Swatch Group Announces Fall in Sales for 1st half

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rockmastermike
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Swatch Group Announces Fall in Sales for 1st half

Post by rockmastermike » Wed Jul 17, 2019 6:50 am

Copied from the boys over at PuristPro.
Last paragraph sounds familiar

Swatch has reported falling sales and profits.Nett income fell 11% to 415m Swiss francs (£340m; $420m) in the first half. Sales fell 4.4%.

Swatch has tried to stop the flow of unofficial sales of its watches and sales have been hit by political trouble in one of its most important markets, Hong Kong.

Swatch has been taking action this year to stop its watches being sold at steep discounts online and has stopped supplying some dealers completely and some have been warned about their activities.The crackdown had cost it more than 100m Swiss francs in sales, but Swatch said it would have long-term benefits.In particular the company is worried that its brand was being devalued, as unauthorised retailers were selling its watches at deep discounts.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by pbj204 » Wed Jul 17, 2019 7:44 am

A quick search on Jomashop shows that they are not being very successful.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JP Chestnut » Wed Jul 17, 2019 7:49 am

Falling sales? Keep raising prices and get rid of discounts!

The watch industry is a study of brilliant management. All Rolex has to do is not fuck up and they win by default.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by hoppyjr » Wed Jul 17, 2019 7:52 am

pbj204 wrote:A quick search on Jomashop shows that they are not being very successful.
No doubt a policy change takes time to reach the end of the line retailer. I think it’s a good thing to continue their efforts to push upmarket. The latest Omega watches I’ve handled are extremely well done.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JBZ » Wed Jul 17, 2019 8:12 am

I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JP Chestnut » Wed Jul 17, 2019 8:23 am

JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by hoppyjr » Wed Jul 17, 2019 8:34 am

JP Chestnut wrote:
JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".
Actually I don’t think Omega raised retail prices as much as they raised dealer prices, eliminating some of the margin that allowed for those 25-35% discounts. A good strategy to improve “perceived image” is to eliminate deep discounts. I don’t advocate for raising retail prices.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JBZ » Wed Jul 17, 2019 8:40 am

JP Chestnut wrote:
Wed Jul 17, 2019 8:23 am
JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".
From a quality perspective, Omega is certainly on par with Rolex. But that doesn't matter when the general public sees Rolex as THE luxury watch to have. If Omega keeps pushing up its prices, it will reduce its sales, at least in the short term. Maybe their business model is designed for that or can absorb it. And maybe Swatch will push entry level consumers toward brands like Longines, Hamilton, and the like. But I wonder what it says about the viability of middle market luxury brand like Omega (and, yes, I know it's ridiculous to call Omega middle market, but that's what it is when compared to the true high end brands). And, by pushing up their prices, won't Omega come into direct competition with Swatch's higher end brands like Breguet and Blancpain?
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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JBZ » Wed Jul 17, 2019 8:44 am

hoppyjr wrote:
Wed Jul 17, 2019 8:34 am
JP Chestnut wrote:
JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".
Actually I don’t think Omega raised retail prices as much as they raised dealer prices, eliminating some of the margin that allowed for those 25-35% discounts. A good strategy to improve “perceived image” is to eliminate deep discounts. I don’t advocate for raising retail prices.
It seems like it's really tricky. Certainly any brand wants their watches out in the general public, but I guess the question is what's the right balance between exclusivity and ubiquity.
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Re: Swatch Group Announces Fall in Sales for 1st half

Post by ChuckW » Wed Jul 17, 2019 8:46 am

A few days ago, I went to the local OB to pick up a replacement for a broken clasp. During the time I was there, about a half hour, not a single customer came in. Granted, it was a Monday afternoon, but there were three sales associates standing around trying not to look bored while the manager was in the back installing the new clasp.
No, it's not Tourettes.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JP Chestnut » Wed Jul 17, 2019 8:49 am

hoppyjr wrote:
Wed Jul 17, 2019 8:34 am
JP Chestnut wrote:
JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".
Actually I don’t think Omega raised retail prices as much as they raised dealer prices, eliminating some of the margin that allowed for those 25-35% discounts. A good strategy to improve “perceived image” is to eliminate deep discounts. I don’t advocate for raising retail prices.
I'm sure you follow their pricing more than I do, but I was thinking about the price path of the regular Speedy Pro. New box + same bracelet but with screws = how much of a percentage increase? It was pretty substantial.

You're right though, I was implicitly comparing "street price" Omega versus MSRP Rolex. The alternate comparison (MSRP Omega versus inflated Rolex) looks a lot better for Omega.

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Re: Swatch Group Announces Fall in Sales for 1st half

Post by dnslater » Wed Jul 17, 2019 9:35 am

JP Chestnut wrote:
Wed Jul 17, 2019 8:49 am
hoppyjr wrote:
Wed Jul 17, 2019 8:34 am
JP Chestnut wrote:
JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".
Actually I don’t think Omega raised retail prices as much as they raised dealer prices, eliminating some of the margin that allowed for those 25-35% discounts. A good strategy to improve “perceived image” is to eliminate deep discounts. I don’t advocate for raising retail prices.
I'm sure you follow their pricing more than I do, but I was thinking about the price path of the regular Speedy Pro. New box + same bracelet but with screws = how much of a percentage increase? It was pretty substantial.

You're right though, I was implicitly comparing "street price" Omega versus MSRP Rolex. The alternate comparison (MSRP Omega versus inflated Rolex) looks a lot better for Omega.
Speedy Pro price is a tough metric to gauge the brand's strategy on, as it is extremely unique being a luxury good that is virtually unchanged for the past 50 years - with the exception of a few pieces of the movement and the bracelet design.

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JP Chestnut
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Re: Swatch Group Announces Fall in Sales for 1st half

Post by JP Chestnut » Wed Jul 17, 2019 9:39 am

dnslater wrote:
Wed Jul 17, 2019 9:35 am
JP Chestnut wrote:
Wed Jul 17, 2019 8:49 am
hoppyjr wrote:
Wed Jul 17, 2019 8:34 am
JP Chestnut wrote:
JBZ wrote:
Wed Jul 17, 2019 8:12 am
I don't know about the continued push up market. It works for Rolex because they're Rolex (and if it remains impossible to get desirable models, even Rolex may take a hit). Nobody else has that luxury, so I wonder if they're going to continue to suffer if they push their prices up.
It's been a long time since Rolex has raised US prices. Omega has actually moved more than Rolex has over the last few years. There's no doubt that Omega watches are really really nicely made. However, they're going to lose if they want to move beyond "Rolex alternative but cheaper".
Actually I don’t think Omega raised retail prices as much as they raised dealer prices, eliminating some of the margin that allowed for those 25-35% discounts. A good strategy to improve “perceived image” is to eliminate deep discounts. I don’t advocate for raising retail prices.
I'm sure you follow their pricing more than I do, but I was thinking about the price path of the regular Speedy Pro. New box + same bracelet but with screws = how much of a percentage increase? It was pretty substantial.

You're right though, I was implicitly comparing "street price" Omega versus MSRP Rolex. The alternate comparison (MSRP Omega versus inflated Rolex) looks a lot better for Omega.
Speedy Pro price is a tough metric to gauge the brand's strategy on, as it is extremely unique being a luxury good that is virtually unchanged for the past 50 years - with the exception of a few pieces of the movement and the bracelet design.
That's precisely why I think it's the best product to look it. It has almost zero confounding effects. The price rise is almost 100% due to their brand strategy, unless we actually think a stupid big box and some bracelet screws really amount to more than a couple bucks a unit to Omega.

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