What the World’s Most Expensive Watches Can Tell Us About the Future of Retail

You know things have changed when the watch-maker’s watch mak­er Patek Philippe starts sell­ing its prod­ucts online. Patek Philippe, like sev­er­al of the world’s high­est-end, exclu­sive watch brands, has only ever let you buy one in person.

It guards its brand so close­ly that you have to prove your eli­gi­bil­i­ty to buy. Even then, first-time buy­ers are only allowed access to entry-lev­el mod­els. It’s a brand that exer­cis­es com­plete con­trol over the cus­tomer expe­ri­ence, because when your cus­tomers are spend­ing a min­i­mum of £10k on a watch, you’d bet­ter make sure they get a decent cup of coffee.

In a way, Patek is an exam­ple of how a brand has always retained a direct-to-con­sumer (DTC) approach, side­step­ping the con­trol and pow­er of retail­ers. Patek’s autho­rised retail­ers oper­ate pure­ly as an exten­sion of the brand. Cus­tomers vis­it them for the watch, not for any other.

Times are changing: the future of retail

But now, you can buy Patek watch­es online. Accord­ing to the watch­mak­er, it’s a tem­po­rary sit­u­a­tion, and it seems unlike­ly that even a world­wide slow­down will per­ma­nent­ly end the exclu­siv­i­ty of the brand’s buy­ing experience.

Nev­er­the­less, it’s an ear­ly indi­ca­tor of what we can come to expect over the next few years. After all, it’s been a while since retail has been the_ only_ chan­nel for brands. Post-coro­n­avirus, it might not even be a chan­nel for many.

With so many peo­ple con­fined to their homes, and with most phys­i­cal retail closed, cus­tomers are increas­ing­ly look­ing to shop online, giv­ing many busi­ness­es the oppor­tu­ni­ty to re-eval­u­ate their dig­i­tal set-up (or lack of). Buy­ing habits are chang­ing and, for some, may nev­er change back.

For retail­ers espe­cial­ly, dig­i­tal com­merce has become a top pri­or­i­ty. Dur­ing this peri­od, engag­ing your cus­tomers with respect and authen­tic­i­ty is more impor­tant than ever. Now is the time to estab­lish or build on con­nec­tions with your cus­tomers, and there are many brands out there already doing it.

Breaking free from the retail mould

Sports sun­glass­es brand Sun­God has an extreme­ly devot­ed fol­low­ing. Part­ly thanks to the pric­ing, which pitch­es a guar­an­teed-for-life, fit-for-the-moun­tains prod­uct at the same price point as a pair of mass-pro­duced fash­ion glass­es. They’re also sig­nif­i­cant­ly cheap­er than a pair of Ray Bans.

DTC com­pa­nies such as shav­ing brand Har­rys and flower deliv­ery busi­ness Bloom & Wild have report­ed a con­sid­er­able surge in demand for their prod­ucts. As more con­sumers get used to these sub­scrip­tion mod­els, it’s going to make sim­i­lar offers from retail giants seem increas­ing­ly less attractive.

Of course, sell­ing direct-to-con­sumer has its own risks, and brands can sink as fast as they rise. Mahabis sold smart woollen slip­pers at £70 a go, turn­ing over £25m in 2017 and mak­ing £2.5m prof­it three years after launch. It went into admin­is­tra­tion at the begin­ning of 2019, due to a com­bi­na­tion of ris­ing mar­ket­ing costs and a man­age­ment dis­tract­ed by takeover bids.

Now under new own­er­ship, Mahabis is back to mak­ing the same prod­uct and still sells direct, but its fall from suc­cess has prompt­ed many to ques­tion the sus­tain­abil­i­ty of DTC brands.

Typ­i­cal­ly, DTC brands start with a busi­ness mod­el rather than a prod­uct inno­va­tion, are fund­ed by pri­vate equi­ty, and enjoy rapid growth – but keep­ing them going once demand peaks can be tough. The increas­ing cost of social media adver­tis­ing – often the go-to chan­nel for DTC brands –has also prompt­ed spec­u­la­tion about their future.

These are seri­ous con­cerns, but they’re most­ly oper­a­tional, fail­ing to observe the basics of run­ning a busi­ness (debt, cash flow, sup­ply of and demand for your prod­uct, etc), and shouldn’t dis­tract brands from the fact that soon, there’s going to be lit­tle excuse for not let­ting cus­tomers direct­ly inter­act with you. They expect it, now more than ever.

There’s no deny­ing that coro­n­avirus is prompt­ing busi­ness­es like Patek Philippe to change how they work. But with change, comes oppor­tu­ni­ty. It’s not the way we would have wished it to hap­pen, but if we can emerge with a bet­ter idea of what cus­tomers want, and how to give it to them, we might be in a bet­ter place than we were before all this started.

As the sit­u­a­tion with COVID-19 quick­ly unfolds, Adobe is com­mit­ted to giv­ing you the sup­port and resources to nav­i­gate this chal­leng­ing time – learn more.