Empty stores

[Submaster1675]

It had been a while since I had visited Audemar stores in Paris (2 stores and 3 resellers).
I walked around it on Saturday. In total, I saw 4 code 11.59 and 1 Royal Oak 33mm.
While chatting with an AP store salesperson, he told me he hadn't received a shipment since June. With humor, he told me that he was going to sell the displays soon and that I could get on the list ...

What a change in 1 year when it was still possible to "easily" have an Offshore

[maecenas]

Yep, same story in Beverly Hills, except they have nothing at all… and yet AP is in the process of opening 3 more boutiques in the US concurrently (including one an hour away in Costa Mesa). At this point I don’t know if they’re stockpiling watches at the moment for some reason, or what. Opening more empty stores doesn’t sound like a good plan…

[Snilsson]

Same thing in Chicago

[Images and Words]

Originally Posted by maecenas

Yep, same story in Beverly Hills, except they have nothing at all… and yet AP is in the process of opening 3 more boutiques in the US concurrently (including one an hour away in Costa Mesa). At this point I don’t know if they’re stockpiling watches at the moment for some reason, or what. Opening more empty stores doesn’t sound like a good plan…

I was told by one of the Euro boutiques that the CEO wants watches in the boutiques for people to try and hold (sounds like similar to Rolex where I came across boutiques like the Frankfurt airport that were fully stocked with show pieces). Doesn’t mean it will be easier to buy. Also (and this is a speculation) AP will cut off as many ADs as possible to bring more inventory to their boutiques and avoid that wholesale margin. Lastly, I was told each AP boutique will have a territory and they will not be able to sell to customers outside of it. So no more tourist purchases, etc. All in all good moves imo.

[Mini2]

Originally Posted by Images and Words

I was told by one of the Euro boutiques that the CEO wants watches in the boutiques for people to try and hold (sounds like similar to Rolex where I came across boutiques like the Frankfurt airport that were fully stocked with show pieces). Doesn’t mean it will be easier to buy. Also (and this is a speculation) AP will cut off as many ADs as possible to bring more inventory to their boutiques and avoid that wholesale margin. Lastly, I was told each AP boutique will have a territory and they will not be able to sell to customers outside of it. So no more tourist purchases, etc. All in all good moves imo.

Good move when times are like this but the times we are in have never been round before. Im sure this 'territory' thing will only be for hot pieces and stuff which is hard to move I'm sure will happily be sold to a tourist.

Getting rid of wholesale is crazy IMO

[Xerxes77]

Same told me and my AD

[Reign]

Originally Posted by Mini2

Good move when times are like this but the times we are in have never been round before. Im sure this 'territory' thing will only be for hot pieces and stuff which is hard to move I'm sure will happily be sold to a tourist.

Getting rid of wholesale is crazy IMO

It’s a high risk, high reward but given the demand it could pay off. It allows AP to directly interact with clients. The risk is that they take on a lot of OpEx and CapEx but this is somewhat mitigated (at least in the US) by joint ventures.

At the Manhattan boutique, they’ve converted the back to show some museum pieces since there’s no inventory for the main room.

With regards to the empty displays, there is no conspiracy theory, the demand is many multiples above their supply. There are many buyers for all references and the CODE has really built its own following

[Dabbadon8]

Westtime in Miami is empty. Someone literally bought the display over sized non functional movement. They have some cuff links. Nothing else.

[Sulituan]

Originally Posted by Reign

The risk is that they take on a lot of OpEx and CapEx but this is somewhat mitigated (at least in the US) by joint ventures.

Then at the same time they should save on the cost for wholesale/ distributors right? Does anyone know out of $1 how much of it goes to the distributor, in case they use one?

[Mini2]

Originally Posted by Reign

It’s a high risk, high reward but given the demand it could pay off. It allows AP to directly interact with clients. The risk is that they take on a lot of OpEx and CapEx but this is somewhat mitigated (at least in the US) by joint ventures.

At the Manhattan boutique, they’ve converted the back to show some museum pieces since there’s no inventory for the main room.

With regards to the empty displays, there is no conspiracy theory, the demand is many multiples above their supply. There are many buyers for all references and the CODE has really built its own following

When you take into account high cost of fitting out stores, rents, staff cost does the margin they save on pieces being sold at wholesale that good.
To try and go in it alone and take full control just sounds crazy and greedy

[texasmade]

Originally Posted by Dabbadon8

Westtime in Miami is empty. Someone literally bought the display over sized non functional movement. They have some cuff links. Nothing else.

Well when people ask "How do I build a relationship when there's nothing to buy?" we just got our answer.

[Mini2]

Originally Posted by texasmade

Well when people ask "How do I build a relationship when there's nothing to buy?" we just got our answer.

Apparently you don't need to buy to have a relationship.........
But I think its more like picking up a hooker, you get the goodies when you pay the monies

[Reign]

Originally Posted by Mini2

When you take into account high cost of fitting out stores, rents, staff cost does the margin they save on pieces being sold at wholesale that good.
To try and go in it alone and take full control just sounds crazy and greedy

Pros for consumers: no back door AD games, direct interaction with the brand

Pros for AP: in theory higher margins, directly speak with end consumers vs through an AD, more control over client experience

Cons for AP: upfront store fit out costs, ongoing OpEx, higher / longer working capital needs given the need to hold inventory until the watch is sold vs selling after production to an AD

The model works now since watches are flying off the shelves but this won’t last forever. The real test will be when they need to hold more inventory.

I personally love dealing with Corporate boutiques and refuse to deal with ADs due to the rampant bundling. All my comments apply to the NA market btw

[barracuda28]

Same thing for the Vegas store, not even codes on display.


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[mjm700]

squeezing out the ADs works so long as demand stays like it is. But it's a crazy world for luxury good - whether watches, homes, boats, cars - demand is huge and supply can't keep up. We have all been talking about it for a long time. But will it last? Always a cycle, right? I think it's important to take care of customers and business partners when times are good or it will come around in the end. Of course if an AD is not operating appropriately there should be action taken. I AM NOT SUGGESTING AP IS DOING THE WRONG THING OR HAS THE WRONG MOTIVES, but I think you have to be careful not to ignore what could happen on the other end of the cycle. There is no AP boutique anywhere close to me - if that is the only place to buy then it could have an impact. Just saying.

[GreenLantern]

Originally Posted by mjm700

squeezing out the ADs works so long as demand stays like it is. But it's a crazy world for luxury good - whether watches, homes, boats, cars - demand is huge and supply can't keep up. We have all been talking about it for a long time. But will it last? Always a cycle, right? I think it's important to take care of customers and business partners when times are good or it will come around in the end. Of course if an AD is not operating appropriately there should be action taken. I AM NOT SUGGESTING AP IS DOING THE WRONG THING OR HAS THE WRONG MOTIVES, but I think you have to be careful not to ignore what could happen on the other end of the cycle. There is no AP boutique anywhere close to me - if that is the only place to buy then it could have an impact. Just saying.

[cascavel]

Originally Posted by Mini2

Apparently you don't need to buy to have a relationship.........
But I think its more like picking up a hooker, you get the goodies when you pay the monies

Probably more interesting to "bundle" in that market than in watches.