t’s a tough time to be a brick-and-mortar retailer in America. But to be a brick-and-mortar watch retailer is brutal. Malls are dying, store traffic is down, e-commerce is up, grey-market watch sales are booming, and authorised Swiss watch sales are tanking.

“The Unites States remained weak (-5.9%) in the first half [of 2017],” the Federation of the Swiss Watch Industry reported in July. “The situation there has not improved for more than 12 months and for the time being there is nothing to suggest that the outlook will brighten soon.”

So, why does one of the U.S. watch industry’s most experienced consultants say that the future of embattled multi-brand, brick-and-mortar watch retailers is “better than ever”? Because they will soon expand into to e-commerce. That’s the view of Steven Kaiser, founder and CEO of Kaiser Time Inc., a watch and jewellery consultancy in New York City. Kaiser has worked in the U.S. watch business for 35 years. In 1982, he joined the family business, David G. Steven, Inc., which distributed Baume & Mercier watches in the United States. Later, when the Richemont Group set up its own Baume & Mercier subsidiary in the U.S., Kaiser served as CEO for six years. In 1999, he left Richemont to set up Kaiser Time, first as a watch distribution company, then as a consultancy specialising in the U.S. watch and jewellery markets.

Europa Star met with Kaiser at his office in New York City to discuss the future of watch retailing in America. Kaiser says the most important development is the coming embrace of e-commerce by Swiss watch brands and their authorised retailers.

The dominant trend in watch retailing in America will be “brick-and-click,” he says. “It’s evolving that way. The future is bright for the strong independent jeweller in conjunction with e-commerce. I don’t see brick-and-mortar and the internet as against each other. I see them as supplementing each other.” Increasingly, so do Swiss watch companies and their authorised dealers. The current slowdown in the U.S. is concentrating their minds – and changing them – about e-commerce. Not everyone who shops online is looking for a deep discount, Kaiser argues. “There are intelligent customers who want to shop online in addition to shopping brick-and-mortar. We are losing business as an industry because that customer cannot purchase watches the way they want to.” As a result, they either buy a watch from an unauthorised online site, or they buy a different luxury product online.

“I think the majority of customers still want to purchase luxury watches within a store environment. But there is an increasing percentage who don’t,” Kaiser says. “Let’s say the percentage is 10% to 15%. That’s enough for a retailer to see a decrease in traffic. We as an industry need to service that customer as well. If they want to purchase online, the industry must provide a luxury online shopping experience for them.”

A tipping point

The U.S. watch industry is at a tipping point on this matter, Kaiser says. Consumers are forcing the issue. They already buy luxury products online from fashion and accessory brands and from watch and jewellery retailers like Tiffany & Co. and Cartier. Those two iconic brands sell watches and jewellery online with great success, Kaiser notes. “Why does it have to be mutually exclusive? I think the consumer will continue to force the watch industry to adjust, which is going to make it better. Ultimately we all work for the consumer.”

Savvy American jewellers also want e-commerce sales. The challenge is the partnership with the brands and their authorised retailers, Kaiser says. Both parties need to work together to effectively sell luxury timepieces online. “Brands need to provide the content and retailers need to provide a luxury experience to their customer equal to the experience in the store.”

Swiss watch brands are getting the message. Top brands in the U.S. are currently working with top watch retailers on ways for authorised multi-brand jewellers to sell watches online. Kaiser declines to give details, but behind the scenes there are a several initiatives underway, he says. “Influential brands are doing their homework. They’ll come up with solutions that help the industry move forward. The industry is responding to these changes slowly, but that’s all right.

Historically the industry moves slowly. But it always adapts.” That’s what makes him so optimistic about the future of brick-and-mortar jewellers in the U.S. “In five years, we won’t be saying anymore, ‘Am I going to be online?’ or ‘Is e-commerce going to hurt my business?’ No, we’re going to adjust. Brick-and-mortar and online will coexist.”

The future

Kaiser summarises his vision of the future of luxury-watch retailing in America in three points.

 1. There will be fewer, but better, stores. “There are currently too many jewellers in the market. We have way too many stores,” Kaiser says. However, America’s Swisswatch slump (Swiss watch exports to the U.S. are in the third year of a downturn) is culling the herd of watch retailers. The result is a shakeout that will eliminate weak jewellers and leave the best ones in a stronger position, Kaiser says. “Nobody escapes the business cycle. It’s a tough market. We are in a low cycle, but it’s changing. The strongest retailers, who continue to incorporate online into their businesses, are going to do better. Their future is huge.”

 2. Watch retailing will be multi-platform. As the industry adapts to e-commerce, watches will be sold through a combination of brick-and-mortar and online. Brands will be able to sell direct to consumers through their boutiques and their own e-commerce sites as well as through their authorised retailers via their brick-and-mortar stores and e-commerce sites. This will enable consumers to buy watches wherever they want. “It will work synergistically,” Kaiser says. “Some people will buy online, some in the store. Some people will educate themselves online and buy in the store. Some will educate themselves in the store and buy online.”

 3. The majority of watch sales will be done by multi- brand, brick-and-mortar stores with an e-commerce option. Watch brands may well have their own brickand- mortar boutiques and their own e-commerce sites. But those platforms won’t match the volume of a brand’s retail jeweller network, Kaiser predicts. “Brand boutiques are great for PR and marketing. But if you look at the U.S. market, very few brands do really well with their own boutiques.” As for brand e-commerce sites, “Some brand loyalists will go there. But the significant part of a brand’s business is with multi-brand retailers. Most consumers want to shop in multi-branded stores. The majority of the business will continue to be at the independent jeweller level.”

Kaiser is aware of new forms of watch retailing cropping up in the U.S., like luxury-watch rental services and retailers selling luxury goods, including Swiss watches, in luxury apartment settings. The U.S. has always been a crucible for retail experiments, Kaiser says. Some work, some don’t. He cites TV shows like the Home Shopping Network and QVC, which have proved successful for some watch and jewellery brands.

Inevitably, though, they are small experiments in a giant market. “Nobody is really reinventing the wheel,” Kaiser says. Such niche retailing amounts to “a little here and a little there, but it is not significant.”

The big opportunity in the U.S., he says, remains with a national network of retail agents. In a country with six time zones, they know their local markets and have the confidence of the local consumer. “If I owned a brand today, I would work with my retail partners.” Kaiser says. “There are certain things that nobody can do to match the independent jeweller. The good ones offer service, selection and experience better than anybody.” Kaiser says most Swiss watch CEOs understand the importance of retail partners in the U.S. market. That won’t change as the market shifts from brick-and-mortar to brick-and-click. “Brick-and-click,” he says. “That’s the future of the luxury watch and jewellery industry.”