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Vertu in Russia first person view - Hardy Schneider

Vertu was established by Nokia for market promotion of exclusive handsets made from both usual materials and precious metals. On the Russian market the exclusive distributor of Vertu brand is Wital, carrying out representation functions, which include negotiations with clients, logistics on delivery of the equipment, marketing and so on. The company has never aspired to being publicly known, that is why its name was first unveiled for the broad audience after the conflict between “Euroset” and Vertu. We shall remind you that the largest retail network accused the partner of non-observance of terms of deliveries of the equipment and opened a Vertu boutique with shelves filled up with pies, which looks this way even nowadays.

The emerged conflict of interests has drawn attention to Vertu, as well as to the situation itself. We met with Hardy Schneider who is the executive board advisor of Wital. In the interview we touched upon positioning of Vertu and the current situation. In November we will give “Euroset” an opportunity to express its own vision on the problem; meanwhile you can find out what Wital’s viewpoint is.

E.M. Thank you for the consent to give an interview, the first question will be why is Russia so important for Vertu today, what position does the company have here, what the difference from other countries?

H.S. Naturally, your country is one of the largest markets for Vertu. We have no right to publish absolute numbers or shares of the various countries for Vertu sales in the world, but I can tell you that Russia is placed in the top three countries for Vertu. Products of the company are unique, in many respects relate not to technological or not so much to technological devices, as to products of jewellery art. Each device is hand-crafted, has a lot of fine details (about 250) and this is what differs Vertu and puts our phones on one level with the famous accessories, for example, the Swiss watch. It is an exclusive product and as all luxury goods, Vertu can not be related to the mass market. Recently, there has been a stable demand for such accessories in Russia and Vertu is not an exception. We are glad, that our partners are successful on the Russian market.

E.M. So, who is your partner in Russia today and how does the distribution network work?

H.S. As the exclusive distributor, Wital works with the various companies in Russia and the CIS countries. The main channel for selling of Vertu-labeled handsets is jewellery boutiques, which distribute the products of the famous brands and this is what provides a necessary level of service which Vertu insists on. Today the share of jewellery boutiques in sales of Vertu is 60 percent. Moreover, we are opening mono-branded Vertu boutiques and this direction is the extremely important for us as it allows telling buyers or visitors the philosophy of the company. Everything, from staff to interior, is important there. Vertu boutique is the “visiting card” of the company.

E.M.. You have not mentioned “Euroset” as a retail partner of Vertu.

H.S. Did not have time to do so. “Euroset” is one of the strongest Vertu partners focused on retailing, we have a history of relationships and it shows that the business has been successful for both partners. Over at Wital we have concentrated all the efforts (, both the wholesale and retail) on working with Vertu. In this aspect “Euroset” acted as the operator of our boutiques. At the initial stage of development of the market such division was legitimate but today our company is planning to focus on logistics, delivery of the goods, promotion and PR, rather than retailing. We are negotiating with “Euroset” for this company becoming the retailer on behalf of our company, in other words Vertu’s official retail partner with rights to sell through monobranded boutiques. You are the first journalist to whom we tell about it. At the moment there an active discussion of such contract is taking place, between us, Vertu and “Euroset”. For us, as for the exclusive distributor, this means an opportunity to concentrate on other challenges and markets as the phones will be distributed to “Euroset” through us in any case.

E.M. It is not a secret that other mobile retail networks would like to sale Vertu-labeled handsets as well, do they have any chance?

H.S. I want to remind that Vertu it not so much of a technological device as an accessory. It can be seen from the share of sales through jewellery boutiques, practically it is half of the market. Vertu is not a mass market device so you can not see in every shop. There were other large market players asking for cooperation but at that moment we already worked with “Euroset” and one operator on this market was enough.

E.M. Am I right that giving the status of Vertu dealer to “Euroset” means the end of the conflict? What can you tell about opening a new boutique by “Euroset” with empty shelves and how can it influence the brand?

H.S. First of all “Euroset” will get the status not of an official dealer but the official retail partner with rights to sell through mono-branded boutiques only. Secondly, there is no conflict and we always tried to be as much open to the inquiries of our clients, as possible. We also found a way of solving these problems in this concrete situation, as our basic purpose is to sell Vertu handsets. Establishment of a boutique with empty shelves is a serious strike at Vertu’s image and we do realize that. Our activity on the market has always been targeted at improvement of Vertu positions and we hope that there was no critical impact on our image. Most of the negative PR was aimed at a single boutique on Tverskaya as for other points of sales, for example, boutique on Kuznetskiy Most, they did not suffer and we did not see any changes.

E.М. You said that your activity on the market will be directed towards promotion of Vertu, how do you plan to do that?

H.S. Unlike the past years, we plan to intensify our advertising efforts to get even closer to our clients, to offer unusual PR-events, various promo-actions. The Russian market for us is a top priority, as well as the Russian clients.

E.M. Improvement of Vertu positions? It might seem that you have competitors?

H.S. No, Vertu does not have any competitors among usual devices; however indirect competition is still possible with Goldvish brand. It would be better to observe indirect competition with other luxury goods, rather than with handsets.

E.М. And what about the competition with the previous Vertu collections? Are they being sold on the secondary market already?

H.S. This is a unique case that only confirms my words about the very exclusive character of Vertu. Previous models are occasionally even more expensive nowadays as compared to prices they had on release. These phones have not become cheaper at all.

E.М. And what is you viewpoint on the life cycle of Vertu handsets today? Will the development time of the new models be accelerated?

H.S. Today Vertu phones are used by their owners for two years, in other words, the life cycle of our handsets makes two years. In course of this time collections are getting updated and our clients can choose a new phone. We use only proven technical solutions and consequently we are not aiming to replace models every 6-8 months as other “ordinary” manufacturers do.

E.M. Price for Vertu-branded handsets starts from 4000 Euros for the most unsophisticated model. At the same time we see aspiration of handsets manufacturers to entering top price brackets, in particular, Nokia is mastering the segment of phones with the price of 1000 Euros. Is any counteraction possible, I mean reduction of prices, especially against the background of the growth of the production and amplified demand on the market?

H.S. In my opinion, the level of 4000 Euros is the bottom line for Vertu devices and decrease will not occur.

E.M. The popularity of phones has led to the fact that even the tunes from Vertu are now being used in ordinary phones; can that pose a threat to Vertu’s image?

H.S. Tunes can be used, indeed, but the fact that they are recorded in mp3 format with the help of microphone worsens their quality. The second important thing is that Vertu uses extremely expensive loudspeakers and Yamaha sound processor. None of the manufacturers can afford installing such top-notch components on mass market devices. You can recognize a Vertu-branded handset by its sounding and the difference with an ordinary device will be strongly appreciable.

E.M. Thank you a lot for the interview. Finally, I’m asking you a traditional question: some words for our readers, perhaps wishes?

H.S. Thank you. I would like to wish well-being to all your readers and hope to see some of them among Vertu clients.

By the time this article got published, “Euroset” had already acquired the status of the retail partner.

Eldar Murtazin ([email protected])

Published - 27 October 2006

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