Amid the splendor of the Ritz in Paris, Daniel Wellington unveiled its debut handbag line, the latest new development amid a major strategic shift for the Swedish watchmaker.
Few brands witnessed more explosive growth in the previous decade than Daniel Wellington, a Stockholm-based watchmaker which carefully targeted the market for clean, minimalist watches with little pain at the cash register.
Growth was explosive rising to several hundred million euros in annual sales, before heavy investment in China almost doubled sales again. However, like for many brands, the pandemic was brutal for Daniel Wellington, as its CEO Tianhao Liu is honest enough to concede.
“I would say we were the fastest growing watch brand of the past half century. I witnessed that, but around 2018 we made a decision that was a mistake. We went from a traditional wholesale model, to only wanting to do a complete D to C, all across the world, all across all channels – digital and retail. Completely fading out wholesale, everything at once,” says Liu, who began as CEO on January 1.
“At that point, we opened up our own offices all around the world, hired GMs and that was a very heavy investment, with lots of salaries and lots of rent. We were inspired by China in 2017, where we did very well. We opened up about 300 stores there, some as kiosks – in about two years – generally in malls,” recalls Liu, who in the past decade has been Daniel Wellington’s senior executive in China, and later for all of Asia.
But the China strategy didn’t work in smaller markets, or even in the UK. Where they opened five stores, with pricey rents, and leases of 10 years.
“At that point we had not existed as a company for 10 years, and we are singing leases for even longer! Key money, renovation, staff and our own GMs. It was all very, very heavy,” he admits over tea in the Ritz.
After Daniel Wellington struggled through 2020, taking all the risks, it realised it needed to go back to its earlier business model.
“Prior, wholesale was 80% of our revenue with 10,000 doors. And we got rid of them all, which was crazy! Part of the reasoning behind that was we were the most counterfeited brand in the world. We wanted more control,” reasoned Lui, who was born in China but moved to Sweden as a child and speaks with a Nordic intonation.
So, even before he became CEO, the brand went back to wholesale model last year.
“Luckily, what is very good news is that the brand and products still work very well,” beamed Liu, explaining that most former partners re-embraced Daniel Wellington. Notably Siddiqui, a giant Gulf region group with thousands of doors, and by some estimates, the world’s biggest Rolex dealers.
“Over 90% of our partners we worked with previously are back. They still believe in our brand,” enthused Liu, who expects his watches to be in 5,000 doors by the end of this year, and the company back in profit.
The brand has also altered the product mix – from 95% of revenues coming from watches.
“Now we are 70/30 watches and jewelry, which has another distribution network. In our mono-brand store we sell them together – but multibrand watch stores don’t really sell jewelry,” notes the CEO in the Ritz, where Daniel Wellington unveiled its debut trio of bags, made in vegan leather, in the Salon Été. The new tote and a funnel shaped bag carefully composed with beveled backs, to fit snugly on the hip. These will be introduced onto the retail market in the fall.
In France, Daniel Wellington sells in Printemps and Galeries Lafayette, but was forced to close its Marais store during Covid. It has also carefully widened its watch price point, with the average being €250 from a starting price of about €150.
“In the industry some people would say we basically had one watch movement but we’re widening our watch range quite significantly. In terms of styles, models and price. Now, we have automatics at $400, even if these are more a statement than a revenue driver,” the CEO says.
Jewelry ranges from €59 to €100. With the brand building plenty of momentum with its gold plated €25 letter charms and classic crystal trim tennis bracelets at €59. It’s also winning fans with its precise eyewear and sunshades, where everything is priced at about 99 euros.
Daniel Wellington’s watch movement is actually Japanese, its leather wristbands come from Italy, but assembly is done in China.
“The quality really is best in China. We tried in Germany, but it was not as good. Same thing for jewelry,” smiles Liu, as guests imbibed Barons de Rothschild, the Ritz reserve champagne.
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