Swatch shuts half-a-dozen flagship stores in malls, bets on kiosks

It is likely to see closure of its last operating mono-brand store at the Grand Central Mall in Seawood, Vashi, in a few months

Swiss watch company, Swatch Group, is shutting shops across malls as part of its plan to revamp its distribution strategy — by opening a litany of kiosks.

Earlier this month, the Swatch Group shut down its Bengaluru store in Phoenix Mall. Prior to that, it closed its store at Mumbai’s Palladium Mall in August. Also sharing the same fate were stores in Chennai, Pune and New Delhi.

The brand, known for its budget-priced colourful and stylish watches, is likely to see closure of its last operating mono-brand store at the Grand Central Mall in Seawood, Vashi, in the next few months. 

Partha Duttagupta, Swatch Group India’s country manager, said, “Closure of the corporate stores has nothing to do with the performance of the Swatch brand but is part of the new distribution strategy with focus on e-commerce and wholesale.” 

He added that for a brand like Swatch, the e-commerce channel provides a big opportunity and has the potential to become a substantial contributor to business. 

“Swatch is already available on Myntra and we are evaluating other platforms and our own e-commerce site for a strong presence in this channel. Our performance in travel retail is strong and this will also be an area of expansion for us,” he said.

Swatch is one of the several brands that the Bienne-based Swatch Group operates in India while others include Omega, Longines, Rado, Breguet, and Tissot. 

Those who track the watch industry indicate that the move comes as a surprise because market conditions would suggest that Swatch’s lower price points (Rs 5,000 to Rs 10,000) would enable it to buck the retail downturn that would have impacted time pieces in higher segments. 

However, according to the Federation of the Swiss Watch Industry, in 2018, the Swatch Group’s strongest sales growth worldwide was posted by the prestige and luxury range, particularly by brands like Blancpain, Omega and Longines. 

Analysts said that the lower-end spectrum of watches in which brands like Swatch have focused on have undoubtedly been impacted by the rising popularity of smartwatches such as the Apple watch.  

The Mumbai store that shut down was meeting overall targets even as other locations like Pune were not performing and their lease had expired. 

Real estate prices in high-street malls in recent times have increased by anywhere between 10 per cent and 20 per cent, thanks to the addition of goods and services taxes (GST). For the Mumbai store in Palladium Mall, rentals were as high as Rs 4.5 lakh a month. 

The move to shut stores and move to kiosks will be more capital-efficient but will also come with its own limitations. For example, an average three-panel kiosk wouldn’t be able to display more than 150 or 200 watches as compared to 600 time pieces in a store. 

In the past, music ad entertainment retailer Planet M, which was owned by Videocon Industries, had slashed half of its stores to re-launch in 100 square feet kiosks in malls but the concept itself failed to take off for mixed reasons.

Others like online grocer Big Basket made its offline entry last year in kiosks around residential and office buildings. Electronics manufacturer like OnePlus has, in recent times, also launched kiosk-like pop up stores across malls to boost eyeballs before a big product launch. 

Then, overseas fast food companies have started pushing towards kiosks and even automated vending machines with the likes of McDonald’s, Wendy’s and Subway charting out plans to increase footprint. Will the kiosk model work for watches in India? 

“A kiosk is lower on operational costs even if it is higher per rupee per inch but if a company can make it work, then it’s far more profitable because fixed costs are lower on an absolute basis”, said Devangshu Dutta, chief executive officer at management consulting firm Third Eyesight.