The Breitling Watch Source Forums

Some very good points have been made here. My background was originally in economics so this interests me a great deal.

Yes a lot can be attributed to exchange rate differences, and I'm sure that Breitling's intention would be to set prices at a broadly comparable level in real terms across the world. However, the US exchange rate to GBP has been at roughly the level it is now for a good couple of years, but the USD prices are nowhere near twice GBP prices - hence we in the UK already have a reason to shop abroad.

And then we come to discounting. As we all know there are wild disparities between different country's AD network's willingness to discount. The US is well-known for being a place where dealers will discount : the UK is well-known as somewhere they won't. I think a lot of AD networks still assume that the public has imperfect information and that they (the ADs) have a captive market and can therefore monopolise the prices. However, the internet has lead to far greater freedom of information and hence the public are able to make more informed decisions. And it's an economic fact that if a good is identical in every way, an individual will buy the cheapest. It's that simple, and it's human nature.

I think a lot of people are still scared by import duty and VAT, but as more people look into the actual figures I believe we will see more and more individuals seeking out better deals outside of their own borders.

One thing I don't understand though is why a UK AD would rather lose a sale than give a discount. I mean it's not like they only have a limited quota of watches assigned to them per year. If that was the case then you could understand the need to maximise their profits on every single watch they sell, but as it is, if they sell one they simply put in an order with Breitling for another one. As long as some kind of profit is being made, then I would have thought a sale is a sale...... The US seems to have a much more "stack 'em high, sell 'em cheap" policy, which the consumer will favour as the economy takes a downturn. When all is said and done, these watches are luxury goods, and luxuries are the first things to go when people's fiscal belts are tightened......

Anyway, we will see what happens if a recession occurs. I certainly don't want to see anyone go out of business, but unfortunately that's how market forces will operate if some areas refuse to wake up and smell the economic coffee. As with any competition, to be in with a chance of holding your own you need to be starting from the same position as your competitors, and at the moment the US AD's are way ahead than the UK.

As I say, if all things remain equal, I know where I'll be buying my next watch from......

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Driver8

Site Moderator

There is certainly a huge disparity in retail, and I believe that in large part it's because of the difference in wholesale pricing. In Canada the distribuotr (Grigoros) also owns the largest AD chain (La Swiss). Now as the national distributor they obviously have huge buying power - but this is still only Canada - a country of around 32 million people.

I know for an absolute fact that La Swiss pay Grigoros 45% of the list price to obtain the watch. Bear in mind that it's an internal transfer, but I can't believe that Grigoros is taking a loss for the benefit of another company in the group.

I have to believe that in the US the situation is similar, and I have to believe that in Europe it is very different. Do European distributors have to pay more to Breitling or do European ADs have to pay more to distributors, or both - I don't know, but it has to be a fundamentally different model.

Here's some more information that I probably shouldn't share - when the corporate headquarters of my AD found out that she was potentially selling watches to overseas clients, especially the US, as part of the 40% offer they tried to clamp down on it because they didn't want to upset BUSA - this is inevitably going to continue. If Breitling (or distribuotrs) are going to try and stop buyers from taking advantage of these price differentials then it suggests to me that they are here to stay.

There was an adjustment in Canada last year to reflect the relative strength of the Canadian dollar to the US dollar, but as some US buyers found out with my offer, the revised prices from this spring seem to have restored the differential.

Last time I checked we are (at least mosto fus are) living in free market economies and therefore an unregulated product like a watch should be available to us from any buyer that we choose to purchase from. We should be free to determine for ourselves the balance of price vs. service.

Just my 0.02 (Canadian).

Well said. When shopping around to make my purchase I spoke to your AD but eventually went with another AD here in the US to avoid potential headaches with the import/duty tax that no one seamed to be able to give me a straight answer on

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I am also in the retail business as an owner and I'm afraid to say that money does talk and it is inevitable that if the consumer can purchase anything for 25-30% cheaper as was the case with myself then I defy anyone to tell me they wouldn't opt for that purchase. At the end of the day its the world and financial climate we live in today.

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Currently:
Avenger Skyland(Black)
Super Avenger(White)

Moved on:
Montbrillant Legende(Silver)
Panerai 312
SOHC 125th Ann. LE(Silver)
Navitimer World(Pearl)
Panerai 441

The British dealer has to let the customer go, instead of giving a higher discount. Otherwise he is just changing money and cannot pay his staff anymore. Staffcost in Europe is a lot higher than in the US or in some third world country. Specially the taxes and social security payments. So if the british dealer starts giving discounts of 25%, he will increase his sales, but will not cover his costs anymore. The other point is, that Breitling UK will not sell him any watches anymore. He can only buy them on the grey market. Here in Austria, the distributor sends out test buyers on a regular basis, and everyone cought giving more than 10% discount will first get an official warning, the second time he is no AD anymore. 2 Years ago, they closed the 5th biggest Breitling AD, because of that.

By the way, I have to pay 52% of the listprice (and that includes already 20% VAT)!

BG
Thomas

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http://www.ellert.at

Isn't resale price maintenance prohibited under EU law?

That's a very harsh disparity between the way Breitling treats European and US AD's. In today's global marketplace all regions need to be on the same playing field in terms of the discounts they can or cannot give, or else, unfortunately, consumers will vote with their feet.


I thought so too. I believe a couple of years ago there was a ruling that said that the Recommended Retail Price (RRP) had to be just that - a RECOMMENDED price, and that it couldn't be enforced.

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Driver8

Site Moderator

in belgium it's totally not done asking for a discount !
if you dare to do it, you may leave the shop because you get really ugly looks ...

the only place where you can ask for discounts are car dealerships....

I guess it's kind of similar here in the UK and most people still wouldn't dream of asking, or even think to ask in the first place (just not the British way and all that! ), but there is certainly an increasing "if you don't ask, you don't get" approach to buying watches.

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Driver8

Site Moderator

Of course, its forbidden in the EU, but officially the reasons for the closing are completely other than the discount policy. Most important watch companies have contracts with their ADs, which are close to slavery. When I read one (all companies are similar in that) my gut twists, I get itches all over my back and I have the urge to tear up some paper. The good point on the other side is, that those contracts are only executed, when it is really necessary for the brand.

BG
Thomas

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http://www.ellert.at

[quote="Alien"]The British dealer has to let the customer go, instead of giving a higher discount. Otherwise he is just changing money and cannot pay his staff anymore. Staffcost in Europe is a lot higher than in the US or in some third world country. Specially the taxes and social security payments. So if the british dealer starts giving discounts of 25%, he will increase his sales, but will not cover his costs anymore. The other point is, that Breitling UK will not sell him any watches anymore. He can only buy them on the grey market. Here in Austria, the distributor sends out test buyers on a regular basis, and everyone cought giving more than 10% discount will first get an official warning, the second time he is no AD anymore. 2 Years ago, they closed the 5th biggest Breitling AD, because of that.

By the way, I have to pay 52% of the listprice (and that includes already 20% VAT)!

BG

It's true that a company can't mandate that an AD sell at a certain price; however, it's also true that the dealer does not have to give an AD reason when they come in a shut them down.

How do you think Rolex enforces their discounting directives?

BUSA's direction with their new chief will go in this direction. Whether the reason be extremely limited product or less distribution the trend will be to discount less. Breitling has shut down many many dealers in the USA this year, while only opening one new AD.

Breitling has and is positioning themselves as one of the top tier brands in the world. You don't see a lot of discounting going on with Rolex, Patek, AP, Panerai, etc.

I guess one way to put a positive spin on this is the product we now have will maintain its value...
How

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BC

The salary point is a very valid one - here in Canada at least the AD hires people with retail experience, not watch people - and those are cheap resources. Even with commissions they are not going to be earning a very goold living and hence there tends to be high turnover among the front line staff.



I actually think that is the right way for Breitling to go - it doesn't help us as buyers, but the growth that Breitling has experienced does run the risk of turning the brand into a mass market (albeit high end mass market) brand rather than one with exclusivity. Selfishly, I hope that also means more LEs (as has been suggested) to add to the exclusivity concept.

Generally from your AD--and usually not on the first piece.

Bizarrely enough, I agree too - hence my point about all regions needing to be on a level playing field. I wouldn't complain if the prices were roughly comparable across the globe.... but they're not, which is why it annoys me that I am stitched up simply as a result of living where I do! If the prices are universally high and the brand retains it's exclusivity then great, I'm all for it - it just means I might have to save a bit longer, but then that's part of the "fun" (I think! ). What I do object to is being expected to pay literally thousands more in my part of the world compared to others. In situations like that you can't blame people for buying from the most cost effective country.

The grey market is a different kettle of fish again. If these internet companies can provide all the paperwork including a stamped Breilting Warranty card, then again it's hard to justify paying full retail.... I'm torn between getting the idea of getting a bargain and doing my part to keep the brand (that I love) reasonably exclusive.

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Driver8

Site Moderator

Well put Driver and I concur on he level playing field. I guess I always thought the retail prices were adjusted globally to reflect the local currencies. Shows you what I know... i

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BC