CPP-LUXURY.COM has recently interviewed exclusively the CEO of Poland’s W. KRUK, the largest luxury watches retailer in Central & Eastern Europe (Russia not included).
How did your company perform in 2019 and what are your expectations for 2020?
W.KRUK is the oldest Polish jewelry brand, turning 180 this year. Being such a long-established company we are at the same time a very innovative one. And innovation has been one of the key highlights of 2019. As a diamond expert, we have introduced to the market – for the first time in Poland and probably as a first nationwide jeweler in UE – laboratory grown diamond jewelry collection.
Together with our partner ALTR Created Diamonds, a New York based company, we have launched not only white but also very rare pink and blue human made diamonds, within the dedicated jewelry line – Doskonały®. Following the fact that in 2018 the US Federal Trade Commission changed the definition of the word “diamond” to remove the term “natural”, and therefore acknowledged that lab-grown diamonds have the same physical, chemical and optical qualities as diamonds mined from the earth, we wanted to introduce them to the market.
We strive to educate our consumers by providing 100% transparency standards (between diamonds and man-made diamonds) in the diamond outlet on the Polish market. And last, but not least we want to provide an attractive and very up to date alternative in the diamond category for our clients. Will the lab-grown diamonds jewelry replace diamond one in W.KRUK stores – definitely not. However, after a few months of sales and positive feedback from the market, we can definitely say this was a successful kick off of the new category.
As an expert in exclusive jewelry and a ROLEX official retailer since 2004 W.KRUK is one of the companies strongly involved in building of a Polish luxury market. W.KRUK is a distributor of top Swiss watch brands (Hublot, GP, Omega) and jewelry as well (e.g. Damiani). Last year we were glad to welcome new high-end brands as our partners and we now offer Cartier watches and Chopard jewelry and watches in W.KRUK stores.
These two premieres in our portfolio, together with our long-term partner Rolex and other brands as Panerai, Breitling, Jeager LeCoultre make our luxury brands portfolio almost complete. The market develops constantly and welcomes giants from the fashion industry. And W.KRUK has the privilege to be a local retailer that is professional and qualified to represent the most legendary brands from the watch and jewelry industry. In 2020 we will continue building the strongest luxury brands portfolio on the market and celebrate W.KRUK’s anniversary. As the oldest, yet the most innovative brand.
In a turbulent economic and political context which do you consider as the key disruptive factors and what has been your approach to tackle them?
Luxury jewelry and watches category has enjoyed some rapid growth in Poland in the recent years. According to KMPG luxury jewelry growth forecast is the most optimistic for the entire luxury goods market. Luxury jewelry segment is expected to grow 6,9% in 2019-2024, while luxury watches category is expected to slow down with 2,8% until 2024. (KPMG Luxury Goods Market Report 2019). From W.KRUK’s perspective jewelry category seems optimistic, same as watches, where we still see a huge potential in both regular and luxury segments.
As for political context, surely the Sunday trading ban, introduced by the Polish Government starting from 2018 and gradually developed (with two trading Sundays monthly in 2018 and one in 2019) to end in 2020 with an all-Sundays ban, has been a challenge for the entire retail industry. For a nationwide jeweler as W.KRUK today it doesn’t have a huge impact. Polish consumers seem to have adapted to the new situation and compensate the Sunday ban with online shopping and purchase activity during other week days. We do not consider this a key disruptive factor anymore.
Wealthy Polish consumers, unlike other Eastern European nations, are more conservative and reserved when it comes to spending on luxury branded goods or services. Do you agree that most of their expenditures have an investment angle?
Wealthy Polish consumer of the jewelry and watch category has been traditionally very focused on the investment purchase angle. However, in recent years we have noted a very dynamic change in the way Poles consume luxury goods. When it comes to luxury jewelry, women in Poland do not need a special alibi or occasion anymore to buy an expensive piece. They buy it to express their personality, individual sense of style rather than an investment. For men, who according to KPMG create 78% of the luxury watches market value, buying a high-end watch is no longer a once in a lifetime purchase and an investment. Poles learned to shop luxury brands and are more aware of their personal needs, more eager to buy goods that relate to their passions and lifestyle.
You have been gradually expanding your retail network not only in Warsaw but in other cities. What motivates wealthy Poles to buy luxury watches locally? Is there a particular set of brands which are more preferred by Poles?
Polish customers learned how to navigate the luxury brands world, they also became more familiar with high-end products. And these products are just simply available on the local market, plus local retailers can provide the same level of brand experience and know-how. Among brands that are surely preferred and generate interest among local consumers are Rolex for men watches and Chopard for jewelry. These are the brands that do not need any special introduction to Polish Clients and they are both available in W.KRUK, second biggest jewelry retail network in the country with over 140 stores.
In other emerging markets, wealthy consumers are also motivated in their watch purchases by how recognisable the respective piece is from a distance?
In Poland we have made a huge move forward in terms of consumer perspective on luxury brands. Today an expensive watch does not have to be a “show-off” kind of watch. Of course, there are customers who enjoy some vey fancy pieces and there are brands that offer vanguard watches. I
n W.KRUK we represent Rolex, Cartier, Chopard, Hublot, Breitling, Panerai, Omega and many more. With this mix we can easily answer the needs of all customers. Those who enjoy classics, those who love sports and those who wish their watch to visually stand out. Best Swiss quality is key, but choosing a particular brand is important and helps express one’s personality. A new trend we currently observe is for men to choose sport watches and build their watch collections. And very often pieces they choose can only be recognized by connoisseurs and surely not by everyone from a distance.
Is there a profile of a Polish luxury watch consumer? Does the same consumer choose for example exotic holidays and /or high fashion?
Polish luxury watch consumer is mostly a man (men generate 78% of the segment value according to KPMG). From the perspective of a retailer offering Swiss watches of all price segments – young men in Poland aspire to buy luxury watches much earlier than is was in the past. This means that the distance – mentally and financially – for the younger generation to reach luxury goods level has dynamically shortened.
2019 was marked by the symbolic market entry of HERMÈS. Have there been any particular recent developments that motivated this opening? Or it is more a question of the maturity of the market.
In the past few years Poland has been a point of interest of many luxury brands. Today the market is mature enough to welcome brands like Hermès. W.KRUK as an official retailer of Rolex since 2004, is one of the pioneers in building the luxury market in Poland. The first Hermès in Poland and the newest W.KRUK store are both located in Warsaw in Europejski Boutiques, next to Raffles Europejski Warsaw hotel.
You also opened several boutiques at Raffles Europejski adjacent to Hermès. Are these more like corners or shop in shop? Do you plan to launch mono-brand boutiques for other brands?
There are no Rolex monobrand stores in Poland. All of the ten boutiques offering Rolex in Poland are multibrand W.KRUK stores, where we offer W.KRUK jewelry and watches of this legendary brand. The W.KRUK boutique that was opened in Europejski Boutiques is a multibrand store where we offer a few separate corners of excellent brands as: Rolex, Cartier, Jaeger-LeCoultre, Panerai and Breitling.
What is the ratio of jewelry versus watches sales?
W.KRUK has been a jewelry company for the last 180 years and even though our know-how in watches started in 1920 – we are still more focused on our primary offer. Jewels are and surely will be a stronger part of the business, however in the last 5 years the watch category has grown in all price segments, with luxury watches being a very strong one and with big potential for further growth.
Are you facing any challenges related to the grey market? To what extent foreign tourists also buy from your boutiques?
In Poland we are more focused on local clients than on tourists. Of course there is a percentage of watches sold to foreign customers, however this is not a strong trend. With a long client service tradition and as a partner of global brands we have procedures that prevent us from selling products to individuals who make a purchase to resell or any other grey market challenges that could possibly affect us. In this matter, international standards of our partners are also W.KRUK standards.
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