ZURICH, Switzerland — In case you weren’t paying attention, Richemont is turning itself into a luxury internet powerhouse.
The freshest evidence of this is in the latest reshuffle of its jewellery box.
Out goes French handbag maker Lancel, in comes Watchfinder, a seller of second-hand watches it is acquiring for an undisclosed sum.
The Watchmaker move is a bold one.
Acquiring the platform, which sells pre-owned luxury time pieces online and in seven boutiques, makes strategic sense, and could be a prelude to further expansion in the burgeoning used watch market. Luca Solca, analyst at Exane BNP Paribas, estimates this is currently worth about 25 percent of the new watch market, or 3 billion euros ($3.5 billion) to 5 billion euros.
Platforms such as Watchfinder and Chrono24 have taken the stigma, and risk, away from buying second hand. Add in a luxury setting, and consumers are prepared to use these platforms to buy and trade. Though authentication is still a sticking point in this market, here Richemont is well positioned, having the in-house expertise from its own watch brands.
There is scope for the market to grow, and by stepping in, Richemont will be able to take an early lead and shape this emerging sector more effectively. The used watch market is also often an introduction to luxury timepieces. If Richemont can capture customers at this stage — and their data — then it has a good chance of selling them other models later. That's a useful weapon as manufacturers battle the creep of smart watches.
The purchase also advances its strategy of taking more control over its distribution, from selling through its own physical retail and online boutiques, to buying back unsold timepieces to prevent them falling into the hands of unauthorised sellers.
It fits in nicely with its recently increased ownership of Yoox Net-A-Porter — a move that gives Richemont greater online prowess. It has already started selling high end watches on YNAP. Watchfinder boutiques on the site would be a natural next step. And with 5.3 billion euros of net cash at March 31, the company has plenty of scope to invest in both YNAP and Watchfinder.
Shares in Richemont hardly moved on Monday. That looks short-sighted.
The Watchfinder deal is small — Richemont said it won't have a material impact on its assets or operating profit this year. But it is a significant step forward toward winning the battleground of online luxury. For all its historic Maisons, Richemont is not marking time.
By Andrea Felsted; editor: Jennifer Ryan.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.