Luxury watch retailer and a sweetener on the side. We recently met the management of The Hour Glass for an insight into the company and the watch industry. Over the past 34 years, Hour Glass has cemented itself as a luxury watch retailer in Singapore and has been growing its presence in Asia. It also secured the main franchise of Ladurée in SE Asia, a French luxury bakery renowned for its macaroons.
Rising headwinds, rising costs in core market. The management stated rising business costs in Singapore in recent times have negatively affected one of its core customers, namely, SME owners. It views Singapore’s consumer sentiment as the weakest among the ASEAN countries. In the region, the luxury sector is facing increasing challenges. For example, China’s efforts to weed out official corruption has resulted in a drop in Swiss watch export levels to Asia (Singapore’s -2.6%, Hong Kong’s -11.1% and China’s -18.7% in 1H13.)
Potential entry of new competitor. There is also talk of new competitors entering Singapore, eg, Emperor Watches & Jewellery. But we think newcomers would find it difficult to take market share with Hour Glass already firmly entrenched in prime retail spaces on Orchard Road. Management pointed out that once the company secures a retail space, it is usually there for good.
Exploring untapped markets to mitigate slowdown at home. To break into