“Fossil needs one outlet store for every 10 full price stores”
The viewpoint from Wolfgang Thoeren, Senior Vice President Retail EMEA at Fossil.
Sophie Baqué: Can you explain the Fossil retail business?
Wolfgang Thoeren: Fossil is a mid-range accessory retailer based in Dallas, Texas, U.S.A. We specialise in luxury goods like watches, bags and wallets. In 2015, our turnover reached US$3.23 billion, with 50% coming from licensed watches. In Europe, we opened our 1st outlet store in 2006, and this business now has 66 units (40 Fossil Outlets and 26 Watch Station), which are mostly in Europe’s four largest retail markets of the U.K., France, Germany and Italy. We calculate that we need one outlet store for every 10 full price stores. If Fossil did not sell extra stock through outlets, we would lose millions in unsold inventory.
What are the advantages of selling overstock online, via services like Net-a-Porter or Vente-Privee?
WT: When you have overstock, either you sell it in your outlet stores over a minimum of 6 weeks, or you use online for greater speed. Vente-Privee and Net-A-Porter provide a fast channel for selling overstock, as do liquidation stores like TJ Maxx in the U.S.A., which has been increasingly successful. In some very big and professional retail firms, when you have overstock, you are not allowed to purchase new products before generating the cash by selling the overstock first. Online can help accelerating the process. However, at Fossil, outlet stores remain the priority.
Are Fossil outlet sales on Vente-Privee or Net-A-Porter profitable?
WT: I really don’t know because I am not in charge of these operations. Online sales are a tiny part of Fossil compared to outlets, as they account for less than 5% with outlets generating 95%. Our outlet stores are more profitable than our full price units, because rents are so much lower than in high streets and sales per outlets are higher.
What are Fossil’s priorities?
WT: We see that personalisation is huge and that it brings people into our stores. Clients can have their watch engraved or their leather watchstraps embossed at full-price stores. We are now engraving at our Bicester outlet store (U.K.). Next year, we will offer engraving at 20 outlets. This is a fast learning curve. The outlet world is in constant evolution and the U.S.A. is 10 years ahead of Europe. As every retailer has huge traffic problems, omnichannel is a big thing because the addressable market is not expanding. Retailers who are the fastest to link all online, full-price and outlets channels will win, leaving others facing bigger challenges.
