We all know that High Street purchases include a profit margin for the retailer.
This is as it should be: like all businesses, shops have to pay overheads such as rent, rates and staff wages before they make any profit. However, these costs can be very high, particularly in city centres, not to mention shopping malls like Meadowhall and Bluewater. The retailer’s margin is his only way of recouping his overheads and making a profit, and the size of that margin varies. On low priced, fast moving goods it may be small, but on expensive goods – such as high-end watches – it is probably at least double the wholesale price.
A manufacturer who wants to sell through these stores accepts that the retailer will multiply the wholesale cost by two or three times to arrive at his selling price. But there is more: the manufacturer will have had to advertise to attract customers to the stores – and high-profile advertising is eye-wateringly expensive! So High Street big-brand watch prices are only distantly related to the cost of making those watches. In fact, according to one source, the price you pay in the shop can be around ten times the basic manufacturing cost. Put simply, more of your hard-earned cash goes on marketing than on making the watch itself!
That is how the retail world has worked for many years: it is successful, and it meets a very high demand. Recently, however, this approach has been challenged by other ways of doing business: methods that have always been available, but which have expanded enormously because of the Internet.
Basically, these methods cut out the middleman, and can offer better value to the customer. Mail order companies have always done well in areas such as clothing, books and CDs, but a much larger variety of goods is now available through the internet, diminishing the need to visit city centres and shopping malls.
More expensive items such as watches and jewellery are becoming available in this way. Of course, “real” shops allow you to examine prospective purchases more thoroughly than do photographs and text, but a ‘no quibble money-back guarantee’ can go some way towards answering this problem. In fact, some makers will even send you sample goods by post, without obligation (against a refundable deposit) to allow a thorough evaluation in the privacy of your own home. As well as value for money, good service is key to customer satisfaction: fortunately there is a growing realisation that customers want a return to ‘old fashioned’ levels of service. The more astute businesses combine direct selling with a traditional and personal approach that makes the buying experience more satisfying and less pressurised than a shopping expedition.
Which would you rather spend your money on: real craftsmanship, or an A-list celebrity? The question might seem silly, but look carefully, and you can find superb watches at a fraction of the High Street prices for equivalent quality. The amount you pay will be a much truer reflection of the cost of making your watch, because it will not be going on glossy advertisements, megastar endorsements or retailers’ profits.