45 US Patek dealers headed to 32 by end of the year

[Gebbeth]

They are all headed to very limited numbers of boutique stores that are owned or co-owned by the watchmakers.

Rolex is headed this way after their Bucherer purchase, and Patek would have done something similar had Rolex not moved first.

The days of the independent AD selling high end popular models are dead.

HOWEVER, the history of brands thinking they can do this on their own and rub their noses at their retail partners are littered with failures.

Nike lost a ton of market value and sales when they tried to do the same, and now they are going back, hat in hand, when market sentiment changed toward other brands like Hoka, New Balance, Brooks, ASICs, etc. The consumer also got sick of $300 to $God Knows What priced limited edition kicks that strangely the same secondary players were snatching up and reselling for many times their retail prices.

Sound familiar?

These watch brands really need to watch out what they are doing to their customer and distribution base.

[scurfa]

I agree they are crazy, I’m sacked from Patek but the latest offerings are woeful, I will never buy another Nike product ever you have loads of new up and coming brands to choose from, time to move on.


Sent from my iPhone using Tapatalk

[dpj17]

Originally Posted by Gebbeth

They are all headed to very limited numbers of boutique stores that are owned or co-owned by the watchmakers.

Rolex is headed this way after their Bucherer purchase, and Patek would have done something similar had Rolex not moved first.

The days of the independent AD selling high end popular models are dead.

HOWEVER, the history of brands thinking they can do this on their own and rub their noses at their retail partners are littered with failures.

Nike lost a ton of market value and sales when they tried to do the same, and now they are going back, hat in hand, when market sentiment changed toward other brands like Hoka, New Balance, Brooks, ASICs, etc. The consumer also got sick of $300 to $God Knows What priced limited edition kicks that strangely the same secondary players were snatching up and reselling for many times their retail prices.

Sound familiar?

These watch brands really need to watch out what they are doing to their customer and distribution base.

This is a wonderful analogy and spot on. Not to mention, these brands set a lot of this in motion when the market was in full mania mode. Now they are opening up stand alone stores in the middle of a significant downturn where inventory is starting to back up everywhere. I understand the want to control the retail aspect of your business and "know" your csutomer inside and out. However, having that wholesale client, ie. AD's, you are guaranteed to sell everything you make at a certain % every single year, even in a downturn. We shall see where this goes but I agree with the post above, this is going to get very dicey very soon.

[LJubel328]

Originally Posted by Gebbeth

They are all headed to very limited numbers of boutique stores that are owned or co-owned by the watchmakers.

Rolex is headed this way after their Bucherer purchase, and Patek would have done something similar had Rolex not moved first.

The days of the independent AD selling high end popular models are dead.

HOWEVER, the history of brands thinking they can do this on their own and rub their noses at their retail partners are littered with failures.

Nike lost a ton of market value and sales when they tried to do the same, and now they are going back, hat in hand, when market sentiment changed toward other brands like Hoka, New Balance, Brooks, ASICs, etc. The consumer also got sick of $300 to $God Knows What priced limited edition kicks that strangely the same secondary players were snatching up and reselling for many times their retail prices.

Sound familiar?

These watch brands really need to watch out what they are doing to their customer and distribution base.

You explained the dynamic so eloquently. I had not thought of the Nike dtc failure as an analogy. It’s certainly possible this could happen with AP and PP as well, though we will never fully quite know how this strategic shift is panning out since they are privately owned.


Sent from my iPhone using Tapatalk

[texasmade]

Originally Posted by LJubel328

You explained the dynamic so eloquently. I had not thought of the Nike dtc failure as an analogy. It’s certainly possible this could happen with AP and PP as well, though we will never fully quite know how this strategic shift is panning out since they are privately owned.


Sent from my iPhone using Tapatalk

Being privately owned is a huge advantage though for Rolex, AP, and PP. If product demand really drops, they can cut production and live with the lower sales for awhile. Provided these brands stashed away enough cash to survive they should be okay with lowering demand.

Nike can't/couldn't lower production since they have the pressure of ever increasing sales from being publicly traded.

[scarlet knight]

Originally Posted by ChetBaker

I was visiting Manhattan earlier this week and on my way back from the VC Flagship dropped into Bucherer and noticed they had hardly anything to sell. They did have a couple nice Mosers though. Watches of Switzerland at Hudson Yards had a much better selection when I dropped in earlier the same day.

Much different than my other Rolexes. Would never trade my Calatrava.

[Bosscheto]

I could be wrong, but living in Switzerland, we hear different things. Allegedly, PP wants to decrease the points of sale, but increase the number of watches per points of sale. So they prefer smaller number of ADs but a much larger selection of watches. With regards to rare watches - the application process is well established, so I see no changes there. They just added the in demand not rare watches - sports watches into the same process. Sometimes when I travel, I see in big cities - two different PP ADs on the same big commercial street, and it does not make much sense. Also, what I have noticed often Mono Brand boutiques are actually JV with a local AD - Breitling does this, ALS does this as well - mono brand boutique but run by Bucherer for example. What also we hear in Switzerland is that now PP demands watches to be focused on local based clients, and the rumour is that the ADs are very very careful because the power of the brand is huge. Take this with a pinch of salt. PP and especially Rolex are completely closed and nothing leaks, so most of this are speculations.

[Gebbeth]

Originally Posted by texasmade

Being privately owned is a huge advantage though for Rolex, AP, and PP. If product demand really drops, they can cut production and live with the lower sales for awhile. Provided these brands stashed away enough cash to survive they should be okay with lowering demand.

Nike can't/couldn't lower production since they have the pressure of ever increasing sales from being publicly traded.

Certainly there is less pressure on privately owned brands.

But money is money, and cashflow is cashflow.

You can't cut production to nothing and expect to have income flowing through. Even idle factories cost money, and the more you don't produce, the more these become wasting assets. Factories are like people....when they are in motion, they can be efficient and healthy. When idle for long periods of time, things start to break down (get out of shape so to speak), and getting them back up and running (no pun intended) takes more effort, costs more, and is just harder to do.

So unless these brands have enormous amounts of money and investors in the bank, they need to sell sell sell.

Of course, this is not a science per se. That's why some companies get it right, and some wrong. It's a balance that is notoriously difficult to achieve.

My warning to these companies is that it's really really easy to tear things down and destroy a relationship, even if it's a relationship spanning 90 plus years, and a relationship that has been fruitful. It's so easy to destroy relationships.

It's really really really difficult to build back a broken relationship. It's just never the same. That's why when a divorced couple remarry, these don't last very long....and are often shorter than the original coupling.

Just too much trust has been broken and those things that tore the relationship apart the first time, are much less tolerated the 2nd time around.

[scurfa]

What they are reducing is visibility I would never have started buying Patek watches if I had never seen and handled them, with my local AD gone the people of the North East of England have moved on to other brands, I can imagine they have lost thousands of customers closing this one AD.

[Calatrava r]

Originally Posted by scurfa

What they are reducing is visibility I would never have started buying Patek watches if I had never seen and handled them, with my local AD gone the people of the North East of England have moved on to other brands, I can imagine they have lost thousands of customers closing this one AD.

I think they believe they have all the visibility they need, and they will attract more steady big purchase buyer type clientele at the big inner-city boutiques.

[John Doyle]

Originally Posted by scurfa

What they are reducing is visibility I would never have started buying Patek watches if I had never seen and handled them, with my local AD gone the people of the North East of England have moved on to other brands, I can imagine they have lost thousands of customers closing this one AD.

Perfect, easier for me to get the models i want then.

[bob101]

I don’t think they really care as evident by the fact they don’t even invite you to shop elsewhere or continue sending the quarterly magazine once you lose the AD relationship.
They probably calculate those wealthy enough will just start a new relationship elsewhere assuming an AD further away will accept them as a new customer. Those who just wanted one or two pieces will just buy grey / used market. Sad but seems to be the case these days.

[77T]

Originally Posted by Gebbeth

You can't cut production to nothing and expect to have income flowing through. Even idle factories cost money, and the more you don't produce, the more these become wasting assets.

Cutting AD stores in US is about distribution, not production. PP's factory isn't affected by concentrating the sales channel into fewer stores - it actually reduces distribution expenses.


Sent from my iPhone using Tapatalk

[scurfa]

Originally Posted by John Doyle

Perfect, easier for me to get the models i want then.

I think it will get easier


Sent from my iPhone using Tapatalk

[SoylentGreenChi]

Even 30 seems high for the US, TBH. There are something like 10 US cities in the Alpha/Beta+ category, so having 20 ADs would be spreading things pretty generously across the US market. Folks that buy Patek can travel to one of the top 20 US cities to shop, and most likely already travel to NYC, LA, Chicago, etc to do that already. This is an issue that goes beyond the US. I was recently in Germany was struck at the sheer number of Patek AD’s in relatively small markets and or/ADs essentially down the street from each other in bigger markets (eg. Munich).

https://en.wikipedia.org/wiki/Global...search_Network

[Gebbeth]

Originally Posted by 77T

Cutting AD stores in US is about distribution, not production. PP's factory isn't affected by concentrating the sales channel into fewer stores - it actually reduces distribution expenses.


Sent from my iPhone using Tapatalk

This was in response to the assertion that as a private company they don't need to disclose their profits and losses and can control inventory and pricing, and therefore, are somewhat immune to their need to have a wide distribution network or downstream distribution partners, or to react to the whims of stockholders (i.e., like Nike).

My response is whether private or public, you still need to make money. If you don't have a distribution network that is effective and reliable and resilient, it doesn't matter whether you control the means of production and don't have to disclose whether you are making, or not making, money. If the means of distribution is solely on you, then that exacerbates the problem. You are incurring your own losses in both production and distribution and sales.

That's a fallacy to think a private company is immune to basic economics.

[mickyd329]

Originally Posted by SoylentGreenChi

Even 30 seems high for the US, TBH. There are something like 10 US cities in the Alpha/Beta+ category, so having 20 ADs would be spreading things pretty generously across the US market. Folks that buy Patek can travel to one of the top 20 US cities to shop, and most likely already travel to NYC, LA, Chicago, etc to do that already. This is an issue that goes beyond the US. I was recently in Germany was struck at the sheer number of Patek AD’s in relatively small markets and or/ADs essentially down the street from each other in bigger markets (eg. Munich).

https://en.wikipedia.org/wiki/Global...search_Network

Europe has 129 retailers, while the U.S. only has 39. Under represented IMO versus Europe based on population size and wealth. Unless you are referring to going to a DTC model like AP has done? Both models have pros and cons, but consolidating your distribution channel post the COVID hype poses dangers long term IMO. Arguably, the industry hit it's peak during COVID and now you're going to downsize the points of sale and leave all those newly acquired clients out to dry?

[texasmade]

Originally Posted by Gebbeth

This was in response to the assertion that as a private company they don't need to disclose their profits and losses and can control inventory and pricing, and therefore, are somewhat immune to their need to have a wide distribution network or downstream distribution partners, or to react to the whims of stockholders (i.e., like Nike).

My response is whether private or public, you still need to make money. If you don't have a distribution network that is effective and reliable and resilient, it doesn't matter whether you control the means of production and don't have to disclose whether you are making, or not making, money. If the means of distribution is solely on you, then that exacerbates the problem. You are incurring your own losses in both production and distribution and sales.

That's a fallacy to think a private company is immune to basic economics.

Of course they're not immune since everyone needs to sell. Provided they saved up enough cash, they can withstand a downturn better without having to worry about quarterly reporting.

[LJubel328]

Originally Posted by SoylentGreenChi

Even 30 seems high for the US, TBH. There are something like 10 US cities in the Alpha/Beta+ category, so having 20 ADs would be spreading things pretty generously across the US market. Folks that buy Patek can travel to one of the top 20 US cities to shop, and most likely already travel to NYC, LA, Chicago, etc to do that already. This is an issue that goes beyond the US. I was recently in Germany was struck at the sheer number of Patek AD’s in relatively small markets and or/ADs essentially down the street from each other in bigger markets (eg. Munich).

https://en.wikipedia.org/wiki/Global...search_Network

This would make sense for HNW's to travel to their nearest metro area to purchase, however, Patek has asked AD's to prioritize local clients. This is the case for me, I spend a few months every year in an area with an AD. This AD, however, will not sell to me because I am not considered a full-time resident.

[TomInNJ]

Originally Posted by scurfa

What they are reducing is visibility I would never have started buying Patek watches if I had never seen and handled them, with my local AD gone the people of the North East of England have moved on to other brands, I can imagine they have lost thousands of customers closing this one AD.

This is a good point, and it is what I don’t understand about Patek cutting Hamilton in Princeton. To begin with, Princeton is one of the wealthiest towns in one of the wealthiest states in the wealthiest nation in the world. Lots of old money, and lots of new money from pharma, Blackrock, tech, etc.

But local economy aside, Hamilton is uniquely positioned directly across the street from the main gate of Princeton University. In addition to high end shopping (Hermes just opened a store a block away), it is surrounded by stores and restaurants that are continuously frequented by Princeton students all day. I’m sure that dozens of times every day a student walks across the street to Starbucks, exits with their over-priced coffee, and the first thing that grabs their eye is Hamilton’s display window filled with Pateks. I’m sure some future Secretary of State has done exactly that and thought, I want one of those watches someday. It is perfectly situated in the middle of a breeding ground for the future leaders of the country. You can’t pay for better advertising than that. So now those kids will now grow up lusting after Rolexes and JLCs instead.

And Patek does that so that it can have more stock for 3 Patek ADs within a block on 5th Avenue in New York (Wempe, Tiffany, and Bucherer)? I’ll never understand it.

Oh, and let’s not forget it’s one of the oldest Patek ADs in the US. They’ve sold Patek for close to 90 years. Is there nothing to be said for dancing with the girl you brought to the dance? Why would anyone be loyal to a family (or at least family-owned company) that has no loyalty?

And for the record, I own a Patek, so I think I pass the Thierry-test that allows me to criticize Patek.

[Be_Water]

Originally Posted by TomInNJ

This is a good point, and it is what I don’t understand about Patek cutting Hamilton in Princeton. To begin with, Princeton is one of the wealthiest towns in one of the wealthiest states in the wealthiest nation in the world. Lots of old money, and lots of new money from pharma, Blackrock, tech, etc.

But local economy aside, Hamilton is uniquely positioned directly across the street from the main gate of Princeton University. In addition to high end shopping (Hermes just opened a store a block away), it is surrounded by stores and restaurants that are continuously frequented by Princeton students all day. I’m sure that dozens of times every day a student walks across the street to Starbucks, exits with their over-priced coffee, and the first thing that grabs their eye is Hamilton’s display window filled with Pateks. I’m sure some future Secretary of State has done exactly that and thought, I want one of those watches someday. It is perfectly situated in the middle of a breeding ground for the future leaders of the country. You can’t pay for better advertising than that. So now those kids will now grow up lusting after Rolexes and JLCs instead.

And Patek does that so that it can have more stock for 3 Patek ADs within a block on 5th Avenue in New York (Wempe, Tiffany, and Bucherer)? I’ll never understand it.

Oh, and let’s not forget it’s one of the oldest Patek ADs in the US. They’ve sold Patek for close to 90 years. Is there nothing to be said for dancing with the girl you brought to the dance? Why would anyone be loyal to a family (or at least family-owned company) that has no loyalty?

And for the record, I own a Patek, so I think I pass the Thierry-test that allows me to criticize Patek.

^^
This x 10

[Mr. Drunmond]

Originally Posted by TomInNJ

This is a good point, and it is what I don’t understand about Patek cutting Hamilton in Princeton. To begin with, Princeton is one of the wealthiest towns in one of the wealthiest states in the wealthiest nation in the world. Lots of old money, and lots of new money from pharma, Blackrock, tech, etc.

But local economy aside, Hamilton is uniquely positioned directly across the street from the main gate of Princeton University. In addition to high end shopping (Hermes just opened a store a block away), it is surrounded by stores and restaurants that are continuously frequented by Princeton students all day. I’m sure that dozens of times every day a student walks across the street to Starbucks, exits with their over-priced coffee, and the first thing that grabs their eye is Hamilton’s display window filled with Pateks. I’m sure some future Secretary of State has done exactly that and thought, I want one of those watches someday. It is perfectly situated in the middle of a breeding ground for the future leaders of the country. You can’t pay for better advertising than that. So now those kids will now grow up lusting after Rolexes and JLCs instead.

And Patek does that so that it can have more stock for 3 Patek ADs within a block on 5th Avenue in New York (Wempe, Tiffany, and Bucherer)? I’ll never understand it.

Oh, and let’s not forget it’s one of the oldest Patek ADs in the US. They’ve sold Patek for close to 90 years. Is there nothing to be said for dancing with the girl you brought to the dance? Why would anyone be loyal to a family (or at least family-owned company) that has no loyalty?

And for the record, I own a Patek, so I think I pass the Thierry-test that allows me to criticize Patek.

100% agreed. Reminds me of the old porsche ad. It showed a picture of the new porsche and the tag line was "Porsche 911: purchased in 2008, sold in 1972"

[Gebbeth]

Originally Posted by texasmade

Of course they're not immune since everyone needs to sell. Provided they saved up enough cash, they can withstand a downturn better without having to worry about quarterly reporting.

No one has in infinite store of cash.

In addition, would you wait until you had zero cash in your bank account before deciding to do something to stop that?

At what point do you say "mercy" and start to stem the flow?

OR, do you try to be smart and prevent this from happening in the first place?

Patek may be private and family owned, and I have no idea how much money they have in the bank, but I do know that running a high precision factory and a cadre a skilled artisans is not cheap. In fact, it's very expensive......very very expensive.

So that emergency fund starts to look real small really quickly if nothing is coming in.

In addition, you may have cash in the bank, but you may also have credit facilities and other loans to maintain operations, pay for components and raw materials, and basically provide the grease to make the gears run smoothly. These facilities have loan covenants and other financial health requirements that cannot be breached or else trigger a default and onerous remedies, in addition to the cancellation of the loan facility.

So you are always answering to someone. No one is completely immune.

[Hostinkee]

I think PP’s pockets are deep enough to do as they please. If they sell all 60k watches they produce annually at an average of $50k a pop, they would be generating $3 billion annually. I’ve read they have around 1600 employees. If they paid each employee $100k you’re talking $160 million. Still quite a bit of wiggle room there for all other expenses and still turn a magnificent profit.

Just my two cents, usually worth about a penny.

[Mini2]

Patek are in a strong position
They just need to be mindful the buyers who came to the party in covid times might not be here anymore and constant price increases and potentially alienating there true client base before covid might be effected