By  on March 26, 2009

Negotiating rough waters following a dismal holiday season and first quarter for many in the industry, watch brands convening at Baselworld 2009, the bellwether Swiss watch and jewelry fair that kicks off today and runs through April 2, are looking to the event as an important barometer for what’s to come.

Sylvie Ritter, Baselworld’s show director, said exhibition space for North American brands has increased 4 percent over last year, with all key marquee players present. “All buyers who want to show their customers novelties and trends are here,” she said.

Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said manufacturers and suppliers are both feeling the strain, with many implementing layoffs as business shrivels.

“It’s tense. Brands need to present innovations, but at the same time need to economize,” Pasche said. “It’s a contradictory situation.”

He said besides technical one-upmanship, brands will be looking to multiply their contacts with distributors at Baselworld.

“It’s fundamental in moments of difficulty,” he said, adding those with underdeveloped export structures are in for the roughest ride.

Observers claimed the prestige watch segment continues to be resilient to the down times, however. Hublot, which had a dozen $1 million watches on order at the beginning of the year, plans to increase production of uberluxe models by six.

“It’s not so much because demand is stronger, we’ve developed a better production process,” said Jean-Claude Biver, chief executive officer of Hublot. “It’s quite surprising that the very high [category] is not suffering at all.”

Thomas J. O’Neill, president of HWD and chief executive officer of Harry Winston Inc., said, “Our expectations for Basel are good. We’re looking forward to the introduction of some terrific new pieces. Our offering hasn’t changed, and we haven’t pulled back.”

Harry Winston’s new styles include the Talk to Me, Harry Winston women’s watch featuring a contoured oval case set with diamond rays.

Hans-Kristian Hoejsgaard, ceo and president of Timex Group, said business at its Vincent Bérard brand, which has prices starting at $75,000, has not been hurt at all.

“There is still a clear distinction between luxury and super premium, which is still doing really well,” he said.

Despite such relative optimism, Nicholas Beau, Chanel’s international director of watches, said Baselworld would offer better visibility of what the market can expect in the second half of the year.

“[The main problem] is not even the final customer; it’s more distributors who have problems with their treasuries or overstocked inventories,” Beau said. “We’ll know from Basel whether we need to be really worried or not.”

Several brands said they were anticipating a flat first quarter.

“We have been increasing year by year by a rate of 40 to 50 percent since 2004. Now for the first time we have no increase,” said Hublot’s Biver, who said business in 2009 has been variable according to the territory. “We have some retailers in Switzerland and London that have done their best January ever.”

Biver views the slump as a prime moment to invest in retail. Hublot boutique openings are in the pipeline for Paris, Munich and possibly New York.

“We’re on standby to catch the right moment,” he said. “We’re taking advantage of certain price reductions in leases. They’re coming down slowly but surely and this provides opportunities.”

Jean-Christophe Babin, president and ceo of Tag Heuer, said the major question is not how quickly the market will bounce back, but how best to gain market share.

Babin said Tag Heuer has intensified its aggressive pricing strategy designed at offering the best value for each price point on which it competes, notably with the launch of its Aquaracer 500M Calibre 5 that’s water resistant to 500 meters and features surgical-grade steel, an automatic helium valve and anti-reflective, treated sapphire crystal, retailing for $2,450.

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