Most Recent Articles In Watches
Latest Watches Articles
- Serena Williams Considers Revisiting Her Trademark Beaded Hairstyle
- Bucardo Collection Aims to Give New Look to Apple Watch
- Montblanc CEO Cites Strength in Watches, Leather Goods
More Articles By
GENEVA — So strong was the demand for hotel rooms during last week’s SIHH watch show here that even U.S. Secretary of State John Kerry and his international counterparts had to decamp to nearby Montreux for their opening talks on Syria.
This story first appeared in the January 27, 2014 issue of WWD. Subscribe Today.
With nearly 13,000 trade and media visitors, 16 exhibiting brands, nonstop sushi and Champagne, and sales of Swiss timepieces hovering near another record, the mood in Geneva was decidedly upbeat.
At nearly 20 billion Swiss francs, or $21.5 billion at average exchange, exports of Swiss watches by value climbed almost 2 percent in the first 11 months of 2013 compared with the previous year. Full-year export figures — the only industry-wide data available — will not be out until Feb. 6. But shortly before the show, Compagnie Financière Richemont, the driving force behind SIHH, said revenues in the crucial third quarter to Dec. 31 had risen 9 percent at constant exchange to almost 3 billion euros, or $4.05 billion. Days earlier, archrival Swatch Group — the motor behind the bigger BaselWorld watch and jewelry show in March — said 2013 revenues had jumped by more than 8 percent to a record 8.8 billion Swiss francs, or $9.46 billion, and reported a “strong start” to 2014.
Where the market is going remains up for conjecture. For independent watchmaker François-Paul Journe’s line, F.P. Journe, demand is reaching its limits. “I think the market is growing a bit more fragile. If you look at the figures, exports have risen because of higher prices, not higher volumes,” he said. While not exhibiting at SIHH, Journe was one of a number of smaller watchmakers to piggyback off the event, launching the Elegante — his first women’s watch collection.
François-Henry Bennahmias, chief executive officer of Audemars Piguet, was more optimistic. “This is still not a mature industry; far from it. Just compare it with women’s shoes: Watches haven’t even started yet. And as for men, ever more are being exposed to top watches. There’s still vast potential,” he said.
But the shadows remained amid Geneva’s bright lights. By far the longest was cast by China. Beijing’s crackdown on corruption and ostentatious gift giving has hit pricy watches. Exports to China were down 15 percent in the first 11 months of 2013. While Swatch Group remained reasonably confident — thanks partly to its lower- and mid-priced brands — Richemont acknowledged sales had fallen, without saying by how much.
Everyone at SIHH was conscious of China’s potential for disruption, but few dared stick their necks out. The reticence was particularly conspicuous among Richemont executives, always wary of revealing proprietary information and even more so when the subject is touchy.
Jérôme Lambert, the normally communicative former head of Jaeger-LeCoultre who last summer moved to run bigger Montblanc, was one of the tightest lipped. He also declined to comment on the rumors surrounding his transfer — widely taken by analysts to reflect Richemont’s attempt to enliven Montblanc’s stagnant sales.
Lambert made no secret his priority was boosting synergies between watches, writing instruments, leather goods and jewelry, Montblanc’s four lines, with watches playing a big role. For starters at SIHH, he revealed the brand’s new Meisterstück Heritage range to reinforce its lower priced watch offering.
“Yes, there are going to be ups and downs. But what we’ve noticed in China in the past two to three years is the rising connoisseurship of many owners,” observed Nicolas Bos, ceo of Van Cleef & Arpels. As a relative latecomer to China — the brand opened its first store there only in 2005 — and a predominantly retail label, Bos claimed to be less concerned than most.
His priority was to “rebalance” Van Cleef’s image. Once known as the epitome of high jewelry, the brand has moved into watchmaking, with some particularly complicated models for women. This year’s SIHH brought an emphasis on similar expertise for men — showcased by the new Midnight Planétarium Poetic Complication, an extraordinarily complicated timepiece due to retail for $245,000 before tax. The planets featured on the watch will move in time to their genuine stellar orbits. Saturn, for example, will take more than 29 years to circle the dial.
Daniel Riedo, Lambert’s successor at Jaeger-LeCoultre, tried to remain sanguine. “Obviously, there are periods of ups and downs. It’s true this is not a period of very fast growth in China. But we’re there for the long term,” he noted. Reflecting the long-term nature of the business, Riedo’s brand is nearing the end of a heavy investment phase to boost output and increase in-house parts production. The process, called “verticalization” in the trade, was, after China, the second major theme at the show.
Verticalization has been driven by consumers’ increasing sophistication and product awareness, making them much more conscious of what is inside a watch, and watchmakers’ concerns about security of supply. The latter has been triggered by fears of lower sales from crucial Swatch Group subsidiaries that have hitherto dominated production of essential components like springs, regulating mechanisms and even entire movements. Switzerland’s antitrust authority last year gave Swatch approval to gradually reduce sales of such key parts to third parties, triggering an investment spike among even upmarket brands that had previously bought many such products externally.
The Richemont group responded with heavy investment in centralized component making. But its individual brands have also spent apace. At Jaeger-LeCoultre, for example, output of springs and entire regulating mechanisms has roughly quadrupled in the past three years. Reflecting the brand’s confidence in its own technology, Riego launched the Hybris Mechanica 11, an ultrathin (just 7.9 mm), ultracomplex men’s watch that will retail for 350,000 euros, or $458,500, when it hits the market later this year.
Vacheron Constantin, another top Richemont brand, has invested as heavily. Last September saw the concentration and expansion of component manufacturing activities on one site. By this December, construction should be completed to double space at the company’s watch manufacturing and administrative base in Geneva.
Selective acquisitions to bring in previously outsourced expertise, like wheels and pinions or dials, has complemented investment in bricks and mortar, explained veteran ceo Juan Carlos Torres. As with Jaeger-LeCoultre, the brand’s confidence at SIHH was expressed by a striking new product range — the Métiers d’Art Fabuleux Ornements.
“The acquisitions will help us grow a little faster. The aim isn’t so much to increase volume as to optimize our product mix,” explained Torres. “We want to master an increased range of skills, even if that often involves only a very small number of very specialized watches. We may only make about 30,000 pieces a year. But I’d say they are of such complexity it’s like someone else’s 100,000.”
Piaget, the Richemont brand best known for diamond-studded women’s watches and classic men’s timepieces, is also expanding. “We’ve always believed in being completely verticalized: we don’t buy in any movements. Bracelets, settings; we do it all ourselves,” said ceo Philippe Léopold-Metzger. Piaget has already boosted movement output and has big plans to raise space by 50 percent at its headquarters site. “You have to cater for the future, and we believe in the future,” he added.
Design was the third theme at SIHH. Virtually every stand testified to the continuing shift away from “bling” products, evident since the end of the financial crisis. Just as “bling” brought bigger, flashier watches, so the pendulum has swung back to more classic (though not necessarily more simple), more elegant and, often, smaller designs, especially for women. Rising demand from Asia, in particular, has played a role here, given Asian women’s generally smaller hands and wrists than their U.S. or European counterparts. Ralph Lauren, for example, unveiled its Stirrup ladies’ watch in a new “Petite” size, retailing at $2,300 before tax. Cartier was as indicative, notably via its new Tortue collection — a comprehensive reworking of a famous range first introduced in 1912. Priced between 8,000 and 98,000 euros, or $10,800 to $132,300, depending on the metal used and the extent of diamonds, the new Tortue is intended to look more contemporary and feminine. And, with a depth of 8.6 mm. for the medium-size version and 7.3 mm. for the smaller one, it exemplified the shift to smaller and thinner watches.
Pride of place on thinness went to Piaget’s Altiplano 900P, a men’s watch launched at SIHH that is just 3.65 mm. deep. “It’s all of Piaget, in just 3.65 mm.,” said Léopold-Metzger. “It’s the thinnest manual winding watch in the world — we already have the record for the thinnest automatic.”
Of course, watches, like fashion and accessories, also need their free spirits. Roger Dubuis’ new Hommage range showed that flamboyance and size could remain defining features of a brand, whatever the latest trends. “Smaller, flatter, cheaper, we recognize all that. But we don’t have to go along,” said ceo Jean-Marc Pontroué, with obvious pride “Roger Dubuis is a brand that’s all about personality.”
Georges Kern, the head of IWC, agreed. “All this stuff about trends to smaller, thinner; it’s nonsense. Every brand has its own identity. Everything in watchmaking has been done over the past 200 years. The key is how you develop your brand. People buy first and foremost a brand, before a product. Once you’ve got a customer affiliated to your brand, they’ll buy your product. It’s the brand that counts.”