Authorized Watch Dealers: Doomed?

Jaeger LeCoultre limited edition Polaris (courtesy jaeger-lecoultre.com)

Fancy Jaeger LeCoultre’s Limited Edition blue Polaris?  You can buy it direct from Jaeger. The only requirements are . . .

your credit card and personal details. Win- win?

By cutting out the middleman and data capturing you, JLC wins. They can provide a more consistent customer experience, which increases brand loyalty, which sells more watches. And eliminates dealer margins, earning JLC significantly more money per watch.

Customers win by getting a more consistent customer experience. JLC’s operators are standing by, ready to give you the 411 on all their products and help you make use of their new eight-year warranty.

The only ones who see this as bad news: authorized JLC dealers. if nothing else, the more watches JLC sells to consumers, the less watches JLC dealers sell. Or service. Are JLC dealers looking at extinction?

The dealers I spoke to don’t think so. They contend that their high-end watch business is protected by their personal relationships with the customer and the “look and feel” factor. Consumers want to try on a luxury watch, several watches, before they buy. And many want financing.

Advantage dealers?

To entice online/telephone sales, JLC offer customers a 30-day money back guarantee. Then again, the friendly woman at JLC’s call center informed me “You have 30 days to send it back if you don’t like it, but it has to be unworn with all the tags and stickers intact.”

What’s more, “we will look for microscopic scratches.” (Watch gloves not provided.) Still want JLC to send you a Polaris to see if you like it? Pay up first. Full retail. Equally daunting, JLC doesn’t finance the purchase.

So the dealers have a point. But these are not insurmountable problem. JLC could dispatch demo watches. Financing is a strong incentive for any high-priced purchase, a big profit center in and of itself. Why wouldn’t JLC sort it out?

Keep in mind that JLC isn’t alone in its online sales and service push. Expect all of Richemont’s watch brands  —  A. Lange & Söhne, Azzedine Alaïa, Baume & Mercier, Cartier, Chloé, Dunhill, IWC, Giampiero Bodino, Lancel, Montblanc, Officine Panerai, Piaget, Peter Millar, Purdey, Roger Dubuis, Vacheron Constantin and Van Cleef & Arpels — to head down the same road. Omega’s right there with them.

Not Rolex. The Swiss behemoth has stated outright and in no uncertain terms that it has no plans to get into retail sales, either actual or virtual. You could almost hear their dealers’ collective sigh of relief.

Meanwhile, on the boutique brand level, the online watch business has gone mental. Fueled by dealer-free margins and cheap Instagram access to new buyers, dozens and dozens of new companies are starting up. Kickstarter-born brands are being financed in days. None of them have a retail outlet.

This non-bricks-and-mortal watch sales total doesn’t include online sales of smart watches, products that don’t seem to need the “look and feel” sales process, and don’t have a significant returns issue. Amazon’s selling millions of them.

When the Internet was born, purveyors of high-end luxury products — from cars to properties to jets — claimed no one would buy big ticket items without prior inspection. Wrong. Jaeger’s online direct-to-consumer marketing strategy will prove the point.

Think of it this way . . .

I live in Austin. My nearest Jaeger LeCoultre dealer lies two to three hours away in the traffic-choked swampy city of Houston. Would I buy a Polaris straight from JLC if I could sample a demo watch first and finance the purchase?

I would. Would I feel comfortable sending my Polaris back to the factory for service? I would.

High-end authorized watch dealers will still do OK in urban centers, but their days as the sole purveyors to horological big spenders are done. That’s especially true if manufacturers take the next big step: lower their direct-to-customer prices to undercut dealers. Brand suicide? We shall see.

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