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- [00:00]
Julia Alom
Hi and hello, watch fans and welcome to another edition of the Real Time show. With us, your in house provocateur, David Vaucher calling in all the way from beautiful France in Fontainebleau. And me, your friendly neighborhood Julia Alom and Joseph calling in all the way from my beloved Amsterdam. We're here for another Q and A session. Rob is too busy, but I don't mind because I have a lot of fun jamming with David. David, how are you today?
- [00:28]
David Vaucher
Well done. Doing very well. I know I sound like a broken record, but anytime I get to talk watches with someone equally passionate, it's a good day. So super happy to be here with you.
- [00:37]
Julia Alom
As we discussed on one of the previous Q and A sessions, sometimes good designs, you just stick with it. Good intros are good. We love stability at the Real Time show. So how's everything on your end of things and did you ponder about our previous episode? We got great feedback in the TRTS community, so thank you. Dear TRTS fam. We love the feedback, we love the passion. Did. Did it linger with you?
- [01:05]
David Vaucher
It did. So much so that I wanted to ask you a follow up question based on that show and you actually use the perfect word to lead into it, which is stability. So can I run with that question, please?
- [01:16]
Julia Alom
Sure thing. So you're basically adding your own question to the mailbag, aren't you?
- [01:20]
David Vaucher
I am. Hopefully I don't get penalized for that, but I think, I think this will be an interesting question for everyone and as always, if you think this terrible idea, let us know. But I think this is a topic that a lot of people in watches want to talk about and that's stability. So we've talked at length before about, you know, new designs versus old designs and why is it that the industry tends to stick with certain icons. So let's talk about Audemars Piguet and Royal Oak. So you mentioned in one of the last episodes that we, that we recorded that Patek Philippe's campaigns don't really have like a Halo watch. And that's in line with their recent strategy. They're trying to downplay the Nautilus. And you said it was a little bit of a jab at AP and the Royal Oak. And so as you were saying that when we were recording the show, I was thinking, okay, so let's say that Rolex only sold datejusts for example. Right. My feeling is that they wouldn't be huge like they are now. That's just natural. They have less to sell. But I think they could still do pretty well just selling datejusts. Like there seems to be an insatiable appetite for datejusts. So my question to you, Alon, is, is it really so bad that AP really only leans on the Royal Oak? If in fact, that seems to be working pretty well for them. Like, do you see an end to that?
- [02:42]
Julia Alom
Yes, yes, yes, yes, yes, it's bad. Yes, I see an end to it. Yes. I think it's stupidity. It's getting high on your own supply. It's bad business decisions. I. I think it's stupid all around. I salute Cheristan, owner and CEO of Patek Philippe. I It shows grandeur, it shows guts, it shows vision, it shows long term strategy. Everything in life is cyclical. Nothing stays the same. And although we salute and hail Rolex for the fact that they are stable, minor changes, no revolutions, all about evolution. But let's be realistic. Everything evolves, everything changes. So Audemars PK has endured. It's independent, it's family owned, family run, they're not publicly listed. Very cash rich, very profitable. They've never had a growth like they had before. And yes, it's thanks to the Royal. But come on, how can you rely on one sole horse in your stable? I mean, any company doesn't rely on just the founder or the CEO or the leader or the MD or whatever. You always have contingency plans. So obviously Audemars woke up. They're not stupid. I mean, they created the code 1159 and I loved it from the beginning. They got a lot of heat for it when they launched it. I think it's amazing. And yes, it's different. I just regret the fact that it's a nod to the Royal Oak because the middle case of the middle shape of the case of the barrel of the case is octagonal as well. And so what are you saying? AP is all about octagonal shapes. You don't need to. You made amazing watches. You have an amazing back catalog. You are a true manufacture means you have independence and you have creativity. You can do more. I've. I've said in one of the previous episodes that I do salute the fact that they are trying to venture out and they made an oddball shape. I believe it's called the Re mastered. So. And the leader of the owners of the families that own Audemars Piquet is, I believe is Jasmine. Audemars is a lady. I'm happy. And most probably she put her foot down and she said, I want a lady at the helm. After a alpha male running Audemars for almost two decades. So Ben Hamas, I'm referring to Beni Hamas. And he did a great job. But as an alpha male, I think he got high on his own supply and his testosterone and he just ran with it. But it doesn't prove, in my humble opinion, long term vision, which Cherry Stern does, and maybe that says it all. Apartek Philippe, it's the owner that runs the company. And Ben Yamas was, I mean disrespectfully just an employee. So. And he probably got incentivized by bonuses based on sales figures. So you create a self fulfilling prophecy, don't you? So I can go on for hours, but do you want to rebuttal, David?
- [06:35]
David Vaucher
Yeah, because I just, you know, as you were, I was listening to what you were saying and I agree with it all in principle. But then I was thinking, okay, what other companies have design icons? And I think when you talk, you know, watches, there's several. I think when you talk cars, it might be fewer. But the one I could definitely think of is the Porsche, Porsche 911. And it's like if Porsche only made the 911, could they keep going? And I think, yes, they probably could. Because as wild as it is to me to imagine having multiple cars, I think there's people who would definitely buy a 911 every time it came out. And Porsche has riffed on the 911 with several iterations. So you got the, you know, the base model, you've got the Turbo, you've got the GT3 and so on and so on. And so it seems to work for them. But then I also think like, okay, if you have one icon, wouldn't it be better like Porsche to also have other things that sell really well? And I think of in this case, I'm going back to watches now. Omega, Omega has the Moonwatch. They have the Seamaster 300M, they have the Moon Swatch. And so I suppose that my view on my original question would be that if AP continues to only sell the Royal Oak, I think they will do fine. But I also think that they would gain in credibility and sales because I think they're a business at the end of the day, if they had at least one other icon, I think one point I'll make before turning it back to you. And I have one follow up question I know you're gonna be interested to answer, but the thing I'll say is that so much of culture today, even now where hype has kind of subsided, is that it's driven by celebrities. And just watching, you know, some recent events, I still see so many celebrities wearing Royal Oaks. I mean Serena Williams is a regular wearer. John Mayer was just signed up as kind of like I think a design liaison. So it seems like celebrities still haven't gotten their fill of the watch. And because of that, I don't know that we have quite seen the watch finish its run in the public sphere. Public sphere in the way it has the last couple of years. What do you, what do you think about that?
- [08:56]
Julia Alom
First of all, Porsche would have never have a hockey stick growth graph if they wouldn't. If they would have stuck to the 911. Think about the Cayenne so SUV types and the Panamera four door and going full electric, et cetera. So I respectfully disagree with you. That being said, Audemars did it solely on their 9 11. So that is actually a big achievement. So I do salute them. From a business case analysis. Now Omega is beautiful that you've went there because every family within Omega could technically be a spin off into a brand like Martin Clocker did with the Sherpa for any car. So imagine that somebody takes the Speedmaster, makes it a brand, Seamaster, makes it a brand, deville, makes it a brand concession and they can. So that's very impressive what Omega did. And credit goes to Ashley man, because he's maybe one of the longest sitting CEOs in the watchmaking industry today. And I have a very high esteem of him as a person and a CEO. So that's interesting. And taking that as a case study, Adama will fall out of fashion. To answer your question about celebrities, it's a balloon that's being blown up. It might not happen today, it might not happen tomorrow, might not happen in five days. But tastes change and they're becoming so expensive that they're less accessible as a brand as well. So. And regarding this celebrity thing, I don't know because we also have to analyze. They've pivoted in their business strategy and setup. They went full mono brand structure. So they don't have independent multi brand retailers anymore. They do work with retailers still because some of the AP houses are run by retailers. So they've not abandoned the model of wholesale. So they sell into retailers that run a mono brand as a franchise or a joint venture. So they still believe in retailers and to support their retailers. But I don't know many brands that relies solely on one model. Not in the car industry, not in the watch industry, not in the jewelry industry or whatever luxury sector. Let's take Vitra, for example. They are a bit, I guess, the Rolex of the furniture world because they have old, famous designs. Think of the Eames chair and they keep on making it. But they have many heroes in their collection, so I don't know. I hope that answered your question. I don't want to ponder too long, but maybe you want to counter once more before we go to an actual real mailback question, because you're hijacking the show. David.
- [12:19]
David Vaucher
Sorry, sorry. Okay, one question I'll ask you, and maybe only one word suffices and we'll talk about it more if the listeners want us to. Do you think that because they are only based on their success is only based on one model, do you think they should be considered part of the Holy Trinity? My answer is no. What do you think?
- [12:37]
Julia Alom
That's another white paper you can write? Because I've asked in a previous episode to write some white paper. So my question is A, how they are coming along and B, will you add one to your to do list? What makes a brand a Holy Trinity brand? So off the bat, in my humble opinion, you're a Holy Trinity if you are highly skilled as a brand, meaning you are a manufacturer with the link to doing a lot of the metier d'art in house. So Jaeger Lecoultre seems to be kicked out of the Holy Trinity, but it was always in there because they were one of the few manufactures that literally did not only calibers in house design and manufacture make cases, but they would have enameling, goldsmiths, diamond setters, leather, I don't know. But for me that's very important. So Vacheron Constantin also has a lot of metiers in house, so they were originally also in there. I believe Patek was in there. It seems that people have different definitions for their top three or the Holy Trinity in watchmaking, because often Rolex, Patek and Audemars kicked in there. I believe that people that categorize those three as a Holy Trinity simply look at output of sales. So the number of watches not sold in quantity, but the turnover created by these three brands. So if you look at. And nobody knows, because Patek's numbers are not public, Rolex numbers are not public, Audemars, because numbers are not public. Although Ben Yamas has been bragging how much he sold. So looking at three single brands that sell the most annually, it's these three. But for me, and maybe I'm too old school, the Holy Trinity was comprised of those three brands that can make the most exceptional watches. And I'll add a sentence to the definition being all round. So a lot of different types of watches, complications, metiers. So diversity. So I've already said in a previous episode, that's why I salute Patek. They don't want to one trick pony, a single hero in their product tell different. Different designs, different complications, different finishes, different price ranges. They're all over the place, it seems. So Patek is in there. Always was in there, and definitely for me is in there and takes the first spot. Then in my humble opinion, Rolex, in my holy trinity, is not in there. Vacheron and maybe Jaeger. So to answer your question, Adama, for me is not in there. Although at a certain point they were going there because they created. You remember the concept watch.
- [15:45]
David Vaucher
I do, yeah. I do remember that.
- [15:47]
Julia Alom
And that made them invincible. But since you don't see those crazy complications anymore, and it seems they've been surpassed by MBNF and Ulwerk and everybody. So I think they dropped the baton in the race. So, no, for me it isn't. And although I want to go to the next question, I have to ask you. So what's your holy Trinity?
- [16:14]
David Vaucher
So I've always assumed there was a traditional definition, which was Vacheron, Patek and Audemars. I will have to consider very carefully whether or not I write a white paper on this, because I suppose I'd be torpedoing my chances of ever working for some of these companies again in my life if I said this, but I think Audemars Piguet has always seemed a little bit of the, the, the odd duck out of the three because of what we've talked about, which is that even though they're clearly capable of doing absolutely incredible things, to me, the fact they don't have the breadth of. Of reach and of models as, as Vacheron or, or Patek does, I, I think kind of leaves them out. I mean, if I were going to replace them, I think JLC would be the natural candidate. Yeah, I just. As much as I think from a business point of view, my, My hypothesis is that they can live off of the Royal Oak. I think from a prestige point of view, it, it does kind of hurt them a little bit. So my, my holy Trinity at the moment would be, yeah, jlc, Vacheron and Pateka. I just don't think AP has a. Has a spot there at the moment.
- [17:20]
Julia Alom
So you're basically concurring with me.
- [17:22]
David Vaucher
I guess I am. Cool. Yeah, I guess so.
- [17:25]
Julia Alom
Wow. But, you know, I Don't kick out Audemars Piguet because of the royal oak. It has in the end not so much to do solely with the fact that every watch has an octagonal bezel and an integrated bracelet. It's. They used to make way more complications and crazy movements and ideas and keep on innovating and pushing the envelope both on design and techniques. And they also did that in the millinery and they did it in the Jules Adamar collection. And they do still today have perpetuals. But I mean, let's be realistic. What is the most innovative thing they think they did is blue ceramic Royal oaks or open works skeleton tourbillon. I mean it's not that innovative. Frosted gold finish on the gold cases, which actually is very cool and not done enough by watchmakers. But okay, so and, and, and, and let's not forget these high jewelry crazy cuff watches for ladies that they used to make which were amazing. So I guess they became a bit lazy. So I hope that we'll see a new era for Audemars contending to take the spot in your and my definition of Holy Trinity. So Audemars, if you want to talk to us, we would love to interview you. Talking about changes. I want to use this as a segue, a message we've received on LinkedIn by Jacques Jordan. JJ he asks a very short question. What do you think of the changes of Ad Ho Dinky?
- [19:19]
David Vaucher
I think we could just go ahead and call this episode of the Real Time show the most controversial ever, because I think we're going to be saying some controversial things. Not, I wouldn't say not offensive. We never want to be offensive. But I think this, this definitely calls for a little bit of stepping out on a limb. So maybe I should start, and I'm looking forward to hearing this from you Alon. But maybe I should start with when I started reading Hodinkee because I think that will sort of establish why I think I can talk about this. And I remember very clearly the first time I read Hodinkee. So my career started in 2006 when I graduated university. I did a little bit of a pivot and went back to the field. So I worked in, I work in oil and gas still. And at the time I was in the field and I was in the field in Saskatchewan, Canada. So kind of the middle of nowhere. And I was killing time in a hotel room waiting for this job to start. And I had this idea like I'm a professional now and I have some money so I should get a nice Watch and this was back in May 2010, so a long time ago. And as it does for everyone trying to get into watches, you know, your. Your search kind of starts two places, so Google and Amazon. That's where I started. And very quickly when looking at Google, I came across Hodinkee. And Hodinkee at the time, as everyone can imagine, was. Was a very different site than where we are now. So I want to pause here. Alan, what was. What was your first experience with Hodinkee? Do you remember when that was exactly?
- [20:55]
Julia Alom
I don't know. I don't remember the year. But most probably a few months after Ben Climb started writing, posting. He came on my radar very quickly. In my humble opinion, Ben and Hodinkee became mythical because I loved the talking Watches videos. So ironically, it was not so much the writing that did it for me, but the videos. And maybe I'm skewed because I'm good friends with Robert Diambur. So I've been literally following him and supporting him from day one. I was the first AD to advertise with a banner on his blog. I know Frank very well. Also dear friend from Monochrome. So actually we have two behemoths in the Netherlands. So Hodinki seems and a lot of people think it's the number one either in quality or quantity of. Of traffic. I I love sjx. I think he goes deeper and more technical. I love Ariel Adams and a blog to watch because they go wider. So if you have to categorize all our colleagues, Podinky is high end. I don't know if they'll write about Tissot. I'm not quite sure. Maybe they do, but let's say they focus on mechanical more high end. I love a block to watch because I guess that's the most democratic meaning they'll write about any watch everything. So maybe they're the only ones that literally covered the whole spectrum of watchmaking. Revel of course I love as well. I used to read that as a physical magazine. They excelled in photography. And I love Waco as a person and a writer. He's very. How should I call it? He very vivid in his writing. He creates images when he writes. In my head, SJX is very technical. Monochrome is focused very much on the Indies originally. Also technical and Fratello. I love the fact that they kind of are very blunt and honest. So that's a landscape Now I guess JJ's question refers maybe to give an intro for those that missed Hodinki at a certain point got investors on board, I believe Kevin Rose was one of the first. He's in Silicon Valley. Tech entrepreneur, loved watches, did a little investment. John Mayer, who was I believe maybe the first guest on Talking to Watch, but I'm not quite sure anymore. Huge watch nerd, became friends with Ben Clymer, also invested. And several rounds down the line of investments. One of the most prominent and maybe controversial investments is the investment arm of the Arnault family and therefore of LV Mage that they also invested in Odinki. I believe that at a certain point there was 40 to 60 million poured into Hodinkee. They became a retailer. First they did collab, so they sold their own Collab watches. So that made them a retailer. Then they became an authorized dealer for watch brands, started selling pre owned. With that money they also bought I believe Crown and Caliber. So they had a second retail outlet. Ben Clymer, the founder and CEO, stepped down, stayed I guess as an advisor and now he's stepping back in because Houdinki wasn't doing well. That was reflected in the fact that they went back from 150 plus employees down to 60. There was a rather critical article in the, I believe Wall Street Journal or Financial Times, but I think it was Journal. And Ben is back, I believe he's CEO now and he published an article on Odinki a while back that big changes are coming and they're going back to their forte, which means journalistic writing about watches, whatever that means. Right. Because if you sell watches, are you independent? So that's something that I always discuss with Rob and you and also with our TRTS community. So I'm very curious where this goes. He's given hints in between the lines. Less pre owned. No more emails pushing you with discounts to buy watches. It doesn't say if they'll stop retailing. I think it would be stupid because they have a cash cow there with their collabs. They still do very well. So what are your thoughts? Where do you think Hodinkee is going? And B, where do you think they should go?
- [25:56]
David Vaucher
So, you know, as you were talking, it got me thinking of some of the key points in Hodinkee's life. So I really think of a couple. The first one was, and I don't, hopefully I haven't messed up the order, but I think first they started selling straps and kind of various accessories, which sounds like not a big deal at all today. But back then I think probably 2011, 2012 was a very new thing. They then decided they were going to start selling pre owned Internally, that was another big change. That of course was the Crown and Caliber acquisition and then some of these other various changes that you talked about. But I think what's important to mention is that in those early kind of years, Hodinkee was doing a great job not only at trying some of these new things like the introduction of accessories and really trying to monetize their blog, but the other thing they did really well was they came up with an aesthetic. And the aesthetic isn't anything groundbreaking, right? It's like mid century furniture, a nice clean font. It's classic cars. You know, they had a point where they were selling dead stock and maybe they still do, but they were selling dead stock accessories. Like I remember seeing a pair of vintage Cartier sunglasses. They even had a couple collabs early on with, with Drake's. They had some kind of collaborative ties. And I think that's another thing kind of separately is they were collabing before everyone was doing it and they were collabing outside of watches. And this was all playing into their aesthetic. And that is hugely important because I totally agree with you Alon in terms of the landscape that you described. So monochrome. A blog to watch sgx. I read all of them for the same reasons that you do. But I think that the very clear difference between those outlets and Hodinkee is that they do not have an aesthetic. They have a. What's the word? Like a core kind of competency, but they don't have an aesthetic. And that aesthetic worked two ways for Hodinkee because on one hand I think it really propelled them ahead of everyone. On the other hand, I think it led them down this path of oh, we don't have to just do watches anymore, we can be a lifestyle brand. And in trying to do that, I think they made a couple of missteps. The first one being that I don't think they really. They seem to not have a clear focus. Like if you're going to do lifestyle, then why did you double down on pre owned by buying Crown and Caliber? That seemed like kind of splitting your resources and going to battle on two fronts, if you want to put it that way. So now they're in this really awkward position of they have tried to differentiate themselves from everyone else. That doesn't really seem to have worked out. And they're trying to come back in to the journalistic landscape at a time when everyone else has already evolved. Like SJX today is very different from sjx 10 years ago. Same with a blog to watch everyone's got collabs going on. And of course the watch market is different. We're now on a downswing. So if you're asking me what do I think of the changes, I think that they are necessary to the extent that there's numbers that you and I can't see. Let's say they need to make a change. I think it's going to be difficult though, because you know, Alan, you and I have talked about this in the background, which is that they still have LDMH money. They have investors, have to satisfy those investors with revenues. And I don't really see a path just doing journalism. And even with LE right. I mean, maybe the LEs are more successful than we know, but how do you keep those investors satisfied when you basically said we're going to cut some of these revenue streams off, what do you think?
- [29:31]
Julia Alom
I click on two things. You said they have an aesthetic, but honestly, today they're all seeing 12 in a dozen. They all are like black, white, very clean cut, own photography, own videos, own podcasts. It's a mix of recycling press releases and hands on reviews. And they write their own content and they're all doing it more and more. But what is Hodinkee's aesthetic then and how does it differ than their peers?
- [30:03]
David Vaucher
I still think there's a difference. I mean, I would say again, it's probably, and that's the difficulty here for them is that it is less pronounced today because as you said, they are a dime a dozen today. I mean, it's like if you tell someone I like classic Porsches and Eames chairs, they're going to be like, okay, congratulations, you have a lot of money, but maybe not a lot of original taste. So I think that's the difficulty, right, is that the aesthetic is there, but it has not really changed. It's not changed. Sort of at the speed that Hodinkee has moved forward, if that makes sense. So while Hodinkee was trying, and I think we can agree failing on some of these ventures, everyone else was catching up. And so now they find themselves having to gain back customers. And as you and I know, Alan, like, gaining a customer is very expensive compared to keeping a customer around.
- [30:50]
Julia Alom
True. And we totally forgot to mention time and tide as well. But. But maybe let's dig deeper. I salute Ariel Adams. He's the only one who's never sold a watch. S. Jakes did one, two or three collabs, but actually stayed away from it. We at the Real Time show have never sold content, never had advertising money. We've underlined with the feedback from our community that that's what they appreciate and don't want us to do. So we listen very, very carefully to our community, but the overhead is rather high. So to have a bit of restitution of our costs, we said we'll co design watches that brands will sell. So we're not selling anything with that. We think that we are very independent and objective. And that begs a philosophical question. Can anybody or is anybody ever truly objective, as the truth is in the eye of the beholder? So the problem is the watch industry is in dire need of true objective journalism. But that's the core of the problem. The watch brands don't want it and don't permit it. So they either don't like criticism or they always want to steer the narrative. So I understand that all these blogs that today are online magazines and today are actually big companies because they have a payroll of almost all of them of at least five to 10, 15 people. So that's a huge overhead. And to make money, yeah, either you need to sell more ads is strangely enough, whereas big media outlets have different kinds of advertisers, you hardly see any ads on these publications or outlets that are not watch brands. So I don't understand why car brands don't advertise on these favorite blogs of ours or liquor or furniture or et cetera.
- [33:15]
David Vaucher
Totally agree. And I think, you know, Alan, when. When you and Rob and I have talked about, you know, ideas and just to reassure the listeners, these are just ideas, but for. For advertising, I think the. The only ones that we seem to settle on are some of these other brands because the. The demographics kind of overlap. So that's the win for the advertisers, and it's a win for us because it's not. They're not really products that we talk about. So we don't have to. We don't have to sort of sacrifice our objectivity. So I totally agree with that. I want to go back to what you said about a blog to watch. Like, I don't know, Ariel, that well. I mean, we've spoken a couple times in the past. But I will say, like, that's a very good example, because when I first started looking into watches, Hodinkee was, I think, number one. But a blog to watch came up almost immediately afterwards. And I remember thinking at the time, like, what is. What are they doing? They need to be like Houdinki. Because the site was just chaotic. It was just watch after watch after watch. But I think in hindsight, there's two things. The first one is that there is no doubt in my mind that Ariel, he isn't it for the watch it. Like there's a series that I've talked about before on this, on the show he was doing during the pandemic and everyone was kind of confined and on YouTube he spent days just going over every single one of his watches and it was endless. It was endless. And it just kind of spanned the spectrum of watches from super affordable to less affordable. But you could tell he owned and cared about each one of those for a reason. And so as time has gone by, he's basically done the exact same thing, which is like, no, I like watches. I'm going to cover as many of them as I possibly can and that is going to be my reason for being here. And it looks like it's worked out. I don't think that a blog to watch has ever had a crisis of identity like the one that Hodinkee is currently seeming to be having now. Would you agree with that, Alan?
- [35:06]
Julia Alom
Very much so. So it's interesting analysis and I, I totally agree with you. I think we can fill the whole hour on this topic, maybe rounding up notes. I wish both Ben, everyone at Hodinki the best, compliments that they are pivoting. And I'm very much looking forward to A more videos and B for more independent written articles about watches with opinions. So I think that's what the market very much is looking forward to. Any other final thoughts on that?
- [35:51]
David Vaucher
Nope. I think that was a very nice. I think, I think that's. Yeah, I think ultimately if Hodinkee does well, we all do well. It's a, it's a big name historically and the more great content we can consume, the better off we are. So I totally mirror those sentiments.
- [36:05]
Julia Alom
The honor is yours to pick the next one from the mailbag.
- [36:09]
David Vaucher
Dear David, all right, okay. So Alan, you wrote earlier in the year a very well received article on multi brand dealers versus sort of ads. And obviously you're perfectly positioned to talk about this. So we have a question here from COM, who is one of our dedicated contributors to the WhatsApp channel. Of course, dedicated listener. He asked the question, which brand do you think will come back from brand owned boutiques to multi brand ads in the next years? And then there's a follow up question here. Is there a real appetite from customers for a brand boutique experience or is it mostly motivated by higher margins and better control of the distribution?
- [36:49]
Julia Alom
Thank you Kom for your question. I'm not objective. I am A retailer. I'm an independent multi brand retailer have been forced by many brands to open a mono brand as a franchise for them or I'll lose the dealership. Well, those that know me well know I don't own a monobrand boutique and that have lost all these brands. So I guess that says it all. Because we didn't open these boutiques because we A don't believe in them, B we don't like them. So that being said, I think that two brands that did a hardcore deep dive in pivoting from dealerships with multi brand independent retailers towards fully mono brand are Lange and Cern and Audemars pk. I think they'll come back from that. And Audemars PK is tricky or sneaky because those that know the market very well and or the US market, they know that material good in New York is an AP dealer but they are in a joint venture with Audemars pk. So it shows that they don't themselves totally believe in 100% mono brand retail for their brand. So I think that Hadamar is strong enough to run, I call it the Louis Vuitton model. So fully verticalized for now. But I've said in the last few episodes in this one that I think that AP will come down after a meteor meteoric rise. So that will force them as well maybe to reconsider that retail strategy. Moving back, Langston, in my humble opinion, I don't think they're strong enough as a brand to fully thrive and survive on a mono brand retail. They say themselves that demand surpasses supply and that's why they're doing monobrand. But I have a different theory and this is a theory and it's my personal opinion there's nobody's opinion. I don't have facts and this is not per se. Everybody on TRTS opinion, I think they were too weak. The brand was discounted too much and therefore to cut discounts they cut the network of retail meaning bye bye independent retailers that used to give the discounts and therefore pushing all sales into a funnel of mono brands where in theory they say never discounts are given, which of course is a fable. And all the hardcore collectors know that mono brand boutiques nowadays give discounts. So those are the first two that pop into my mind. Two other brands that did the same, by the way, while I'm talking and it jumps into my head are Raich and FP Journe. They did the same, but those two brands literally don't have enough production and the demand really surpasses supply. So I don't think those two will come back from it. I won't mention names out of respect for these brands, but I had three, four brands that left us at age jewelers and said to us ah, don't worry, we think it's a mistake, they'll come back from it. Now my answer is it's too little too late because it has a domino effect. Watch brands usually want brand environment. In German we say umfelt so it's a domino effect. They I I call them sheep, they behave like sheep. They'll come on board if that brand comes with you, if you open a new location or if you don't have enough high end brands, then they won't come. So in one sense I do understand that. But sometimes it simply lacks vision of the brands to partner up with retailers. So that means that these big groups, the brands that left us I my answer to them is guys, if you leave now, it has a domino effect. It has a spillover effect. That means that if you go two, three will follow suit because you're an anchor brand and if they're gone you'll, it's a self fulfilling prophecy. You'll tell me you don't have the brand environment so I can't come back if you catch my drift. So I think things are being broken, glasses are being broken that can't be mended. So either they need to be molded back into new shapes. So I think that retail anyways is not done evolving or actually revolutionizing things. A lot of things are changing. I see also more and more press releases about all the big groups opening mono brand boutiques on cruise ships. So they're killing a lot of retail in the inner cities and high streets and they're going there. We see of course that just E Com is not so much the holy grail, especially on a mono brand level. So for pre owned it works for independent retailers, mono brand model, sorry a pure player model meaning just ecom. Look at our dear friends at the limited edition in the uk. They're basic, they don't have a physical boutique or showroom. But it works because they educate the consumer. So you can see models that work. Think about our friends of collective horology in California. Same story. They don't have a physical presence. So I think very interesting times regarding comms. Second question, is there a real appetite for consumers for a brand boutique experience or is it mostly motivated by higher margins and better control of distribution? Not to be too pessimistic and negative Honestly, the initial mono brand boutiques, I understood why they were being formed. Let's take our beloved Amiga, for example. Probably that's the brand in the manufacturer level of things that has the biggest catalog of products with references skus out there. There is literally no retailer in the world that has all of them in stock. I dare to put my hand in the fire, as we say in Dutch. It's the saying. So I dare to put the money where my mouth is and take a bet that there is no single mono brand boutique of Omega in the world that has every reference in stock. So A, that's a bit idiotic, but B, it underlines why I do believe there is a space for monobrands in this world. Because if I as a consumer, let's say, love Nike, I like to see all of them in one place. Think of Nike towns. I had a beautiful example recently. I have a very beautiful Oakley Sunglass limited editions. The lenses literally are worn out, scratched, the coating bubbled up because I have them so many years and they had. Then there are a lot of UV rays. So I went to my local optician, tried for four to six weeks to get lenses from Luxottica. Couldn't get them. I went to another optician. Same story, third optician, same story. Authorized dealers were Oakley. Yes. Couldn't get them. And Oakley is owned by Luxottica, like Cartier is owned by Richemont. I went to one of the main streets in Amsterdam with the kids. Suddenly I see a Oakley mono brand boutique which I didn't know even existed, walked in. I said, I have this in this model. I didn't have it with me. Can you replace it? They're like, yeah, sure. I said, but are you sure? Three opticians told me they can't authorize Oakley dealers. I said, no, we can. We have them in stock. I'm like, okay. She's like, if you want test it, pop your lenses out at home and see if you can pop them out or the models too old. I tried it at home, work. I went the next week to the store and they indeed on the spot replaced the lenses in front of me and had different options. So it shows the added value of a Monomeran boutique. So that's a good experience. But going back to the watch world, I believe 95% is driven by higher margins and as com puts in better control, it's mostly driven by margin and greed. The 5% is marketing. Yes, you do want to a have one place where you can experience all the collection. Although brands push independent Retailers to buy an X amount of watches, usually 80% is dead weight. Right? So the 2080 rule, 20% of your collection will generate in rotation 80% of your turnover. So the other 80% of your collection is dead weight. And often either you can't get rid of it or you need to discount it or you need to beg on your bare knees that they'll take it back with a write off or trade it or swap it for other collections. So Those are my $0.02 on this topic. Do you want to share your vision, David? I'm very curious to hear yours.
- [47:18]
David Vaucher
Well, certainly not. It's. My view doesn't come from experience. I mean obviously this is something you have huge amounts of time with. I would only say from my point of view, I think that if a company is saying we must go all in on one strategy at the expense of another, I don't know that I agree with that and I like working with data. And this must be just a huge place to work because the main trade off is basically is the additional margin that you're gaining worth all of the overhead that you have to. I mean, geez, like, you know, I live close to Paris. I can't imagine what some of those boutiques are paying just in, in rent alone, you know, for the, for the real estate. So my, my impression, actually I think you had a good example with, with Long and zoom because they are not in the same sort of hype boat, we'll call it as ap. But I also think that my view on this is probably because I just don't play in that space. I mean my personal view is that all of these stores and Allan, you probably have some stories here, have like two, maybe three whales like on speed dial and someone's calling them every time a new watch comes out and they're like, yep, just go ahead, you know, send it to this particular place, it gets paid full price and that pretty much covers everything for the month. Right. So I think that there's just some things I don't understand that contribute to this. The other thing too is maybe some of this just gets chalked up to marketing or. Right. Like some of the costs that you have to eat. It's almost part of the marketing budget. So there's definitely brands for which it makes sense and others for which it doesn't. I mean, I live again near Paris. Dubai is a big, a big multi brand retailer. I don't see why Tudor would have any issue with, you know, their watches being sold there rather than setting up a boutique. But Then also for a brand like ap, I can sort of see how they'd want the prestige that comes with withstanding by themselves. The one other thing I'll say before sending it back to you is you mentioned Nike. Now I don't follow them too closely. I, I own some stock in them which hasn't done very well recently. And I think part of that reason is they have also. And Alan, you're bigger into sneakers than I am. I think they've tried to reduce distribution to, to third party retailers. They're trying to centralize some of that at least maybe for some of the more prestige models. And I don't know that I understand that because Nike can sell Monarchs in sort of your regular sporting goods store and they can also sell Jordans and consumers can differentiate between the two. Like Nike plays on all price ranges without really seeming to suffer. And that's not really a luxury that watch brands have. They have to kind of stick to a price point. Is that something that you've noticed as well?
- [50:03]
Julia Alom
Yes. And Nike is an interesting case study because if we need to create analogy to the watchmaking industry, I believe that only the Japanese work in Nike's model, meaning they have a huge brand elasticity so they can cover a huge range of prices and quality and get away with it under one brand name. So Seiko, Citizen Casio or G Shock, they do the same strategy. How does Nike do it? You have different tiers of retail accounts. The most wanted is tier zero or Pinnacle is where you get the most limited Jordans, Nikes and the collabs with the call it the Virgil Ablohs of this world. So you need to be eligible to get a certain accountant to buy it. Psycho. Up until a few years ago, Grand Psycho was just a family within the brand. Credor was always separate. So let's call credor the tier 0 or pinnacle from Nike because it's only sold in Japan. So you can't even get it out of Japan if I'm not mistaken today. Still that's the case. Grand Cycle under huge pressure from the Europeans in the Western brand managers and account managers and managing directors, they've made that a spin off brand. So today Grand Psycho is a brand but they apply the same dealership strategy as Nike. So within Seiko also you can have, let's say the entry level, the Seiko Fives and Quartzs and whatever. Then you have the Presage, you have the Aston, you have. I even forgot the name. So the European brands or the Western brands don't operate that way they have a tighter segment of pricing that they can handle. So I am more in favor of that. I think that Nike was better off creating a different label for their cheaper stuff and Jordan is a separate brand. So they've spun that off. A while ago they own, they used to own, or they still own Converse and they had Kohan as well, if you remember. But I think that spun off, that's a spin off company. So I don't know if that answers your question, David, but I think that Nike has been suffering because of the same thing that I've blamed watch brands and Audemars pk. They've been doing too much of the same, didn't innovate enough, became too much of a lifestyle brand, whereas they used to be a performance brand, if you catch my drift.
- [53:12]
David Vaucher
Yeah, no, I mean, I think ultimately what I think we're settling, settling on is that it's very much case by case and it seems to me just hearing what you're telling me from your experience at the retailer, Alan, is that there's a little bit too much and again, I personally do not know how these decisions are made, but it seems like there's a bit too much of we should do it because everyone else is doing it rather than just really looking internally at your own strengths, weaknesses, desires, et cetera and making those decisions, you know, based on that. Would you agree with that?
- [53:48]
Julia Alom
Definitely. So, and it's actually shocking how much we've agreed on this episode. So on the one hand, thank you David and thank you dear listeners for the questions. We'll promise on the next one we'll create more fireworks and some clashing and definitely on the article analysis episodes. We're sorry that we actually didn't pick that many questions from the mailbag, but don't let that prevent you of filling our mail bag more. We promise the next ones robnuts will jump back on in case you've missed him. If you haven't missed him, just put in a request that David and I do more of these Q and A episodes. David, thank you again so much for an awesome episode.
- [54:35]
David Vaucher
Thank you, Alan. This is a great one.
- [54:37]
Julia Alom
And thank you, dear listener, for taking the time to listen to this episode. You can find all our previous episodes on our official website, WW therealtime Show. You can also find us on the gram at therealtime show. Basically the same as our URL. If you want to support the show, please do subscribe, like it, rate it and share it with your friends. It sounds awfully lot that we request from you, but you have no idea how big of a favor you'll do us if you do that. We're independent, we're not sponsored, we hardly have revenue. So if the quantity of downloads goes up, you're actually helping us. And with that we can invite better guests on the show because some brands and some guests actually ask us how many downloads we have. Otherwise they don't come on. So if you have any other questions, you want to share, feedback or you have criticism, please do send us a message. And if you want to be part of the TRTS community, also send us a dm. You can find David on instagram on his handle at Davao Rob you can find obnudts and meolo n b e n Joseph if you prefer to send an old school email, just type our first name add therealtime show. Same like our IG handle. Stay sane and keep on ticking.