The hour glass

In December 2013, the management of The Hour Glass (THG) had much to be pleased about. The firm, which had begun with a single boutique in Singapore in 1979, now had 29 boutiques spread across Singapore, Malaysia, Thailand, Hong Kong, Japan and Australia. THG’s turnover had grown from S$95 million in FY 1988 (ending March 1988) to S$602 million 25 years later in FY 2013. It was recognized as being one of the leading retailers of high-end watches in Asia. The firm had successfully managed the negative impact of the Asian financial crisis and an attempt to integrate backwards into watch manufacturing that had to be abandoned because of a lack of cultural and operational fit. THG now needed to decide what growth strategy to pursue in the future. The first option was to deepen its presence in the luxury watch segment in its current markets, which would essentially be a continuation of its recent strategy. There were concerns that increases in costs in Singapore – still THG’s most important market – would make it difficult for it to maintain profitability. There were also concerns about rising competition from mono-brand boutiques. The second option was to enter new geographical markets as a luxury watch retailer. This required either finding a trusted partner in the new market (as THG had done in Thailand) or sending a trusted senior employee to the new market to manage market entry. These entry strategies were both challenging to execute. The final option was to enter new luxury segments in its current markets. THG had already experimented with this option by taking up the Ladurée franchise in Singapore. There were questions about whether THG’s expertise in creating an excellent shopping experience for luxury watches would transfer to other luxury segments. There were also concerns that the luxury brand might take back the franchise after THG had invested in developing the market.

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