Panerai consolidates its retail network by focusing more on boutiques
In an interview with The Edge, Milvin George, managing director, Officine Panerai, Richemont Group, Middle East, shares the company’s expansion strategy and growth potential of the Gulf Cooperation Council (GCC) market.
Tell us about your distribution model and presence in this region.
We have over 66 boutiques all across the world in major cities such as New York, Paris, Los Angeles, Hong Kong, Dubai, and Doha. In the GCC, we have 11 boutiques, and if you exclude India and Lebanon, we have nine boutiques.
We also have about 10 points of sales in the GCC. So in term of distribution, we are very niche. We do not have a big distribution channel and we have to follow our business model. Today, we do not have enough watches to supply.
We work with Ali Bin Ali who is the operator of Panerai boutiques in Qatar and Saudi Arabia. We have three boutiques with them in Doha, Jeddah and Riyadh. We work very closely with them, in terms of the image, uniform, how to receive customers and deal with them – all these managed by us through the training that we give throughout the year to the boutique staff.
Moving forward, what would be your expansion strategy?
We have presence through two distribution channels – standalone boutique and multi-brand stores. Panerai staff manages standalone boutiques where you have the maximum number of watches available. As you know we do not have enough supply, so when you commit to a boutique, it means you also commit to making sure that there is a complete collection on display or available in the boutique.
While we are streamlining the number of points of sales that we have. The idea is to consolidate our retail network by focusing more on boutiques.
For the 2016 – 2017 financial year, we have a couple of boutiques on our horizon. These are all linked to the opening of brand new malls. So whenever they are ready to give us the units – it could be next year or just the beginning of the year after – we will open our boutiques. In terms of the locations, we are looking at Saudi Arabia and Qatar for expansion.
What has your performance been this year, and what are your expectations for next year?
In this financial year that ends in March, we hope to meet our target. We are going to close the year meeting our budget and exceeding it despite an economic slowdown everywhere. What is happening to us is that today we are able to fulfill the waiting list in an easier manner. We still have the waiting list but it is not increasing in size. So it is realistic for us at the moment.
2016–2017 will be the year to really further consolidate our retail network, maintain the boutiques that we have and probably renovate some of them. We will focus more on strengthening our customer relationship management (CRM) in boutiques, training our staff and raising the bar. It is better in these tough times to push ourselves even more, and enhance service levels to customers. It involves approaching them, be it through communication, advertising, online presence or when they are in the store. It is also time to streamline the multi-brand network that we have, maybe upgrade and personalise some corners and of course opening new boutiques.
How do you approach the design and technology development for your brand?
I would say it is been really a journey of a lot of work in terms of working on the brand, launching the brand worldwide, working on introducing the first watch movement in 2005 after opening the manufacturing facility in 2002 in Neuchatel in Switzerland. So today we have more than 20 calibers, 20 movements in Panerai. It is quite impressive for the short period of time.
If you are going to claim that you are a watch-making brand, then you have to have a strong backbone – own manufacturing facility is a must. So that you can produce your calibers and movements, and have a full control over the research and development (R&D), assembly line, and all the testing that each watch goes through. You need to have all these things under the one roof and managed by you.
How much customisation do you do for your customers?
We have introduced a special edition watch for Qatar and Saudi Arabia. It is called Luminor 1950 Sealand (PAM00849). This special edition watch is personalised with a beautifully hand-engraved cover for the dial, featuring white Arabian horses riding in the desert with palm trees and the sea in the background.
If customers request us to do some minor customisation such as mentioning their names or something on the back, we can look at it. But if they want to personalise it further, we do not do it.
What do you do to attract the younger generation, which is tech-savvy and more attracted to high-tech watches such as an Apple watch?
It is very important to have clear strategies on how to connect with the new generation, and nowadays we see that generations are keen on online and social media presence. So we have a strong strategy to be very visible online and through social media such as Facebook, Instagram, Twitter and YouTube. We also do a lot of digital advertising.
We cannot deviate from the brand DNA. We are not a trendy brand. We are an evolving company. We are always working on coming to the customer with new materials, new technologies, and different sizes, but in terms of launching something just to suit an age group, it does not work for us.
When do you generally launch new collections?
Every year we do our exhibition at Salon International de la Haute Horlogerie (SIHH), Geneva. It was in January this year when we launched around 15 to 20 watches and presented them to the press and our dealers such as Ali Bin Ali. We work on a quota system, and they have a number of pieces committed to them through the year.
What is the growth potential of the GCC market?
It is the highest market in terms of average sales. It does very well with high-end and complicated watches and there is a very strong potential in the GCC for such timepieces.