Ehren Bragg, Managing Director, Devon:

“Like anyone, brands open a boutique because they see the potential for profit. By trading off the cost of paying a fixed overhead every month, they get the ability to work both sides of the deal and collect all the revenue on retail sales. The direct exposure to the market and control of the customer experience are other major advantages they enjoy.

Ehren Bragg

“There really is no doubt that brand-owned boutiques cannibalise sales from independent retailers, the question is to what extent. If done right, the brand boutique should increase awareness in a marketplace thereby drive business into independent retailers, but there will certainly be customers who choose to do business with a brand boutique rather than an independent retailer because of the cachet it affords their purchase and the direct access they have to the manufacturer of their new timepiece.

“Since a high tide raises all boats, there can be passive benefits to retailers by having a company store in their area. After all, its presence will bring more attention to the brand and can help create desire in end consumers who may not have paid attention otherwise. Aggressive retailers can take advantage of this situation by competing on price - a game manufacturers don’t want to play.

“A brand boutique within a retailer’s existing footprint is a much cheaper alternative. Once again, this is a complicated decision with a lot of moving parts. It depends on the trust established between the two, the market’s impression of the retailer and what you’re trying to accomplish. Studies have shown that consumers are programmed to accept higher pricing in a boutique atmosphere than in a normal multi-brand environment - thereby benefitting both the manufacturer and the retailer.”

Brand Boutiques - Pros and Cons

Introduction

Patrik Hoffmann, president, Ulysse Nardin

Larry Pettinelli, president, Patek Philippe North America

Marc Gläser, president, Maurice Lacroix

Thomas Morf, formerly CEO of Carl F. Bucherer and Hanhart

Greg Simonian, president of Westime (Los Angeles, USA)

Ayman Nassif, president, BTC (Egypt)

Jeremy Oster, co-owner, Oster Jewelers (Colorado, USA)

Alon Ben Joseph, CEO, Ace Jewelers Group (Amsterdam, the Netherlands)

Source: Europa Star August - September 2013 Magazine Issue