Control issues
Although it acts as a sales agent for Vahan, Sothil distributes the balance of its portfolio, a decision the partners say helps them manage their lines independently and works in retailers’ favour, and by extension, consumers’. The setup is particularly critical when it comes to servicing high-end watches. It’s not unheard of for a customer to wait up to six months for a repair that’s been sent to say, Switzerland. To ensure quicker turnaround, Sothil subcontracts a local service centre, which is stocked with original parts for the most common repairs.
“When it comes to servicing [in a sales agency scenario], things can be more complicated and time-consuming because you depend on the supplier for everything,” says Iliopoulos, who oversees shipping, invoicing, and marketing, as well as sales in Quebec. “As a distributor, you have more control of the product in your market, and can service your retailers better. It can be very aggravating for the consumer and retailer to wait anywhere from six weeks to six months [for a repair].”
While the Swiss watch industry transitions away from relying on Swatch Group for its movements and movement parts, it is currently grappling with a crisis over the definition of ‘Swiss-made,’ a label that many view as the epitome of precision and quality.
Right now, regulations say 50 per cent of a movement has to be made in Switzerland for a watch to be called ‘Swiss-made.’ In addition, the assembly, finishing, and final inspection of the watch must also occur in Switzerland. However, the Swiss government has proposed a rule that at least 60 per cent of manufacturing costs for all products, including watches, must originate in Switzerland to earn the label. Larger brands like Rolex have no trouble meeting even an 80 per cent threshold. However, the proposed changes could strip many small and medium-size companies of their ability to call their brands ‘Swiss-made,’ as many actually produce components in places like China.
Iliopoulos stresses the value of the ‘Swiss-made’ label in watchmaking-—a high threshold ensures provenance.
“To a certain extent, it is false advertising when companies produce watches that are 20 or 30 per cent made in Switzerland and the rest is made in the Orient,” he says.
Polan has a slightly different take on the situation, a reflection of their backgrounds in the industry. Although he is not opposed to having a reasonably high threshold, he says one that is too high will result in less competition in the marketplace.
“You’re basically giving all the control to the big brands,” says Polan, whose responsibilities include sales and inventory control. “The Canadian retailer will have fewer choices and, by extension, offer less to consumers. If retailers have fewer choices and Swatch Group, LVMH, or Rolex, for example, don’t want to deal with them, what Swiss watches will they be able to get?”
