Daniel Wellington, the renowned Swedish watchmaker that has gained recognition for its sleek and minimalist designs, has recently taken a bold step into the handbag industry. This move marks a significant strategic shift for the brand, which had previously focused primarily on producing affordable and stylish watches. However, with the devastating impact of the pandemic on their business, Daniel Wellington was forced to reevaluate its approach and explore new avenues for growth.
In 2018, the company made a crucial mistake by transitioning from a wholesale model to a direct-to-consumer approach. This involved the establishment of offices worldwide, the hiring of general managers, and heavy investments in retail spaces. While this strategy experienced success in China, it failed to make a significant impact in smaller markets such as the UK. Recognizing the importance of wholesale, Daniel Wellington decided to return to its previous business model.
Fortunately, the brand experienced a positive response from most of its former partners, with over 90% of them welcoming Daniel Wellington back with open arms. This enthusiastic support demonstrates the strong belief these partners have in the brand. With the shift back to wholesale, Daniel Wellington aims to expand its presence to 5,000 stores by the end of the year and reclaim profitability.
Alongside this strategic shift, Daniel Wellington has also diversified its product range. Previously, watches accounted for 95% of the brand’s revenue, but now there is a more balanced 70/30 split between watches and jewelry. This diversification allows Daniel Wellington to tap into new distribution networks. The brand recently unveiled its collection of handbags, crafted from vegan leather. These stylish bags are set to be available for retail purchase in the coming fall season.
Furthermore, Daniel Wellington has expanded its price range for watches, with the average price now sitting at €250. The introduction of automatic watches priced at $400 adds a touch of luxury to the brand’s offerings, although their impact on overall revenue is more symbolic than substantial. In the jewelry segment, prices range from €59 to €100, with popular items including gold-plated letter charms and crystal-trim tennis bracelets. Daniel Wellington even includes eyewear and sunglasses in their product lineup, all priced at approximately €99.
Despite being a Swedish brand, Daniel Wellington sources its watch movements from Japan, while its leather wristbands are supplied by Italy. The assembly of their products takes place in China, a location chosen to ensure the brand can maintain the highest quality standards.
In conclusion, Daniel Wellington’s recent strategic shift and product diversification exemplify the brand’s dedication to adapting and thriving in an ever-changing market. By introducing their new line of handbags and refocusing on wholesale, Daniel Wellington is well-positioned for continued success.
Useful links:
1. Daniel Wellington Official Website
2. Reuters – Latest Business News
