More legislation to protect prices :( .
http://business.timesonline.co.uk/tol/b ... 107211.eceFrom The Sunday Times
April 25, 2010
Luxury brands snatch away online bargains
Jon Ungoed-Thomas and Chris Gourlay
New rules will come into force this summer to stop cut-price websites selling top brands such as Gucci, advertised by the supermodel Kate Moss
New rules will come into force this summer to stop cut-price websites selling top brands such as Gucci, advertised by the supermodel Kate Moss
Online shoppers face higher prices for luxury clothing, perfumes and handbags because high-end brands have won new powers to block discount websites from selling their products.
New rules approved in Brussels mean brands such as Burberry, Giorgio Armani and Louis Vuitton will be able to stop online retailers from selling their products if they do not have “bricks and mortar” high street stores.
Eddie
Whole chunks of my life come under the heading "it seemed like a good idea at the time".
I would have thought retail price maintenance was illegal.
Perhaps manufacturers should be forced to sell their products at the same price to all retailers in all countries.
Then the retailers can decide what margin they sell at.
That would be a level playing field that would prevent people in certain countries being ripped off, I am thinking
the ofter price differential for the same things between the US and the UK.
How does this fit in with price fixing regulations? What happens at sale time, are traders not allowed to reduce prices of last season/years stock to get rid of it, after all that is what alot of cut priced items are.
This doesn't bode well for Yorkshiremen and skin flints like me!
Just reading Eddie's quote - is there a direct statement that no price discounting is allowed?
Not sure there is - it simply states that the retailer must have bricks and mortar premises in addition to an internet presence in order to sell top brands. The inference is that the products were being sold too cheaply but I'm not sure that's explicit.
It's bad news either way. :?
A smart online retailer would use this as evidence that the luxury brands are trying to reduce free trade and also allowing companies to force price fixing through limited distribution.
Oh yeah, you'll also notice that the EU tend to back these luxury brands, would the same thing happen in the US or Asia?
Unlikely in Asia; in the USA, I think not given a thread posted by lysanderxiii recently. (Something about Tiffany?)Originally Posted by Argee1977
EDIT: Not sure it's (the aforementioned thread) directly relevant, but it may be viewtopic.php?f=1&t=115112
Not sure it will ever affect the vast majority of us.... The people who actually buy original Louis Vuitton, Gucci etc. are a remarkably small percentage of the population. And if you extrapolate this situation to watches, I think you will find that most of the mega-desirable brands are of such limited production that the situation would not arise. The only manufacturer who produce in the quantities to be affected are Rolex, who have been operating their own pricing policy for years, now.
Rob
You'll notice that this has been driven by LVMH and will no doubt apply to all their offerings.
Eddie
Whole chunks of my life come under the heading "it seemed like a good idea at the time".
I suppose, when it comes down to it, one could just not buy those brands. If you want that £250,000 Gucci handbag, then you'll just have to pay it. Which reminds me, my watch is currently for sale at £500,000 but I am due to raise the price to £850,000 at the end of April.
You'll notice that this has been driven by LVMH and will no doubt apply to all their offerings.
Eddie
God knows how they think they'll sell Zeniths are RRP, i love the old zeniths but the new ones are either garish or seriously overpriced, who in their right mind would pay 8 or 9 grand for a watch that's similar to the older 400 zeniths that you can pick up for about 2k?
It's good that the EU aren't sticking their nose in where it's not required agai... oh hang on.
:roll: :roll:
Wonderful European Parliament :evil: . Slowly but surely our once free economy is turned into an over regulated, lobbyist ruled, absolute EU controlled totalitarian economy where choice and free will are strictly controlled by capital interest who will have more uncontrolled power than ever. That Parliament would serve its people far better by introducing "proper" regulation (not some fake unnecessary pretending rules) to the European financial system and the introduction of anti corruption laws for politicians and the financial sector.
Surely the luxury brands can control themselves where their goods are sold. There is no need for the EU to limit buyers choices. The next step will be to make it an offense to buy from any unofficial outlet. But of course this is all for the common good and to protect European citizens and consumers.
They'll be sold to people who don't know any better, for whom the 8 or 9 grand is not significant. They're happy, Zenith is happy, but I'm not.
This is short sighted bull. Okay, first off, I know several people whose business model is to buy up - from High Street stores - end of line or end of season luxury goods and then sell these goods on their website, because the profit margin is not sufficient to maintain a Bricks and Mortar store - they will be persecuted as they also sell current season stuff at a bit of a discount (loss) to get the customers "in".
Secondly - and more importantly - this is going to create yet another niche market for the ner do well's! By pushing the stores overseas, which it will, the public pay the price. There is no guarantee that the goods being bought are authentic, the revenue is no longer subject to tax in the UK or Europe or indeed the US. The ONLY protection is the Credit Card guarantee scheme whereby you are refunded through your Credit Card provider, when it goes Pear Shaped - of course they will pay, they are using your money!
I could understand the EU doing it if it affected their nations sales, but since most luxury goods are coming from Switzerland and the profit is going there why would the EU really care that much?
Luxury goods is a very big and wide market depending on the definition of what a luxury good is. Its not only watches; fashion, cosmetics, fragrances.... so its very much the European Union that is affected. Also a very important point is that if products are sold at lower prices the governments get less VAT revenue. Its a very lame way of trying to protect brick and mortar retail outlets from the internet competition.
Luxury goods is a very big and wide market depending on the definition of what a luxury good is. Its not only watches; fashion, cosmetics, fragrances.... so its very much the European Union that is affected. Also a very important point is that if products are sold at lower prices the governments get less VAT revenue. Its a very lame way of trying to protect brick and mortar retail outlets from the internet competition.
I thought at the moment it was LVMH who were doing all the movement on this, you'd think the EU, which was created to bring down borders and make markets easier for all would look at this and just state that any change would cause free markets to be regulated in the wrong way.
I never really understand the whole luxury market and their moaning about where items are sold, surely since they manufacture these items they can stop it by not supplying, if it's overstocked items coming up or companies buying up liquidated stock then how can they have an argument?
LVMH, Moët Hennessy - Louis Vuitton is a French based group that possesses a portfolio of over 60 prestigious brands in different sectors: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry. French interests at stake.
But what's the betting for tax reasons it's not French :lol:
Indeed. Yet more meddling.
Fully agreed.
The problem with that idea is that you will have a different bunch of people (this time bankers) complaining about the evil EU ruining everything. As we all know, the EU is to blame for everything that goes wrong in all its member states. Before the EU, all countries were perfectly run and had no corruption or foolishness amongst its leaders. :)
I think that the main reason* that the EU is blamed for everything is that any time something unpopular but necessary has to be implemented, national governments say they have to do it because of the EU, or that they can't do something because of the EU. Then they are amazed that the EU is so unpopular with voters.
I think the EU is flawed, but worthwhile and fixable. I'm disappointed if this move hampers internet competition to brick-and-mortar business, but I presume that it is just making something consistent or a clarification of an existing rule. With any luck, as Dibetu suggests, they will next change the rule so that consumers can benefit (the EU has a reasonably good track record on that).
*aside from the (typically foreign-owned) press agitating against the EU because it makes for interesting headlines, sells papers, and damages US economic hegemony
I think the point is that the EU has introduced a whole new level of corruption and utterly unecessary government. It's very existence (over and above a free trade zone) is corrupting and wasteful.
It is not "blamed for everything". In my experience it is only blamed for what it does and what it causes.
This statement presumes that all that the EU does is necessary. For the most part it is not. Genuinely necessary legislation could be and should be passed by national governments. We don't need a supranational, centralising, anti-democratic organisation that betrays its own clamed principle of subsidiarity in order to pass genuinely "necessary" legislation.
Since national governments are unable to opt out of most EU legislation this is demonstrably true for the majority of EU-sourced legislation. If the EU respected its own claimed principle of subsidiarity then there would be no need for some countries to negotiate specific opt-outs: National goverments could, quite rightly, choose what they did or did not implement.
I think it is far, far from fixable. It political motivation is inherently and essentially socialist and is has no presect for democracy.
Consistent centrisim, corruption and socialistic market meddling is still centrism, corruption and socialistic market meddling.
Hear, hear, well stated.I think the point is that the EU has introduced a whole new level of corruption and utterly unecessary government. It's very existence (over and above a free trade zone) is corrupting and wasteful.
It is not "blamed for everything". In my experience it is only blamed for what it does and what it causes.
This statement presumes that all that the EU does is necessary. For the most part it is not. Genuinely necessary legislation could be and should be passed by national governments. We don't need a supranational, centralising, anti-democratic organisation that betrays its own clamed principle of subsidiarity in order to pass genuinely "necessary" legislation.
Since national governments are unable to opt out of most EU legislation this is demonstrably true for the majority of EU-sourced legislation. If the EU respected its own claimed principle of subsidiarity then there would be no need for some countries to negotiate specific opt-outs: National goverments could, quite rightly, choose what they did or did not implement.
I think it is far, far from fixable. It political motivation is inherently and essentially socialist and is has no presect for democracy.
Consistent centrisim, corruption and socialistic market meddling is still centrism, corruption and socialistic market meddling.
That is enough to have TZ members getting their wallets out and forming a queue....NOT!!!!! :roll:
I run a specialist retail store for HiFi, Home Cinema, & Custom Install. Steve & I have to go on many courses at considerable expense just to be able to stock some components.
Recently I made a decision to drop Yamaha because of discounting by on line sellers. Just after I made that decision, and after much moaning to Yamaha, the Yamaha rep. came to see me with new contracts to sign. He told me that some of these on line sellers didn't understand the relationship of what margin they were making against the 'buy in' & selling price - most down to 8% :shock: They have now put into position a contract that now protects us better and happily I agreed and signed up. These low ball bedroom operators should now quietly disappear Yamaha have said (I hope).
There is nothing worse than some prat wasting my time for a couple of hours, tapping my knowledge of over 30 years and saying,"Well I can get it cheaper on the internet" :evil:
If people want cheap prices, ok go on the internet . They'll find out quickly it wasn't quite the bargain they wanted when it comes to servicing and trying to get it repaired.
So I agree that there are brands and retailers that need some protection. Bang & Olufsen were under threat once and to prevent on-line sellers getting hold of the product they created stores which could only be a franchise.
Rod
If Gucci does not like it that Kate Moss undercuts prices, then how does her chain get the goods?
The article at the The Times is more than slightly oversimplified and has a slight slant to it :wink: There's more at the FT:
http://www.ft.com/cms/s/0/0aea7130-4...44feab49a.html
"Under the new rules, a manufacturer who has let a dealer into its distribution system will not be able to prevent that distributor from having a website and selling products online. It will also not be able to limit quantities sold over the internet or charge higher prices for online purchases...
Under the new rules, manufacturers remain free to decide how to distribute their products provided neither their market share nor that of their distributors or retailers is above 30 per cent. However, once authorised, distributors must be free to sell on their own websites as well as in shops or other physical outlets."
Hate to say it but I think I agree with the manufacturers/official dealers. I would want to control who sold my products [if I had any], not let the local "dell boy" flog it, while other quality retailers [with good service] suffer...
BUT I also can't stand overly inflated pricing, maybe they need some sort of nutrition label similar to the food industry, let us see where the costs are, justify themselves :D :) :(
material value..........1.5%..£135
stainless steel..........1.0%..£90
silver.......................0.5%..£45
workman's hrs..........2.5%..£225
overheads................5.0%..£450
fashion....................89.5%..£8055
cost increase since 2008 x10
TOTAL COST...............£9,000
A lot of the fashion groups have been doing the same thing, as it is the only way they can both preserve their brand image and fight fakes. Louis Vuitton now sells only through its own boutiques, as does Chanel (makeup/perfumes/watches aside). If they want to do that the good on them - it is their brand and their product and nobody should tell them how to distribute it.Bang & Olufsen were under threat once and to prevent on-line sellers getting hold of the product they created stores which could only be a franchise.
Surely there is the potential for watches to go the same way. TAG Heuer already have some of their own stores and even outlets, where they can control everything about how the product is presented and marketed. It isn't a stretch to imagine someone with the clout of Swatch Group could easilly set up their own "boutiques" and cut out the jewellers altogether... Swatch-owned stores in major cities selling Omega, Blancpain, Longines, Rado, etc could be made to work... They'd control the brands and take a larger slice of the profits.
+1.
http://www.openeurope.org.uk/media-cent ... easeid=126
When was the last time the EU filed accounts? They went 15 years without filing them. 2009 failed, I know that (see link). Yet the corruption and squirreling away of money in favour vested interests continues. A private or public company would long have been destroyed if it had acted like this. Apologists for this communist system can only be either mortally afraid or it, or employed by it. No-one sane would support their money being given under duress to an organisation so blatantly and openly corrupt - and, apparently, so perfectly untouchable.
...but what do I know; I don't even like watches!
+1.
http://www.openeurope.org.uk/media-cent ... easeid=126
When was the last time the EU filed accounts? They went 15 years without filing them. 2009 failed, I know that (see link). Yet the corruption and squirreling away of money in favour vested interests continues. A private or public company would long have been destroyed if it had acted like this. Apologists for this communist system can only be either mortally afraid or it, or employed by it. No-one sane would support their money being given under duress to an organisation so blatantly and openly corrupt - and, apparently, so perfectly untouchable.
It's not the filing of accounts they fail to do, it's getting their auditors to sign off on those accounts that they can't do :lol:
Anyone who reads private eye must know how daft the EU is these days, they self audits and self police, then the minute something comes out from a whistleblower they go hell for leather in catching the person who leaked the information, whilst doing nothing about what they leaked.
Anyway, for me online retailers for watches tend to do a few things, they either buy in stock from abroad, which surely shouldn't be that cheap as tax and VAT should hit it anyway. They can buy bankrupt stock or old stock, which shouldn't affect the boutiques and so on as they are selling 'this years' fashion.
In many ways the fashion world is a cartel, where they seem to be allowed to do as they wish, it's a shame really as they've all but priced themselves out of the market in many countries, but still think that by stopping online sales they'll bump up their own sales, when in reality they'll just push people to other things because those same people won't go running to pay 30-50% extra, that's why they avoided them in the first place.
Hmm..I think we'll have to agree to disagree on this one Mark. I think a debate goes beyond the scope of 'watch talk'I think the point is that the EU has introduced a whole new level of corruption and utterly unecessary government. It's very existence (over and above a free trade zone) is corrupting and wasteful.
It is not "blamed for everything". In my experience it is only blamed for what it does and what it causes.
This statement presumes that all that the EU does is necessary. For the most part it is not. Genuinely necessary legislation could be and should be passed by national governments. We don't need a supranational, centralising, anti-democratic organisation that betrays its own clamed principle of subsidiarity in order to pass genuinely "necessary" legislation.
Since national governments are unable to opt out of most EU legislation this is demonstrably true for the majority of EU-sourced legislation. If the EU respected its own claimed principle of subsidiarity then there would be no need for some countries to negotiate specific opt-outs: National goverments could, quite rightly, choose what they did or did not implement.
I think it is far, far from fixable. It political motivation is inherently and essentially socialist and is has no presect for democracy.
Consistent centrisim, corruption and socialistic market meddling is still centrism, corruption and socialistic market meddling.I would, however, refer you to the FT article for clarification of what the crazy commies are up to now... :)
Most fashion brands like Gucci,Vuitton ,Boss,Armani ,Ferragamo etc already sell online through thier own boutiques so allowing other merchants with bricks and mortar stores to sell online ,whats the big deal?
Because they want to control every aspect of how their brand is sold and how it is presented to the customer. They've invested in their brands - other retailers haven't - so if they want to limit distribution they are taking all the risk but in turn stand to take all of the reward.
Let's face it, it isn't just "high end" brands doing this... Ford will do their best to make it so you can only buy a new Fiesta through their dealerships, Marks and Spencer wouldn't want their jumpers being sold in Primark or BHS... Even Tesco Value beans won't be sold anywhere except Tesco.
The big deal is that is may be becoming standard business practice:
http://ablogtoread.com/watch-industry-n ... retailers/
Especially in the watch industry where one player holds a lót of cards it may not necessarily be in our interest that he gets to hold even more.
No; brick and mortar shops will not disappear alltogether and neither will internet shops (like TimeFactors) but they wíll change and the whole goal of the changes is to maximise profit which wé pay. Yes, big deal.
Thanks for the link. Good read. I still don't think the big dinosaur brands fully understand what is going on with the internet.
Not directly related ... Copyright = The right to copy:
http://www.youtube.com/watch?v=vvjlBg4ZZwE
john
Costume jewellery. Ouch!!!
I am convinced that they not only do but have been implementing action in the street for some time.
Walking through Málaga centre a change in the watch shops is evident.
Several tradional watch shops have gone and the ones left have changed their stock.
The overal number of windows selling watches has increased as there are now Swatch Group boutiques and lóts of ´designer´ bling in clothing7accessories shops.
The brand boutiques = controlling prices while cutting out the middle man.
The designer boutiques = competing with the internet by bringing the bling into the shop where the people cóme.
Bottom line is that the discounted internet stock comes from the same source as the list priced boutique stock where customers should be able to get better information advice service and warranty. Manufaterers have been supplying the grey market unofficially for ages and exactly this has given a lot of them much higher market shares.
‘Implementing action’ does not imply intelligence. IMO it is too little, too late. If nothing else, the internet has fostered a distrust of the establishment and “the established” and the populous is beginning to look deeper into the workings of things, especially as information is only a click away.I am convinced that they not only do but have been implementing action in the street for some time.
Walking through Málaga centre a change in the watch shops is evident.
Several tradional watch shops have gone and the ones left have changed their stock.
The overal number of windows selling watches has increased as there are now Swatch Group boutiques and lóts of ´designer´ bling in clothing7accessories shops.
The brand boutiques = controlling prices while cutting out the middle man.
The designer boutiques = competing with the internet by bringing the bling into the shop where the people cóme.
Brand boutiques were being talked about before the renaissance and it sounds that due to the lack of any new inspiration, they have fallen back to the last workable-ish plan.
john
Costume jewellery. Ouch!!!
Vulcain Watch or PMH SA. produce in very limited numbers and only supply their chosen AD's worldwide who have to proof with every sale that the watch was sold by them at the agreed list price; else they don't get new stock supplied. Customers also send in part of their AD stamped and filled out warranty card together with the sales receipt to register the watch for an additional three years warranty. No brand new Vulcain turns up on ebay or on the grey market. As its a small company with a high end specialty product they can control where it is sold and at what price.
However when it comes to mass production like for example the Swatch Group's mid and lower tier brands; they need to sell to the broad masses. Depending on grey dealers to clear out stock for them. As they dump the market with thousands of watches of the same model they know that less than half will sell officially at list price through the authorized channels and that has already been the case before internet dealers and auction sites were active but it is so much more visible now. If they want to prevent that production numbers need to be cut.
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