Are Watch Discounts From Authorized Dealers A Thing of The Past?
More often than I would like, I find myself in a discussion about the resale value of a watch. I’d rather discuss why someone wants a watch. To understand where their connection and attraction to a specific timepiece comes from. But perhaps, for some people, the resale value is one of their reasons. Another topic I often see appearing is the purchase price of a watch. People throw double-digit discounts that (supposedly) can be had when buying watches, while others pay the sticker price, no questions asked.
Authorized Dealers offering discounts
It wasn’t that long ago that authorized dealers could often be found advertising their watches with discounts. Not only in the shopping windows of these authorized dealers but in their advertisements in (local) newspapers with discounts. Giving discounts was so common that everyone (including me) was calculating prices with a double-digit discount included. Discounts of 20% were pretty typical at some point. It also applies to the brands that are now unavailable and require long waitlists. I am not even talking grey market here, but official brand resellers. Within the grey market, discounts could even get higher for specific brands.
Higher demand and more brand boutiques
With the increased demand for luxury watches, the necessity to offer discounts has gone down in recent years. Also, here at Fratello, we have seen a massive increase in our readership in the past three years. Watches have become appealing to a vast and new audience, not only those looking for an investment but also those who just developed an interest in the craftsmanship, mechanics, and stories behind them. I was in Paris a few weeks ago, and there were queues outside for some watch boutiques from Cartier and Rolex. If that’s the case, there’s no need for a discount.
The other thing that happened is that brands have been keen on opening more boutiques by themselves and decreasing the authorized dealer network. This way, they control pricing and the grey market more. Brand boutiques usually do not offer discounts to customers. And boutiques usually also do not supply watches to grey market dealers. Besides the financial benefits, brands also keep out the competition in a boutique and control the staff’s competencies. For the customer, it means that (more often than not) boutiques often have more models in stock than authorized dealers, including the “boutique only” models. These locations also tend to receive the limited editions everyone is after.
Not all mono-brand boutiques are controlled by the brands, of course. All the Rolex boutiques you see (except one) are in the hands of authorized Rolex dealers. So even though a boutique is a Grand Seiko, Omega, Rolex, or Breitling boutique, it can also be operated by a partner. It shouldn’t make a difference for the customer, but it often does. This is because brands lack control over these franchise boutiques. I’ve heard stories of quite a bit of nastiness at these boutiques shared by our audience concerning prices over retail and waitlists. Audemars Piguet is one of the exceptions, where they own all their AP Houses.
Last items in stock
With these boutique developments and the high interest in (luxury) watches, offering discounts on new watches will be a thing of the past. The discounts offered today often come from authorized dealers who know their contracts with brands will be terminated or perhaps are already in the termination period. So once that stock is gone, it’s done and dusted.
No more discounts, good or bad?
Is that a good or a bad thing? I don’t know, to be honest. For the brand’s image, discounts were never doing them any favors. I remember attending my first watch trade shows (20+ years ago) and seeing new watches from specific brands at 40% off. It made me realize that buying one of these watches would be very interesting for “the bang for the buck,” but also that they weren’t highly regarded. It made me think something must be wrong with the brand or watch.
Today I think slightly differently about these side effects, but to some, knowing a watch keeps its value is still reassuring. The good thing about no discounting might be the brand’s image or customer perception. But, with the lack of discounts and ever-increasing retail prices, there might also be a break-off point for customers with specific brands. The watch they might want becomes out of reach, and they seek out a different brand or refrain from buying a luxury watch. In the first scenario, brands are the real winners here. Brand-owned boutiques keep the margin that previously would go to the authorized dealers, and by increasing the prices on top, the profit goes up. An excellent example is Audemars Piguet, where the current CEO is not shy of sharing the ever-increasing revenue without increasing production but by cutting out the authorized dealers and increasing the retail prices.
Does it make you feel more appreciated?
When there’s no discount, at least there’s clarity, and everyone will be paying the same. Nothing is more annoying than hearing how much less your friend or colleague paid for the same watch you bought. However, a boutique or brand also shows a bit of appreciation to their clients when they do offer a (bit) of discount. I don’t know anyone who would refuse a discount on a watch, and it does make you (as a customer) feel good and appreciated, right?
It’s all about the buying experience, not about discounts
Perhaps, in the end, it’s all about the buying experience. If that is top-notch, there’s less demand for discounts, especially when there are other things a brand boutique can do to make the buying experience as good as possible. Offering a “Nespresso” won’t cut it, but inviting clients to events, to do a manufacture visit, to get a nice book on the brand, or an additional strap (to name a few options) all add to the experience.
What’s your take on discounts? Do you expect to get them on the big brands while they all seem to move towards brand boutiques only? Or do you think there will always be discounts to be had? Please share your thoughts with us in the comments.