Slowing discretionary spending is not dissuading at least one industry in the luxury segment — high-end watches.
Hublot, known for its Big Bang series of super-sporty wristwatches that can cost more than premium cars, launched its first boutique on the ground floor at the Palladium Mall in Mumbai, demonstrating it sees a market for its products for the long term in the country.
Ricardo Guadalupe, chief executive officer of LVMH-owned Hublot, and who in 2004 led the transformation to mostly automatic-run watches from the earlier quartz-run variants, says the store was in partnership with authorised distributor Ethos Watch Boutiques, in a 50-50 joint venture.
Real estate analysts say the rentals of the boutique, which is around 500 square feet in size, cost somewhere between Rs 700 and Rs 900 per square foot.
In recent times, the Palladium Mall has seen a growth in boutiques being operated by international watch brands. Ethos Watches was the first to set up and launch a multi-brand boutique on the ground floor a few years ago followed by Franck Muller and the Richemont-Group owned Panerai. Both of them opened stores last year on the same floor of the mall.
Typically for most malls, the ground floor is deemed to be the most premium and commands the highest rentals. Other brands on the same floor as Hublot include Chanel, Ermenegildo Zegna, Canali, Gucci, Burberry and Armani.
Even though the retail economics may make sense with their watches being of high value and small volume, is Hublot set for what may be a prolonged period of depressed retail sentiment?
Guadalupe says when he opened his first shop in China, it was selling one watch a month for a while. “Today sales in China have grown to 15 watches a month for each store, so it’s a matter of time and we are fine with that.”
Where will Hublot’s next store be? He says Delhi is a likelihood in the next couple of years, potentially followed by Bengaluru.
The luxury watchmaker's top markets worldwide are Europe, Japan and the US. It operates 100 boutiques around the world.
Guadulupe compares the Indian market to that of Greece emphasising that while the latter may be a small nation, its summer island city Mykonos serves as a trendy hotspot for young, high-net worth individuals and thus a prime high-end retail market.
The firm targets sales of around 1,000 time-pieces a year, almost 30 per cent up from the 700 pieces that they last sold across 16 distributors.
Yasho Saboo, who runs the premium watch distributor company Ethos, says that it’s specifically been a tough period for brands that price their products under $1,000. “In the high-priced luxury watch game, things are better... but there is a slowdown relative to last year — what is really working is large format stores plus digital communication.”