Monday, July 20, 2020

Downsizing - Change Is Inevitable

Now it is not news at this point, SWATCH Group has made the difficult decision to permanently shutter several of its retail stores, and 2,400 jobs are now forfeit. More detail on this can be found in this Bloomberg article -
Swatch Cuts 2,400 Jobs as Watchmaker Trims Store Network

SWATCH Group is many things, and more than anything else, at this moment in time they are the canary in the coal mine of the watch industry as a whole. To put it simply, if SWATCH is hurting, how is everyone else doing? Well, the simple answer is that some brands are (at least by most accounts) doing okay - i.e. Rolex and Patek. But other brands (and sorry SWATCH, some of your babies are in this group) are suffering now from a lack of vision. 

And what do I mean by that? 
Back at the turn of the century, everyone was convinced that Hayek the Elder was the smartest man in Watch Town and (for the most part) incapable of error. And there were some very sharp ideas, and let's be honest, some that could have been better handled. And as it applies to the actions now being taken to close company owned stores, it underscores what had been a long simmering concern with the push to not only "control the means of production" but also to try and control the means of consumption. The amount of grey market products sloshing around doesn't exactly help. The move to exclusive boutiques was maybe (maybe) not the best advised. Here in Boston-Metro we have two pretty glaring errors, the Omega boutique in that (insert sarcasm here) highly visited Boston neighborhood - Natick! For those of you unfamiliar, Natick is actually a different town (yes, designated a town, not a city), in a completely different county, more than 20 miles away from Boston (depending on which route you drive, because... no convenient form of public transit goes from there to Boston unless taking two buses and walking just under a mile is convenient). Ironically, there was, and still is a lot of good retail opportunity in downtown Boston. 

And then there was the SWATCH boutique at Boston's Logan airport. Now logic would tell you that airports are natural choices. But... it was in the International Terminal, and another little factoid about flights in and out of Logan for the uninitiated?  A lot of international flights DO NOT leave from the International Terminal. Strange but true!

Curious to relate? There is a thriving (albeit, pre-COVID) retail neighborhood on Newbury Street, and a boatload of space in the Prudential Center as well as the adjoining Copley Place shopping center. My best sense of these two decisions is that they were taken by people who really did not understand Boston, and really did not put in much effort to do so.

And let's now connect the dots - the majority of watch retail is (for the foreseeable future) going to be online. Now also curious to relate - I can buy an Omega watch online from Omega, and I can buy a SWATCH directly from them. Come to think of it, I can buy a:
but not a Mido, not a Longines... and both of those brands are priced more affordably than Omega. Why not join the 21st century?

SWATCH Group, it is time to pivot. 

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