How to solve the phygital equation in retail?

"What's the problem? Are you serious?

"That was the scathing answer I received from a major Chicago watch retailer as I discussed the problems in his market. The demonstration he gave me opened my eyes to the new reality of watch distribution.

He grabbed my watch, tapped on his computer and inserted the reference. Instantly, he selected the first site from the Google selection. "The public price of your watch? "he asked me. I'm transmitting. "See for yourself, this site sells your watch for half price. And of the 3,000 users who have made a purchase, 98.7% consider themselves extremely satisfied... I don't have 98.7% of satisfied customers in my store! ?. I then mentioned the security risk surrounding online shopping. "This site is committed to taking back the watch within 30 days! "What if it is fraudulent? "Credit cards cover this type of fraud... ?

Distribution at the heart of the issues

Traditional watch distribution is sick. Yet it is this sector that enables it to turn its stock - its highest concentration of investment - into turnover, thus ensuring the survival and development of the company.

At a time when everyone is looking for the next growth lever in watchmaking, producing magnificent timepieces and exploring the 360 degrees of marketing will not change the fundamental problem. Digitalisation has brought about a structural and irreversible change in distribution. New channels make it possible to reach the consumer. Information flows and expectations have evolved. It is no longer a question of concentrating on the watch, but of asking about new ways of selling it. Distribution is at the heart of the issues, and new perspectives are emerging that can change the situation.

However, it is clear that distribution does not exist in the academic world. We teach sales, and mainly marketing (the first being often considered as a sub-category of the second). But distribution is conspicuous by its absence. At best, it is associated with sales, at worst... it is totally ignored.

The 3 pillars of sales

Traditional distribution results from the need to move goods to a dedicated place where supply can meet demand, in a specialized space where the transaction can be carried out in a

secure manner. The watch industry has long relied on a vast worldwide network to meet the customer. This proven system offers a key advantage: it allows future buyers of a watch to be able to see, touch and try it on, while receiving specialist service and advice. This is called the customer experience. In order to be relevant, it has always required a place (a store), a service (employees) and a stock (financial assets), three important cost factors inherent to this business model and which justify the high margins of retailers.

Digital changes the game

With the advent of the Internet, businesses are beginning to exploit a new channel, online sales. Relatively simple to implement, it allows brands to come into direct contact with the end consumer and eliminate intermediaries. Its main advantages? Repatriate high margins, improve cash flow and develop a better knowledge of customers and the famous sell-out.

The Internet first served as a marketing support and directory for the brands to guide potential buyers to authorized points of sale. From a tool at the service of intermediaries, the Internet has now become their competitor, since the brands started to include a shopping cart on their website. And this is the crux of the matter: with online and live sales, brands and their intermediaries have now become competitors instead of partners.

Phygital and the 4th industrial revolution

Is there another way? Can we as a brand improve our margin while at the same time offering increased service to customers? Can we combine the advantages of physical sales with those of digital? The answer that combines the best of both worlds is emerging and is called "phygital". A challenge, because these two models, to date, produce a short circuit if they cross each other.

Digital will attract the customer if there is a benefit to it, either financially or in terms of additional service. But this advantage will de facto provoke an outcry from intermediaries, who will see it as unfair competition. Conversely, the traditional physical network is costly, complex and often inaccessible for many small brands, which are unable to make their way into the shop windows of good retailers, which are locked by the big watchmaking groups.

What can be done? The solution will come from the art of concocting the right cocktail. The fourth industrial revolution, unlike the three previous ones, is not the result of technological breakthroughs that radically change the situation. This new revolution feeds on existing

technologies: by establishing interconnections, it allows new possibilities to emerge. All the letters of the alphabet are now on the table. It is now up to us to create new combinations of letters, the right combination of letters, which will make it possible to write the word success or failure. On the menu of this alchemist's work, ingredients such as big data, AI, Artificial Intelligence, VR, Virtual Reality, AR, Augmented Reality, 3D printing, IOT, Internet Of Things, nanotechnology, biotechnology, blockchains, etc. are on the menu.

This so-called assembly approach is stimulating. It mixes techniques, sometimes finds them or tests them, while advocating the integration of all the channels and not their negation. The possibilities are infinite and the desire to create the winning cocktail gives rise to vocations. I myself got caught up in the game by launching B?111OD, a novel watchmaking concept that allows me to test cocktails. For example? By hijacking the source code of a QR code system, the startup Meotion has made it possible to integrate a referent, thus allowing any person, place or opportunity to be paid for a sale he or she has generated, directly or indirectly. This QR code is integrated into a high definition hologram, creating an ad hoc point of sale at the location where it is placed. A column in a hotel becomes a showcase for ordering a watch while remunerating the hotel where the transaction took place. The possibilities are endless.

If today's possibilities are multiplied tenfold by this new approach to assembly, let's try to design the winning cocktail, one that will integrate intermediaries rather than exclude them. For the drama of retailing today is very much there: the points of sale have become touch points, leaving retailers to bear their costs, without getting their margins. Let's be inventive and go elsewhere for ideas. Because the future may well be in the hands of a barman creating the right cocktail and not necessarily a good watchmaker.