Wednesday, October 10, 2018

Wempe and NOMOS are Kaputt

So you've probably read it elsewhere, but I thought I'd give it to you with a little bit of commentary.

Wempe have dropped the bomb and NOMOS will no longer be carried there.  Wempe's contention, and a fair one, is that they have worked pretty hard (and for a pretty long time) with NOMOS, several now iconic and sought-after limited editions.  Both sides have put in time and effort.  But it is also safe to say that nothing is forever, and here is the proof.

The key reasons cited by Wempe include:

A.  Chrono 24 for factory authorized refurbished watches
B.  Chronext for factory authorized new watches

In essence, too much availability online, an abandonment of what made the brand special.  And a big part of what made the brand special was that you couldn't get it just anywhere.  

On the one hand, it would be more than fair for NOMOS to say that this is the way it is, sorry if you don't like it (which it appears that they did).  

But on the other hand, NOMOS is not exactly bursting in multiple retail locations, particularly here in North America.  Moreover, a lot of these locations are not exactly red-hot, and when you multiply that by the "chain" reality - Tourneau, for example, it gets dicier.  
Again, I live and work near two retail outposts for NOMOS and they are not exactly "jumping" at the moment.

It's interesting, because a lot of these realities were already existing before Wempe decided to throw in the towel.  NOMOS has had their own online distribution for several years, and at least here in the US they have been sold through Watch Buys for quite some time in addition to all of the other retail stores they have/have had.  And with the weird church and state mash-up that is the Hodinkee media (we'll tell you what to buy) retail (and then we'll sell it to you) model it is safe to say that the way watches are bought and sold continues (and will continue) to evolve and change.  Sometimes for the better, and sometimes for the worse.

Having said that, it also underscores a key word which I do feel gets lost, misplaced, and leveraged from time to time -
Partnership.  A partnership implies that two (or more) entities are working together towards a mutually beneficial outcome.  And what that used to mean is that a brand and a retail partner would work together to make good things happen.  Co-op advertising, in-store brand events and promotions, etc.  But some interesting things happened right around 2008.  A few retailers started to display what can only be described as extreme avarice.  Their feeling was that they were spending time and money to promote a brand and, damn it, they deserved a better, bigger slice of the pie.  Now what at least two of these retailers that I know of personally failed to mention in their hand-wringing tirade was this - they were actively discounting the watches by 30% off of the suggested retail price.  So it created a perfect storm.  Brands needed the retail outlets, and the retail outlets needed product.  But the retail outlets now said things like -
"sure, we'll carry your watches, but we won't pay for them.  At least not until after we sell them!"  And thus the golden age of memo was born.  

Memo.  I've written about it before, but in case you missed it, here is a basic outline:

1.  Brand is very, very anxious to be in retail store X.  Retail store X is well known in a major metro area and turns a LOT of product. 

2.  X agrees to take the watches, but they won't pay for it.  But don't worry, they will pay you after they sell them.

3.  Not really.  They will not tell you that they sold something.  You will have to send someone to count all of the watches in their safe, provide proof that they have, in fact, sold the watches, provide an invoice, and....


You will be extremely lucky if you are paid within 90 days.

And that is pretty much where we find ourselves now.  

So the bigger question really becomes, how can a brand afford to be in a retail store in the first place?

But let's look at it from the other side -

1.  The store commits showcase space, training for staff, and local advertising budget.  In the case of a bigger brand, particularly one from the groups, the store will have to commit to a 30/30/30 schedule of payments.  Keep in mind, many retail partners will avoid payment as long as they can.  In some situations this is understandable - they have payroll, expenses, etc.  

2.  The store frequently will have the customer coming in for exactly the one watch that they do not have.  As the store, you get a very quick understanding as to just how valuable you really are to the brand.

3.  You will frequently be undercut by your friendly (and not so friendly) competitors not only in your backyard, but around the country.

The situation with Wempe and NOMOS is really not unique, it happens every day around the world.  But when you see a partnership of that many years thrown out so readily?  It tells you that things have changed.  Whether it is for the better, or for the worse?

That remains to be seen.  

But one last thing that I think NOMOS and other brands don't realize is that they have taken the problems with retail, and transferred them to a different format.  Because the realities of the game have not changed - there are only so many watch customers out there.  So regardless of what medium you are selling the watches - brick and mortar or online, if you over saturate the market, you will be in exactly the same predicament, just in a different format.


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