Swiss watchmaker destroys $539m of luxury watches to keep them off the wrong wrists
Richemont, the Swiss luxury company that owns Cartier and Montblanc, destroyed $539m of their own watches to prevent them from ending up on non-riche wrists over the past 2 years, reportedThe Guardian.
After shifting habits and new competitors caused a slump in the timekeeping market, the well-to-do watchmakers resorted to deluxe destruction — a common strategy to keep branded products off the “gray market” — to preserve their prestige.
Luxury brands should be as hard to afford as they are to pronounce
For luxury producers like Hermès and Cartier, brand is everything — but these companies can only charge exorbitant markups when their products are as rare as the trust funds that can pay for them.
So to keep items from resale at a *gasp* discount, brands from Chanel to many others limit availability of their luxury goods by lighting them on fire or ripping them to shreds — usually (but, as Cartier proves, not always) behind closed doors.
Slumping market + overproduction = watch smashing
Swiss watch exports fell 13% from 2014 to 2016 to hit a 6-year low, and they only began inching their way back last year with a 2.7% increase. But while demand remains diminished, inventories continued to increase.
“Our retail partners . . . are still being force fed like geese producing foie gras,” Richemont Chairman Johann Rupert told analysts last year, complaining about overproduction.
In the name of “long term brand equity,” the brand decided to destroy the overproduced watches to keep them off Amazon.
The problem is: e-commerce loves discounts
Even as Richemont destroys watches by the thousand, unlicensed 3rd parties continued to use e-commerce marketplaces to sell Cartier watches to wind up with some of their $20,000+ value.
In the past Richemont has sued Amazon, Alibaba, and eBay for listing counterfeit watches.
But whether demand for analog watches that cost more than cars ever returns or not, Richemont’s “approach to the grey market remains uncompromising,” confirms Chairman Rupert (a cricket enthusiast with a net worth of $7B).