Author |Gao Jianghong.
Edited |Zhang Weixian.
Source丨Visual China.
Recently, the Competition Administration, the French antitrust regulator, issued 91.6 million euros (about 7 yuan.) to the Swiss watch giant Rolex$200 million) for prohibiting retailers from selling Rolex watches online for more than a decade.
Rolex declined to comment on the penalty decision.
Over the years, Rolex has been active in the French luxury watch market, marketing its watches through a network of exclusive authorized independent retailers. However, Rolex grants retailers the right to distribute their products under the Rolex Selective Distribution Agreement, which requires that the Authorized Dealers' sales methods be limited to in-store transactions and cannot be sold by mail order or on e-commerce platforms.
The French Competition Authority argued that Rolex's terms with retailers constituted a vertical monopoly agreement that restricted competition, and said that an absolute ban on the sale of its products was unjustified – after all, "sales of luxury goods, including watches, have been booming for the past 15 years".
*Why is Rolex going against the wind amid the sales boom?
Online sales of luxury goods are booming
Affected by the new crown pneumonia epidemic, online sales of luxury brands have become hot. Jean-Christophe Babin, CEO of Italian luxury brand Bvlgari, revealed that during the epidemic, the online platform has become the number one sales channel in Bulgari's stores around the world, with sales increasing by more than 100%. As more and more luxury brands open online channels, sharing online dividends is becoming an inevitable choice for these brands.
In 2021, despite the gradual return to normal of the physical distribution network, we observed that the online sales of luxury goods did not decline as a result, but maintained double-digit growth, which also means that this shopping model has completely become a consumption habit of customers. Jo Lle de Montgolfier, executive vice president of global consumer goods and retail at Bain & Company, has notedSince 2019, the online channel for luxury goods has doubled in size, and it is expected that by 2025, the online channel will become the main channel for luxury distribution, accounting for 30% of the total sales of the entire luxury market.
According to Deloitte's Swiss Watch Industry Study 2022, global shutdowns and store closures are still having a negative impact on the Swiss watch industry, with some brands experimenting with online sales. For example, many luxury watch brands have chosen to open their points of sale on Chinese online platforms, such as Bulgari, Cartier and Zenith.
In addition, about half of millennials and Gen Z have made it clear that they prefer online shopping to offline shopping. More than a quarter of Chinese respondents believe they are most likely to buy a watch from a brand**, the highest percentage of any country surveyed.
In the 2023 research report, Deloitte pointed out that 62% of brands and retailers surveyed believe that offline sales will continue to dominate in the next five years, depending on the ** segment. In the high-end** segment of more than CHF 15,000, 73% of respondents made it clear that offline sales will maintain their dominant position, while in the lower and mid-price segments below CHF 15,000, sales are likely to outperform offline sales in the future.
The 21st edition of the Global Luxury Market Study, jointly released by Bain & Company and the Italian luxury association Fondazione Altagamma, also pointed out that the line between single-brand stores and e-commerce will be further blurred in the coming yearsThis will push brands more to achieve and strengthen the "omnichannel 30" strategy. In the future, more and more international brands will choose to partner with leading e-commerce platforms to expand their online reach, while others will continue to work hard to develop their official websites.
The era of omnichannel has arrived.
Rolex is going to bow to online channels?
Rolex has said that the ban on ** sales is to maintain the brand image and combat counterfeit products and parallel**.
One of the major characteristics of luxury consumption is that the value of the product is much higher than the value of the product itself, and the premium is often filled by the experience and service provided by the brand to the consumer. Supporting the huge premium space of luxury goods is the exclusive service and exclusive experience of high-net-worth customers in the process of offline store visitsThis is contrary to the fast-paced, high-efficiency e-commerce.
At the same time, as luxury brands must control the distance between "availability" and "desire", they must be extremely strict in terms of distribution channels and systems, and scarcity is the top priority. However, e-commerce is a large-scale business, and the underlying logic of the two is naturally very different.
For a first-tier high-end watch manufacturer like Rolex, the cake sold online seems to be small. However, Rolex has not made any attempts in channel sales, but has other plansTargeting the second-hand resale online market.
Rolex has previously launched a pre-owned watch certification program, which officially authorizes the brand's official dealers to sell ** certified pre-owned Rolex watches with a new two-year international warranty. Allowed** and certified pre-owned watches are subject to the condition of "sold for at least three years". This program allows authorised dealers** to sell pre-owned Rolex watches, giving Rolex more control over its products on the second-hand market and assuring consumers that they are buying**.
The growth of the second-hand market is outpacing that of the new watch market, which is an increasingly obvious trend in the high-end watch industry. According to McKinsey**, the global pre-owned watch market will grow at an annual rate of 8-10% from 2019 to 2025, with sales set to reach between $29 billion and $32 billion. By contrast, the new watch market will grow at an annual rate of 1% to 3% over the same period, with sales expected to be between $52 billion and $59 billion.
Eventually, every premium watch brand will want a piece of the second-hand resale deal. Why not?Do brands only want to control the experience, value, status, and authenticity of new watch sales?Today, the second-hand market is growing rapidly and has developed into a market that has a significant impact on the industry. Anita Balchandani, senior partner at McKinsey & Company and head of luxury and fashion EMEA, said that second-hand resale platforms may be a viable new venture for Rolex.
sfc
Editor: Zhong Hailing, intern: Xiao Nan.
21 Jun recommended reading
McDonald's, about to raise prices?
Shanghai Disneyland: Internet celebrity program resumes operation.
prada4.$2.5 billion to buy a house!Luxury giants frequently make moves, what signal?