In a world where consumers have their phones with them seemingly at all times, which of course show the time of day, one would think that there would be little need to wear a watch. However, that line of thinking discounts the emotional connection that consumers have to certain products, notably jewelry and watches. That was one of the messages delivered by Efraim Grinberg, chairman and CEO of Movado Group, Inc., the parent company of watch brands such as Movoda, MVMT, Ebel, among others, during a session at the ICR Conference in Orlando, Fla., last week.
Here's a recap of Grinberg's comments on a variety of topics that were covered during his fireside chat session.
On the Health of the Consumer
Overall, Grinberg is bullish on consumer health and the outlook for 2023. Two years ago, we saw a consumer as strong as they were ever going to be — pent-up demand, record employment, savings growth, government stimuli. We would expect to see pull back from that consumer, and that’s what we’ve seen. Also, the consumer today has more places to spend their money, including experiences and trips, which they weren't taking during the pandemic. We're returning to a more normalized consumer model. Inflation seems to be moderating. Full employment bodes well for the consumer’s future. Gas prices are coming down. We also saw a high level of currency valuation — strengthening of the dollar vs. the euro.
On the Need for Watches in a Smartphone-Obsessed World
Consumers have always gravitated to product that they can have emotional connection with, and that includes jewelry and watches. I like to wear a watch every day, and I admit I look at my phone to see the time. When you want an emotional connection to a product, watches make a great gift. We’re a human device. We don’t make watches that connect to your phone; we make watches that connect to your heart. Mechanical watches have a long-term value and emotional connection to them.
On Shift in Marketing Strategy
Customer acquisition has been muted vs. previous years because of the rising cost of acquiring customers online, noted Grinberg. Therefore, Movado Group's plan is to go back to a greater focus on brand building with its online marketing. Grinberg believes brand associations created in digital venues will come back to the forefront. That’s a good thing, he said, adding that acquisition is expensive and inefficient.
A Promotional Future?
Grinberg doesn't believe it’s going to be as promotional an environment in 2023 as is being forecasted. Most of the best retailers are in a pretty clean position with their inventory, which will impact their need to discount. Movado Group is not in the fashion seasonal space, noted Grinberg. That’s a big advantage from an inventory perspective.
A 2023 Forecast
Movado Group is a long-term company and has positioned itself well to withstand economic uncertainty, Grinberg advised the ICR audience. "That’s how we operate. We’ve delivered strong results over time. Having a strong balance sheet has enabled us to continue to invest in growth when others can’t. And we have an executive team that has executed against the strategic plan we’ve put into place."
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