18
Dec
2014

Not much Christmas cheer for luxury watch brands

The Christmas trees, lights, tinsel and the sound of Christmas carols pounding out in shopping malls in China does not do much to hide the discomfort those selling luxury watches are feeling generally. The last two years have been very tough not only due to regulations related to gifting, but also because consumers have become more savvy and retailers are struggling to engage with them.

None of this is new to most observers it’s been a fact of life for a while. But many brands appear to have struggled to cope with new attitudes and buying practices, perhaps hoping that the money would come back if they just kept on doing what they always have done, unfortunately for them, this has not been the case. Change in China is rarely slow and gradual; it’s often fast and unpredictable.

Walking past the rows of luxury watch retailers, there seems little attempt to make the retail environment much different. Store staff still appear to stand around in numbers waiting for activity, and speaking of activity, there is little of this in general. Perhaps one is a result of the other, a case of chicken and egg, but it is worrying that after two years of decline, little seems to be planned to bring more consumers into the stores.

We know that many are choosing to buy overseas due to lower prices and greater choice, but there are still numbers of people who want something now and are willing to pay a premium. Of course consumers know more about the brands now, so brand reputation still plays a major role in drawing people through the door, but the same interior with the same staff standing there looking bored or disinterested does not attract any consumer not matter their knowledge level.

Going back to prices, some brands are reputed to have changed their pricing strategy for China to bring product prices down to or at least close to the numbers that can be paid in Hong Kong. In theory this may increase domestic sales a little, but for a few hundred dollars extra, the flight to Hong Kong and the shopping experience may be justifiable to many.

So what is the answer for luxury watch brands? Since late 2012, they have tried hard to build their CRM data for their client base which to be frank, they did little of when times were really good. Although as a result of better knowledge, some consumers have become brand advocates, some have learned that their past choices did not suit their style and have moved on elsewhere. They want to be special but for the watch brands on the whole, they don’t do ‘individual’ as well as they should.

Price parity will help if its promoted in the print and online media, but the store which is their key marketing tool needs to be more interesting inside to draw existing and potential followers through the door. Give them a more glamorous and existing purchasing experience and they may just part with their money!

Ken Grant
Ken is the publisher of Luxury Insights China, he is regularly asked for his comments and opinions of the luxury sector in China by the media, and speaks at conferences on the subject. His international marketing experience covers 25 years, and most territories of the world.

Top