MAURICE GOLDBERGER : What About New Concept of Collaborative Restocking ? (english version – free access)
For our english speaking readers, a full condensed version of our exclusive interview with Maurice Goldberger (Chiron), published in french by Business Montres a few days ago. The pitch is to create a new virtuous circle for all partners of the value added chain in the watch business... ▶▶▶ MAURICE GOLDBERGER« Both parties could benefitfrom our …
For our english speaking readers, a full condensed version of our exclusive interview with Maurice Goldberger (Chiron), published in french by Business Montres a few days ago. The pitch is to create a new virtuous circle for all partners of the value added chain in the watch business...
▶▶▶ MAURICE GOLDBERGER« Both parties could benefitfrom our Collaborative Restocking process »... ◉◉◉◉ CHIRON'S PHILOSOPHY GOES BEYOND SHORT TERM PROBLEMS, such as unsold or discontinued inventory-; rather it’s to provide a long term solution to an ongoing reality. In 2008, the financial crisis resulted in an inventory glut, as brands had not anticipated the turn in the global economy. In 2015, brands are in good control of their inventories. However new challenges have arisen : Ebola ; Fall of oil prices ; Turmoil in the currency markets in Europe and Russia ; Sanctions in Ukraine and Russia ; Warfare engulfing significant areas of the Middle East ; Political unrest in Hong Kong ; Anti-corruption drive in China ; Slowdown of economic activity in China, and the concomitant effect on their suppliers of basic commodities. ◉◉◉◉ SOME BRANDS TOOK MEASURES to protect revenues and market share. However the typical retailers, and certainly the Man or Woman on the street did not. This leads to a situation that in some markets there now exists a excess of inventory at the retail/distributor level Distributors/retailers are reluctant to purchase, as old and unsold inventory ties up funds and showcase space. This becomes a vicious cycle : Aging goods become more difficult to sell, cash flow of the distributor/ retailer becomes weaker, Brand sales suffer directly. ◉◉◉◉ CHIRON OFFERS A VIABLE AND SUSTAINABLE ALTERNATIVE, leading to increased sales at the Brand and Retail level. Chiron operates globaly and so understand that what is “normal” or desirable in a given market, may in fact be abnormal or undesirable in another market. In most of the world, new, unused, never sold, is a sine qua non of the VALUE proposition when buying an item. To purchase something which has been preowned/used, is experienced emotionally, if not perceived actually, as an admission of being unable to afford the true pleasure of a new object—one purchases this item because one can not afford a new item. The exception is North America. There, to purchases pre- owned/used is seen as being exceptionally astute, having an eye for true value, leaving the original buyer to absorb the depreciation, and then gaining the benefit thereof. ◉◉◉◉ SINCE 2010, Chiron has been purchasing directly from retailers, all over the world, who approach us with their shopworn merchandise, as they realize that slow moving inventory ties up available resources. Inventory is purchased “as is”, i.e. shopworn, often without packaging, and always without the original warranty, and then resold as Pre-owned/ Used in North America at venues such as the Antique Watch & jewelry shows in centres such as Miami, Palm Beach, Las Vegas, New York, as well as in traditional stores which sell only Vintage accessories (watches, jewelry, handbags, eyeglass frames, etc). We do not buff or repair scratches, or replace frayed straps, however in the case of jewelry we make certain that all settings are secure, and in the case of Watches we make certain that the movement and internals work properly. We supply third party warranties. This channel is not Internet driven and very importantly, serves a very different market segment than the customer who enters a retailer seeking Novelties or a specific level of service. ◉◉◉◉ FOR HIGHER END PIECES, and very prominent watch and jewelry brands we organize Trunk shows—private sales in a salon or showroom—directly to consumers-, so as to protect and enhance the rarity and value of the brand and the opportunity available. ◉◉◉◉ CHIRON HAS NOW STARTED co-operating with our Brand partners in the watch and Jewelry industry who aim to provide a discreet, direct and effective channel to help their retailers and distributors, and at the same time, increase their sell- in. Here’s how we do it : ◉ The Brand (via the salesperson or sales director) makes it known to their retailers /distributors that either they themselves or their partner ( (Chiron) will take back ALL their slow moving inventory. We assess the purchase value of the inventory, and communicate this within 24 hours to our Brand partner or the retailer/ distributor, as the Brand prefers. ◉ Chiron’s purchase offer will of course be lower than what the retailer/distributor originally paid. The difference between the original wholesale price and Chiron’s offer is made up by the Brand with a credit to buy new merchandise, at whatever is the normal retailer/distributor cost, usually at a ratio of three to one ( though different brands utilize different ratios) ◉ This has the following effect :1. The retailers/distributors problem is addressed in a material manner, with NO loss on his books. This is an important consideration to those who have bank lines of credits and have not taken provisions.2. The selection in the showcase is now fresh and brand new. We all know that it is far easier to sell 150,000.00 of brand new merchandise, than 50,000,00 of old merchandise.3. The retailer/distributor has been turned from a slow selling or inactive account, into a refreshed account, AND the Brand is now able once again to sell into an account which may very well have, if not written off, been an drag on market share and turn over.4. While it is true that due to the issuing of the credit note, the Brand will not make margin on the first part of the sale, the Brand WILL make margin on the total transaction. ◉ Here is an actual example :1. Retailer owned USD 1,830,720.00 (at cost) of inventory that was not selling. This translated into approximately USD3,814,000.00 at full retail.2. The Retailer provided to the Distributor/Brand written details of the inventory, which the Distributor/Brand forwarded to Chiron.3. Within 48 hours of receiving these details, Chiron proposed a firm cash offer to the Brand/Distributor to purchase on a “as is” basis. In this particular example, Chiron assessed the inventory‘s value as USD 400,000.00.4. The Brand/Distributor presented the cash offer of USD 400,000 to the Retailer, together with a credit note for the difference between the Retailer's cost and Chiron’s cash purchase offer—in this example, USD 1,430, 720.00.5. This credit note was based on a 3:1 ratio, meaning the Retailer needed to purchase USD 4,292,160.00 at cost of fresh inventory, paid with USD 1,430,720,000 in credits and USD 2,458,578.56 of the Retailer's own funds. ◉ Both parties benefited : The Retailer was able to completely refresh the inventory with new, sellable merchandise while disposing of non-performing inventory with no affect on their P & L statement. The Distributor/Brand was able to sell-in new inventory, setting the retailer on a growth path, without negative impact on P & L and without negative impact on brand image or distribution network. Chiron takes these goods (ex works) and sells them into our Preowned/Used market, as detailed previously. We take care of ALL servicing and warranty work—there is absolutely no cost to the Brand for refurbishing or warranty service-. ◉◉◉◉ THE ABOVE DETAILS our integrated, comprehensive approach to working with the Brands, both current as well as future, with a thought out, disciplined and cost effective solution. I invite any interested reader and potential partner to contact me via email at <[email protected]> or by telephone (+1 514 488 6726)Maurice Goldberger(above with his friend Vulcan) 
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