France saw an as­tound­ing in­crease of 53.4 per cent in July com­pared to the same month last year. The Richemont Group, which owns many high watch­mak­ing and jew­ellery maisons, also re­ports dou­ble-digit growth, not only in Europe, but also in Ja­pan.

I’m sure it’s not a sud­den new in­ter­est in watches or eco­nomic growth in those re­gions that is driv­ing such an in­crease in de­mand.

Even with­out div­ing into more statis­tics, a re­cent per­sonal visit to Paris and its bou­tiques shows that there, too, it’s Chi­nese tourists do­ing the spend­ing. The queues once present in front of the Hong Kong bou­tiques of the most fa­mous lux­ury brands are con­tin­u­ing to form in front of their Paris bou­tiques.

Many will point to the po­lit­i­cal and eco­nomic cli­mate in China and Hong Kong for this shift in buy­ing pat­terns, with a main­land clam­p­down on the giv­ing of ex­pen­sive gifts in par­tic­u­lar af­fect­ing the Hong Kong and Ma­cau mar­kets. But given that the Chi­nese cus­tomer is still very ac­tive in other parts of the world, the de­mand is still strong. There are other so­cial and eco­nomic rea­sons for Chi­nese tourists be­ing will­ing to travel such long dis­tances for their lux­ury pur­chases.

Price, of course, is a sig­nif­i­cant fac­tor. Tax-free shop­ping and volatile cur­rency ex­change rates have made the sav­ings in Europe much more com­pelling. But it’s not the only rea­son. For many, the shop­ping ex­pe­ri­ence is more au­then­tic when it is part of a trip to the homes of many of th­ese lux­ury prod­ucts.

Re­gard­less of the rea­sons, the land­scape of the re­tail industry has changed and lux­ury brands must con­tend with the fact that their mar­kets are truly global, and that con­tain­ing their ef­forts to lo­cal or re­gional mar­kets may be a thing of the past. Tra­di­tion­ally, the ex­pec­ta­tion was that a ma­jor­ity of pur­chase de­ci­sions would be made lo­cally, and that mar­ket­ing ef­forts and re­tail pres­ence should re­flect that. The past 10 years have seen in­nu­mer­able bou­tiques open­ing all over Greater China, ad­mit­tedly in re­sponse to the grow­ing de­mand.

To­day, the brands are fi­nally ac­knowl­edg­ing that mar­ket­ing ef­forts made in Hong Kong, Sin­ga­pore or Main­land China may lead to a pur­chase be­ing made in an en­tirely dif­fer­ent re­gion, be it in Europe, North Amer­ica or Ja­pan. Our per­ma­nently con­nected world fa­cil­i­tates this be­cause price com­par­isons can be made and prod­uct avail­abil­ity can be checked very quickly, such that the pur­chas­ing de­ci­sion is not so much which bou­tique you go to in your city, but which one you go to in your favourite travel des­ti­na­tion.

This has a sig­nif­i­cant knock-on ef­fect on both sides of the sales counter. For the cus­tomer, it means there is an ex­pec­ta­tion of af­ter-sales sup­port on a global ba­sis. For the brands, they now have to con­tend with per­for­mance met­rics that are dif­fi­cult to lo­calise, as their re­gional mar­ket­ing spend­ing is now hav­ing an im­pact across the globe, rather than in the im­me­di­ate ge­o­graph­i­cal vicin­ity. Pric­ing will also have to be more care­fully ad­justed, even with un­cer­tain cur­rency ex­change trends, for pric­ing com­par­isons are made within a few min­utes. Also, the “con­ve­nience fac­tor”—the point at which the price dif­fer­en­tial is big enough to en­cour­age the cus­tomer to make the pur­chase over­seas rather than at a lo­cal bou­tique— is greatly re­duced.

Of course, it’s not just about pric­ing; ser­vice is be­com­ing in­creas­ingly im­por­tant as the lux­ury cus­tomer gains knowl­edge and ex­pe­ri­ence, par­tic­u­larly with the high-end watch mar­ket. Sales­peo­ple have to be bet­ter trained and able to re­late to the cus­tomers, un­der­stand­ing their needs and in­ter­ests. There are nu­mer­ous sto­ries of blasé sales­peo­ple in Hong Kong ig­nor­ing lo­cal cus­tomers to fo­cus in­stead on main­land tourists with empty suit­cases and long shop­ping lists. To­day, th­ese same cus­tomers are con­sid­er­ably more knowl­edge­able about the brands they like and the watches them­selves—and let’s not for­get that the lo­cal cus­tomer is still present, con­sid­er­ing their pur­chase op­tions with over­seas lo­ca­tions just as much in mind as lo­cal bou­tiques.

In short, when it comes to fine watches, my im­pres­sion is that the de­mand is still very much there, but changes in the mar­ket en­vi­ron­ment have given the cus­tomer a much more global per­spec­tive. The brands need to bear this in mind, not only when it comes to pric­ing, but at ev­ery level, from mar­ket­ing to af­ter-sales ser­vice. There’s lit­tle rea­son to think this new en­vi­ron­ment will de­volve, with lux­ury cus­tomers re­fo­cus­ing lo­cally, for the flow of in­for­ma­tion is global and hard to con­tain. It will be in­ter­est­ing to see how the brands adapt.


Newspapers in English

Newspapers from China

© PressReader. All rights reserved.