← The Glossy Podcast
The Glossy Podcast
New leadership at Vogue, Proenza Schouler, layoffs at YNAP — and a luxury watches update with SwissWatchExpo CEO Eugene Tutunikov
00:45:51
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- [00:03]
A
Your brand's growth shouldn't be a mystery. Don't let bad data or wasted ad spend block your success. Tenuity believes in one Love, growth, hate waste. Their brilliant humans use powerful tech to deliver clear strategies and results. They show you what's working and eliminate what's not. So nothing stands in the way of your growth. Love growth, hate waste. Visit love growth, hate hatewaste.com hello, and welcome back to the Glossy Podcast. I'm your host, senior fashion reporter Danny Parisi, and I'm here with our international reporter, Zofia Zviglinska. Hello, Zofia. Thank you for joining.
- [00:50]
B
Thank you for having me. It's so nice to be on.
- [00:53]
A
Yeah, it's nice to have you. We have a lot to talk about this week. This is actually not one of our main topics, but it just happened like literally 30 minutes maybe before we started this recording, but Giorgio Armani passed away Thursday morning, 91 years old. We were just talking before the recording started that the statement from the brand was that he kept working up until the final days, which is pretty impressive, but definitely a titan of the industry. And we're all sad to hear of his passing. I don't know. Do you have any quick thoughts on Giorgio Armani before we jump into the rest of the episode?
- [01:27]
B
Yeah, I mean, obviously a 10 billion empire, so very big in fashion terms. A lot of kind of things that came that were his signature. Everything from, you know, understated elegance, the suiting, the dressing. And very sad, obviously, that he's passed away just before the 50th anniversary of the brand's debut. There was going to be a big show in Milan and that will be taking place under a different note now, obviously.
- [01:54]
A
Yeah, absolutely. So again, this news came out right before we started recording, so we don't have a full segment on it, but just wanted to mention first, we're going to talk about some of the biggest news of the week. Is Chloe Mao taking over as the new editor of US Vogue, taking over for Anna Wintour. There's a lot to unpack there, but we're also going to talk about Rachel Scott taking over as the new creative director at Proenza Schuller. And lastly, Zofia, you tipped me off that Mythereza announced lots of layoffs at Yuke's Net a Porter, which they bought last year. We can talk about that. And also the state of luxury E Commerce, which is really in a weird position. Then we're going to take a short break and for the second half of the episode I had a really great conversation with Eugene Tutunikov, who's the founder and CEO of SwissWatchexpo. We talked a lot about the state of the Swiss watch industry. Geneva watch days is kicking off right now. It's a very interesting time for the Swiss watch industry. Tariffs completely upended a lot of things in Switzerland and Eugene and I had a good long conversation about the subject. So that'll be the second half of this episode after the break. But let's start by talking about Vogue. So biggest news of the week probably is Chloe Mal taking over at Vogue. Anna Wintour announced that she was seeking a successor, I believe earlier this year. Mal has been at Vogue for a really long time, since 2011. A kind of funny thing is that Anna Wintour isn't really stepping down exactly. She's ceding that specific role of leading US Vogue, but she's still overseeing all editorial content at Conde Nast. There was an interview with Chloe Ma where she said that literally Anna's still going to be in the office down the hall, so she's not really going anywhere. But she is stepping down from leading US Vogue and letting Chloe Maul take over. A lot of interesting things. There was a great interview with Mal in the New York Times where she talked about some of her plans for Vogue and directions she wants to go. A lot of good information in there, but I'll let you take the first take. Zofia, what do you think of the change?
- [03:58]
B
Yeah, I mean, I think it's really interesting. Mal's obviously the third person to lead Vogue in its kind of history, US Vogue. So I think that's 132 years of history. So it's a very long time. And Mal's got quite a lot of pedigree. She's worked at the New York Times, Wall Street Journal, and she's obviously best known as the co host of the Run Through Vogue's In House podcast. I think she also was the kind of editor and kind of managing the production of Doge or Vogue for Dogs, which I think is a brilliant kind of.
- [04:36]
A
Well, you're a dog person, so I know that you're into that.
- [04:39]
B
Yeah, I think it was a very fun thing. A lot of kind of interest from charities as well. It allowed for some interesting interviews with celebrity people who are quite guarded typically. So I was actually just listening to one of their podcasts about it and how they got. I think it was Hamilton, Liz Hamilton to open up about his dog, even though he typically doesn't really do very good interviews, which you Know, from a journalist perspective is very interesting. But yeah, I think the change is very kind of needed, necessary. You know, us Vogue has been a little bit of like a standalone thing in the Vogue family. It's the main one. The September issue always is the most important if it comes out of Vogue Us. And there's been a lot of copies and covers that maybe haven't worked out quite as well as people think, especially in terms of social perception. So I'm interested to see what Mal brings to this. She's been heading up vogue.com for a long time, and I'm interested in how that kind of converts to print.
- [05:53]
A
Yeah, and speaking of print, one thing that I thought was notable is that Mal said one idea for direction for Vogue she has is to do fewer print issues each year and have each one be. Because right now, Vogue does do a monthly issue, but do fewer issues a year, but make each one more luxurious, more collectible, and more thematically cohesive. So instead of just a February issue, March issue, it would be theme to like, I don't even know an example, but you know what I mean. Each issue would be, like, dedicated to a specific theme, come out fewer times a year and be more of a prestigious sort of product, which I think is a trend that you see in a lot of print media. Basically, the magazines that haven't completely folded or stopped print circulation are tending to do fewer and fewer issues per year. And to make up for that, sometimes they're kind of making each issue sort of a bigger thing and increasing the value of each individual issue, but doing fewer issues overall, that's very common. But I also think print is kind of making a comeback just in general, not fashion related. But I've really been enjoying seeing the return of the Onion under new ownership, and they have launched a very successful print edition of the Onion, which I think is very fun and funny. And the new owner, Ben Collins, has talked a lot about how he runs the business and how simple it is to just let the writers cook and make a good product. And they put out a few print issues a year and it seems to be doing really well for them. Vogue already has really good circulation compared to a lot of magazines. It's obviously a titan in the industry, but I can totally see them getting away with fewer issues and making each one a real collector's item. I don't know. What do you think of that strategy?
- [07:46]
B
Yeah, I mean, I think it's a really good one. Magazines, I guess, have had a different purpose over the years, and I do think A collectible is almost the way that people want to keep magazines, because I think it's not just about buying issues, but it's also, I guess, the loyalty to the title, wanting to buy multiple copies, all of that stuff. I think currently the circulation for Vogue US is about 850,000. I'm assuming that's annual. And there's been a growing focus also on audio, video and events. So I'm interested to see how that print evolves. But obviously Vogue is a lot more than just the print right now. You have the website, you have the events, the Met Gala. All of these things have Vogue's signature print on them. And I'm sure that Mal will be responsible for a lot of those things. Probably with still some of Anna's involvement. It'll just depend on which side they'll be courting, because you don't just have the kind of print and the brands and everyone who's inside to consider, but also the advertisers, which has become a much bigger thing for a lot of magazines which are trying to kind of pad out their profit margins.
- [09:01]
A
Yeah. And last thing I'll say is, as I think the fashion media industry has evolved quite a bit, and obviously what glossy covers is very different than what Vogue covers, and our style is very different. But I do hope that, and am hopeful that MOL will kind of keep up the good reportage and good stories and not just, you know, shiny, fancy collector's items, because Vogue has done some really great stories over the years and I hope that will continue. Let's talk about Rachel Scott taking over at Proenza Schuler. Probably many people remember that Lazaro Hernandez and Jack McCullough, who founded Proenza Schuler, left the brand in January of this year. They went off to design for Loewe. Jonathan Anderson had left Loewe to design for Dior. And now back at Proenza, they're being replaced by Rachel Scott, who's the designer of Diatima. Lazaro and Jack are no longer the creative directors at Proenza, but they are still on the board of directors and they are still involved with the brand. They had, I think, a pretty ringing endorsement of Rachel Scott. They said they were very excited to see what she was going to do. I mean, it was a press release, so of course they're going to say something nice, but it felt genuine to me. And I think she's honestly a really good fit. Diotima is very New York, high end, elegant kind of women's wear. Very Similar to Proenza Schuller, her first official solo collection for Proenza will be February of next year. But interestingly, actually, she has been consulting for them for several months now. And the new collection that they're showing this September, which is officially designed by the Proenza Schuller design team, not by one designer, she was heavily involved with it. So I think we will probably get a pretty good indication of what her vision of Proenza will look like, even though her first official collection isn't until next year. So what do you think? I have some thoughts about kind of just creative director stuff in general. But what do you think of Rachel Scott at Proenza?
- [11:02]
B
Yeah, I mean, I think it's an incredibly interesting appointment. I think that she's a great person for the brand. First woman of color to lead a major American fashion house in recent years. And obviously with her, I guess, like aesthetic and design sensibilities focusing on bringing more like Caribbean heritage into high fashion, I think that it gives a much bigger take on production as well. I think that some of the craftsmanship that she does with Diatima is working with Jamaican cross tiers, NYC tailors and Indian embellishers. So looking at fashion production as kind of a global endeavour, which I don't think it necessarily is always, there's still a lot of focus about, you know, high fashion being very kind of Eurocentric. So I think that's a really interesting shift. And I'm wondering what Proenza will look like, you know, under that. Could that mean, you know, some kind of warmer textures, maybe some more kind of cultural narratives that are being played out under her? I think that could be very, very interesting. But again, it's a big job and she's still kind of managing her own brand too. So she's now, I think, the second designer after Jonathan Anderson I know of at least, who's kind of helming two brands at the same time?
- [12:20]
A
Yeah. Okay. I'm so glad you mentioned it because that was going to be my sort of big point for this segment was she is staying as the creative director at Dima while also being the creative director of Proenza Schuller. And there's absolutely this phenomenon and Jonathan Anderson is a great example. I was also thinking Laura Kim at Monse, who founded Monse, is still designing for Manse and is also designing for Oscar de la Renta at the same time. And I'm sure there's other examples too, but I think there's been a phenomenon which we've talked about a little bit of creative directors of fashion brands doing more, either because they want to do more, or maybe they're being asked to do more beyond just designing for the brand. They might be. I mean, like Virgil Abloh was the, the OG kind of like renaissance man designer who was also like DJing. And he had multiple brands he was working on and he was doing collaborations sort of outside of any of the brands he worked at. So I think there's this continued trend of creative directors and creative professionals in general being stretched very thin and needing to do a lot of different things. And specifically for designers, it's really interesting how many designers have their own personal brand that they founded, which maybe took off and got them name recognition and stuff. And then they get hired to be the designer for a bigger brand. And in this case, Perenza Schuller, it's newer compared to like a Loewe or Dior or something. But it is definitely, I'm assuming, bigger than Dima. So it's still kind of that dynamic where she's designing for her own personal, smaller brand and was hired to design for this big brand that she's not the founder of. And that's just. I don't know, it's just. I don't know what to make of it. But I feel like it's an increasingly common phenomenon in fashion. I can't imagine being the creative director for a big name brand and also the creative director for another brand at the same time. That seems like a huge amount of work and doing multiple collections. But maybe that's just like what creative directors have to do nowadays. I'm not sure.
- [14:21]
B
Yeah, I'm wondering if there's also like just more personal reasons for Rachel to do this. Like, obviously Day Team is one of the few kind of Caribbean routers brands that are on the scene. If it closes, then there's less representation, less work obviously for everyone involved. And the thing that we have to remember is that every single time when you go into a new brand, there's already a whole team of designers and assistants, people who are actually creating the collection. So while it is one person overseeing, I guess, the big picture things, there's a lot of people involved who are also driving the success of those designs. And I'm assuming with Proenza, because it is a kind of bigger brand, it's slightly bigger from an infrastructure point of view as well. I'm assuming that that means also there's more people involved, which probably means that the role isn't quite so granular maybe as it would have been with Rachel's own label.
- [15:20]
A
Yeah, that's definitely true. And they do have a design team that Rachel Scott worked with for this upcoming collection in September. So there are people. It's not a solo job. Let's move on and talk quickly about our last topic. So, like I said at the top, you pointed this out to me, but Mythereza announced a bunch of layoffs at Yuke's Net A Porter. So last year, Mythereza, which is a luxury e commerce company, acquired Yuke's Net A Porter, another big luxury e commerce company. At the time, I talked with my Teresa CEO Michael Kliger, and he told me they had a plan to integrate Net A Porter and turn it into a profitable business. This week they announced massive layoffs at Uxtana Porte, possibly affecting up to 700 people across the UK, the US Italy. The layoffs are part of this $300 million plan to transform the business, unify all of its different parts and turn the whole thing into a profitable company. Mytheresa is and has been profitable. And when they bought Net A Porter, when I spoke with Michael Kliger, he told me that parts of Net A Porter were profitable and parts were not. He didn't say what, but parts of it were profitable. So I imagine that the layoffs and cost reduction is happening at those unprofitable parts. And there may be. I mean, it's clear they're trying to integrate all of this into one big unified business. Very unfortunate for people who have lost their jobs, but it does seem like you couldn't merge multiple big billion dollar companies without some. Some rough turbulence along the way.
- [16:55]
B
Yeah, definitely. I mean, you know, Michael's been so kind of forthcoming with everything that's been happening at Mytheriza. I think with Netsupporte, it's been slightly less so just because of it's still kind of transition year for them. They announced the kind of lux experience change, I think, in January. So it's still technically only been a couple of months really of proper change. And there hasn't been that much shift from what I know of in terms of the way that the business is run until now. Obviously these layoffs show that there are going to be, I guess, efficiency moves, because I think they said that there was a lot of duplicative roles across the different countries and that's what they were getting rid of. So with the business being so international, I'm surprised that that was the case even in the first place. You know, when you've got brands like these which already operate in cross international markets. Maybe there was a bit of bloat in terms of how many people were hired for similar roles. And in the age of AI and all of the things that it does for content, I'm assuming there's a lot of people who might be more efficient if they were just paired with the right tools. And I'm wondering if that's also part of, part of the problem as well. But I have a lot of belief in Michael and that team as well. The exec team that was hired a couple of months ago to kind of change things around to make it a stronger business. Because with it being London based, it's obviously not super reliant on the US economic side of things, which is in this case actually a good thing. So it could be a really powerful way of bringing, you know, luxury and maybe also some more accessible luxury brands to the industry, especially with all of the different changes happening with other E commerce players. You know, we talked about essence, you know, a couple of. Well, I guess it's a couple of days ago now. It feels like weeks and then that's, that's obviously like a big part of it. But there's a lot of brands that might be looking for better representation. And you know, Netaporte has always had great branding and Utes as well. And I think it's got a lot of potential to be more than it is. Which I guess is the whole point of why mytheresa bought it in the first place.
- [19:23]
A
Yeah, and I think they did say that part of the plan is to have Mytheresa, net, a Porter, Mr. Porter, all kind of using the same E commerce platform, using the same warehouses, things like that, for efficiency purposes. So I'm sure that's part of this too. I just want to say quickly, it does feel like luxury E Commerce is a bit cursed. Like Farfetch has had a really wild ride over the last couple of years. There's layoffs at Net A Porter. Mytheresa, I think for a while was one of the few that seemed to really be doing well. And I still think Mytheresa, that part of the business is doing well, but obviously have some rocky terrain to manage right now. So I don't know, it just feels something about luxury. E Commerce feels like it's really hard to crack. And then of course the department stores also have their own world of headaches and stuff. So I'm like, maybe it's just direct to consumer is what's doing best for luxury brands, particularly the really big Ones like Chanel and Gucci and stuff. But I think that's all the time we have for the news section of our episode. Thank you for being here, Zofia. We're gonna take a very short break and when we come back, like I said at the top of the episode, I had a great conversation with Eugene Tatonikov, CEO of SwissWatchexpo, all about the state of the Swiss watch industry, which is undergoing quite a bit of change at the moment. So stick around after the short break to hear that. Is your brand's potential being held back? Bad data, Wasted? Ad spend? The wrong media mix? Lackluster creative? The that's where tenuity comes in. As a full service media agency, they're powered by a single idea. Love Growth, Hate Waste. Their brilliant humans use powerful technology to deliver clear strategies and results. Their tech will show you exactly what's working and hunt down what's not so you have clarity on what to do next. Get ready for the big bold growth your brand deserves. Tenuity. Love Growth, Hate Waste. Find out if your media strategy is working for you atlove growth hatewaste.com hello, I'm here with Eugene Titanikov, who's the CEO of Swisswatchexpo. Eugene, thank you so much for joining the Glossy podcast. It is so good to talk to you.
- [21:50]
C
Thank you for having me on. I've been looking forward to the conversation today.
- [21:53]
A
Yeah, I've been looking forward to it as well. I've talked about watches on the Glossy podcast. Tons of SwissWatchexpo. For those of you listening who don't know, online retailer of certified pre owned watches. Pretty big name in the luxury watch marketplace. You were telling me, Eugene, just before the recording that you guys have 3,000 watches on site in Atlanta, is that right?
- [22:14]
C
That's correct.
- [22:16]
A
So a lot of inventory. The Swiss watch industry and the luxury watch industry is one of my favorite topics within kind of fashion and jewelry and apparel to talk about. So much interesting stuff going on there. And I just wanted to talk to you, Eugene, about your feelings on the state of the watch market. Some of the interesting things we're seeing around which brands are kind of coming up, that sort of thing. But yeah, I just wanted to say at the start, you know, it's been really interesting covering watches for the last couple years. There was this big boom in the COVID years, then there was sort of a market correction. There's a lot of new people who are getting into luxury watch collecting. There's been big fluctuations in prices and in supply and now there's tariffs. There's just been a lot of, you know, changes in the industry from my perspective. But you're deep in it. Eugene, can I ask just, just a broad question like what's your feeling on the state of the watch market? Like what do you think is, what are some of the big things that.
- [23:07]
C
You'Re observing right now? We're definitely living in very interesting times. So as of a few weeks ago there was tariffs against Switzerland announced of 39% in which most luxury watches are manufactured in Switzerland. And that essentially has cut off the supply of new luxury watches coming in. SwissWatchexpo, my company, we specialize in pre owned watches and that has really lit a fire underneath the pre owned market. So all the demand that people cannot fulfill in the new market now because the supply has been cut off has been spilling over into the pre owned market. So it's become a release valve for all of this pent up demand. And we have seen prices going up, supply going down. To your point, we had 3,000 watches as of a few weeks ago. Now we're down to about 2,700 watches in the inventory. Hopefully we'll get back up to our usual inventory amount of 3000. But prices which have been falling for a couple years have now steadily going up every week. And it's just been, it's almost feeling, starting to feel like, you know, summer and fall 2020 when the manufacturers stopped manufacturing watches and the primo market was just on fire. I don't think the euphoria is quite there yet, but it's starting to begin like it's starting. And I think a few more months of tariffs being in place and it's going to be a scramble for inventory from everybody in the US market. What's nice is because we deal pre owned all our inventories already in the US so we don't have to somebody buying from us doesn't have to worry about tariffs.
- [24:56]
A
Yeah, well I'm glad you mentioned that 39% figure. From my understanding it is the highest or one of the highest tariff rates on any sort of more developed European nation. A lot of the really high tariff rates were on manufacturing hubs like Vietnam and China. And I think Switzerland was kind of caught off guard by just how high that rate is. I guess probably in part because I think he based it sort of on trade deficits. And the US buys a lot from Switzerland and most of its watches like you said. So I think the industry was all very surprised by that. There were some reports this week that the Swiss government is Looking to counter, offer and sweeten the deal a little bit, hopefully get that tariff rate down. I think their goal is like 15%, but even that is pretty disruptive to the industry. Like you said, 39% I think is severely disruptive to the flow of watches. But even 15% I would imagine would still have some of that same effect on the rate of new watches coming in and consequently the desire for the pre owned market. So yeah, I'm glad you brought that up. Are you already seeing an impact in terms of demand or in terms of supply or is that just something you're expecting soon?
- [26:06]
C
Yeah, our sales the last three, four weeks are about 25% higher than they were a few months ago. And I think a lot of that is driven by the tariffs. And anybody that wasn't a wait list for a new watch hoping to get it later this year, now they're skeptical they're going to get it. And if they do get it, they don't know what price they're going to get it at. Because just because you join the wait list at an authorized dealer at a certain price doesn't mean when that watch arrives in six months or nine months and if they even offer to offer it to you, it's going to be at the same price. So if they end up lifting prices by 20 or 30% to offset the tariffs, essentially everyone is assuming they're not going to get the allocation. If they're going to get the allocation, they might not want it at the new price. So they're spilling into the pre owned market. So like I mentioned, prices are already up 5 to 10% on some of the hottest sports models. And I think they're going to keep going up by another 3, 4, 5% per month until tariffs are lifted, which is a pretty big move in prices for watches in such a short period of time. I think the tariffs were primarily. My guess it's not about watches. I don't think the president has hopes to move watch manufacturing into the US the biggest export from Switzerland is pharmaceuticals, so. Well, I'm not an expert into pharmaceutical manufacturing. I suspect the tariff negotiations are going to be more around that and not around necessarily on shoring. Swiss watch manufacturing.
- [27:45]
A
Yeah, yeah. It would be very funny to have Swiss watches made in the U.S. but yeah, you're right. I mean in the last couple of weeks I saw ahead of the tariffs there was a lot of exports from Switzerland to the US Were up. There was, I think gold went from like less than 1 ton to like 50 tons of gold. I think was moved from Switzerland into the US So I think a lot of people were trying to get stuff out of the country before that kind of went into effect. Is it affecting all of the brands and sort of the whole watch, Swiss watch market the same? Are there certain subcategories, certain brands? I know gold prices in general have been pretty high and that's affected prices of like gold Rolexes for example. But are you seeing like a, or do you expect to see a blanket kind of impact across the industry or are there certain parts of the watch industry that you think might be affected more or less?
- [28:36]
C
Yeah, we're seeing the biggest impact into Rolex. It's kind of when there's this disruption. Rolex is considered the, it's the largest brand in the Prio market in dollar terms and there's kind of like a, a flight to quality. So everyone who is looking to buy a watch typically will now focus more on the, on Rolex watches. And we're seeing the biggest impact in the sports models. The GMTs, the submariners, the Daytonas, the stainless steel sports models are the ones that have been moving up the most in price and seeing the biggest demand jump. That's just in the, in the last, you know, four or five weeks or so before that, as you mentioned, would you know, gold prices at record highs. We sold, we saw a lot of watches made of gold go up in price but we haven't seen any significant jumps in demand there over the last four or five weeks.
- [29:32]
A
I want to ask you a couple other things that we can move away from tariffs specifically but I imagine it will kind of hang over the whole, a lot of the things we're going to talk about. But so if it comes up that's fine but want to just ask in general what kind of brands you're seeing as sort of up and coming. I spoke with some people in the industry recently about Tudor really blowing up on some pre owned platforms. Tag I think has had a lot of growth recently. Obviously Rolex is still and always will be a huge part of it. But anything interesting you're seeing in terms of what people are buying from Swisswatch? Maxwell?
- [30:10]
C
Yeah, I think the biggest surprise for me has been how well we've done with Cartier watches the past two, three years it's been one of our fastest growing brands and it just continues to be in the headlines and demand is growing. You know Taylor Swift who got engaged I guess yesterday or the day before, she was photographed wearing a very rare Cartier Santos Democell gold watch with a Diamond bezel. We actually were the only place in America that had it for sale yesterday when they published all these photos. So instantly we got 40 calls that sold within two hours of the photos online. And then. Yeah, well, we, we happen to have one. I wish I had more than one. The only one that we had sold. And then we woke up this morning with 70 people on the wait list if we ever get it again. Because we have online we have a wait list function for our sold watch. But in general we've seen Cartier has been our fastest growing brand the last three, four years. And it's just they're doing a great job and brand development, product design and just they're timeless classic watches. And the demand's been really, really, really strong for us. About half our business is Rolex, so it is the dominant player in the market. Rolex produces, I think 1.3 million watches a year, unit wise. And a lot of the luxury brands such as Patek Philippe and AP, they're between 60 and 80,000 watches a year. So the amount of units that Rolex produces is just so much more than any of the other brands. And then more entry level luxury watches, if you want to call it that. We've done really well with Omega. We've done really well with Tudor watches. I think Tudor watches, they're phenomenal. They're. It's owned by Rolex and they have somewhat more experimental design that is very attractive to especially consumers under 40. So we've done really well with Tudor watches as well.
- [32:15]
A
Yeah, I'm glad you mentioned that. I feel like recently I've seen Tudor designs, like you said, they're a little more experimental and I should say, just in case anyone doesn't know, they're owned by Rolex. So it's kind of the same family, but Tudor will sometimes do some more experimental designs and then you can see that kind of filter into Rolex, which they tend to be a little more, not as experimental.
- [32:36]
C
It often feels like a testing ground for Rolex and they'll test things in Tudor and without, you know, before they're ready to really make any tweaks to the main brand.
- [32:49]
B
Yeah.
- [32:49]
A
And the Cartier Santos is one of my, my personal favorites. But on the topic of sort of entry level, sort of luxury watch brands, I wanted to ask you about tag specifically. I feel like I've heard a lot of buzz. I don't even know, do you sell tag at SwissWatchexpo?
- [33:06]
C
We do. What's amazing with us is we really try to have the widest Selection, which I think we typically have the widest selection in the whole country under one roof. So right now we have 73 TAG watches in stock, which is pretty sizable, probably a lot more than you'll find in any TAG boutique.
- [33:27]
A
Yeah. So I wanted to ask you a follow up about tag. So for our listeners. TAG is owned by lvmh and I have sensed this desire from LVMH that they really want to be more of a player in the kind of like big luxury watch space. They've done some, some overhauls to Louis Vuitton watches, which I think tend to be more like sort of fashion watches as opposed to super high end Swiss watches. Tell me if you, if you disagree with anything I'm saying this is just my perspective, but I have, I felt that LVMH wants to kind of like be more of a competitor to like Rolex and Patek and that kind of thing. And TAG is probably their, their kind of most prestigious watch brand. But I don't know, do you get any of that sense from them? And have you thought much about Louis Vuitton watches?
- [34:14]
C
We've been doing great with tag, but we haven't, we have not carried the LVMH brand watches. We typically shy away from watches that brands that don't have a really strong history of holding their value because when we build a relationship with a customer, it's often for, for life. And they, whatever watches they're buying from us, it's very common for them to come back and want to sell us those watches back or trade them in, in future years. So we always want to be in a position that the watch that we sold them holds their value really well or potentially appreciates. Whereas brands that are, you know, trying to make a push or new into the luxury watch space, it's very hard to tell where they're going to be in five or 10 years. So we typically even stay away from independent brands that have done really well in the last few years. You know, it brings me back of the, you know, the Franck muller watches from 20, 25 years ago that were really hot and then, you know, we're selling at 5 to 10 cents on the dollar in the secondary market. And you know, we, we don't want to have that conversation. We want to work customers 10 years from now. So we really, really stick with the top 15 to 20 Swiss watch brands, which TAG definitely is in that set. But LVMH watches are not for us.
- [35:38]
A
Yeah, yeah. And it seems like it's pretty hard to break in to that top 10, top 15 space because it's so many of the brands are 100 years old or something. And like you said, I think the watch customer is often thinking in terms of decades. And so I think maybe in other, you know, in fashion, maybe it's a little easier for a brand to kind of come into the space and immediately, you know, get a lot of attention. Maybe in watches you can do that for a little bit, like you said. But I think a lot of the watch brands and a lot of watch collectors think in much longer terms.
- [36:12]
C
Yeah, I think it really takes 15 or 20 years of consistent demand and popularity until there's a lot of confidence from us that the brand will hold its value.
- [36:22]
A
Yeah. Can I ask a little bit about the demographics of, of SwissWatchexpo just in terms of one, one thing I've heard a lot about in the last couple of years, the post Covid like big watch boom. A lot of people said there was a lot of younger people coming into, you know, watch collecting, getting into it for the first time. I'm wondering if like the conditions of the market might be reversing that a little bit, going back to kind of like the typical watch collector, which is like an older, wealthier person. I have no idea if that's true, just my kind of theory. But do you see any changes in terms of who's buying the watches? I imagine you have lots of clients you've worked with a long time, but any changes?
- [37:00]
C
No, it's, it's about 60% of our customers and web traffic are consumers under 40. And I think part of it is that watch collecting. And you know, we're a Digital first retailer. 90% of our sales are online, even though we have a retail showroom in Atlanta. But younger consumers are just much more comfortable shopping online. I have a seven person sales team that spends their whole day on FaceTime and Zoom calls with collectors from all over the country. And you know, so we tend to attract a very, a lot of our Clientele are under 40 years old. They're digital savvy. What's interesting about the younger consumer and luxury watches is the velocity of their collection is much faster. Older consumer, you know, they have that, a lot of them still have that mentality, you're buying the watch for life and maybe pass it down to your children, which, which is great. Nothing, nothing wrong with that. And I think it's a beautiful thing. But the younger consumer, they don't even think about it that way. They're literally buying it until, until they Decide that they want to sell it back or trade it in for something else and move on. And they tend to turn over their collection much, much more often than an older consumer would.
- [38:27]
A
Yeah. And it's interesting because it kind of still feels like both of those customers, the person who wants to hold onto it for decades versus the person who might sell it in a year or two, both of them still want a watch that's going to hold its value. Like it feels like that's still, you know, an important element kind of regardless of how you're kind of what your relationship with your collection is over time. Do you feel like that's, that's always going to be true?
- [38:54]
C
Yeah, that's accurate. I mean if you're spending 5, 10, $30,000 on a luxury watch, you, you, you want something that's going to hold its value. Otherwise it's, it's. And that's, I think that's. The pre owned market has really developed so much in the last 10, 12 years. With all the information online, people realize that pre owned watches hold their value very, very well. Which I think has actually created a lot of demand for new watches and not necessarily the other way around. So having a very developed pre owned market with lots of information, lots of price discovery, consumers understanding the value, that the pre owned watches are really an asset, they do hold their value well, actually allows the brands to sell a lot more new watches.
- [39:52]
A
You mentioned that Rolex makes probably over a million units per year. First off, am I correct that they don't officially put that number out? Right. That's kind of an, an estimate.
- [40:02]
C
Yeah, that's estimate from industry groups. I think the last estimates around 1.3 million units per year.
- [40:08]
A
It's interesting that I feel like people often talk about like Rolex, Patek and AP kind of like the three top dogs, but two of them, two of those three make far fewer watches than one of them. And I feel like the traditional thinking is that supply and demand are sort of proportionate and if you've got a lot more watches that would affect the demand. But it really does. It feels like Rolex transcends that and is like it's still there's massive demand even though they're making way more. I don't know. Do you have any thoughts like what, why, how come, how can Rolex basically get away with that is what I'm asking.
- [40:43]
C
Part of it is I think they are just one of the top consumer brands in the world, period. Not just in the luxury watch space. I remember they did a Survey, I think seven or eight years ago, you know, it was Apple, Rolex, Nike, you know, Rolex was a top 10 consumer brand period, globally. But also because Rolex has such a wide collection, they use the watches that are extremely hard to get, like the Rolex Daytona, which they don't produce in large numbers at all. And yeah, they're weightless, usually are years long to allow them to sell more entry level watches like the Datejust and Oyster Perpetual and so forth.
- [41:29]
A
Cool. Last couple of things I want to ask you, I'll ask you just like a broad one and we can go wherever you want to go with this. So we talked about tariffs. That feels like obviously a huge challenge for, for the watch market, challenge, opportunity, whatever you want to call it, both for the brands for the pre owned market and for the, for the consumers as well. Is there anything else that you feel like is sort of a big hurdle or just like a thing that the industry is wrestling with? It could be on the brand side, on the pre owned side, maybe it's just tariffs is the biggest one. But I don't know, does anything else come to mind as like something that's really kind of rocking the boat as.
- [42:06]
C
Far as right now? It's definitely tariffs. That's what everyone thinking about. I mean I talked to the head of a major Swiss brand last week and he confirmed they are not planning to import any new watches for the rest of the year, which is the fact he told me that says a lot. The tariffs are impacting the market a ton. But I think the watch brands have done a great job evolving with the times and appealing to the younger generation. I think 15 years ago there was this fear that the average consumer was older and male and the Swiss watch industry might not be relevant to the new generation. And what are Apple watches going to do to demand to Swiss watches? Well, Apple watches are kind of like the gateway drug on your wrist where it's not a luxury watch but you're now used to wearing something on your wrist and then you might consider buying a luxury watch in the future. And, and they did a good job of the brands, did a great job of appealing to celebrities, new influencers. So you know where the younger generation's looking for inspiration. You'll often see the same brands that have been around for over 100 years on the wrists and I think that's amazing.
- [43:28]
A
Yeah, it is. Like I said at the top, it's a fascinating industry. I can tell a lot of times when we do a podcast about watches or when I write about it on the site. I think it resonates with a lot of the Glossy readers and listeners too. So we will definitely be doing more coverage of it. And Eugene, we'd love to have you back on again in the future. So thank you so much for being here.
- [43:49]
C
Thanks, Danny. Thank you for having me. I enjoyed the conversation. Like I said, if you want to make it a day and come to Atlanta and see some watches, hope we can make it happen.
- [43:57]
A
Yeah, let's do it. And thank you for listening to the Glossy Podcast. Don't forget to give us a rating and a review on Apple Podcasts or Spotify wherever you listen to this because that helps us out so much. And don't forget to subscribe to the Glossy Podcast to hear interviews with industry insiders and we can review segments where we break down the news. The new episodes come out every Friday. Until the next time. Thanks for listening.