By  on March 19, 2012

BASEL — Watch firms just keep ticking along.

Despite hurdles ranging from soaring gold prices to worries about European debt, the watch industry is heading for another record year, according to exhibitors at the Baselworld international watch and jewelry show in Switzerland.

The event, which ran from March 8 to March 15, attracted 104,300 visitors, up 1 percent compared with 2011, and a record 3,320 journalists, representing a 9 percent jump.

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“The mood is good,” said Nick Hayek, chief executive officer of Swatch Group, the world’s largest watchmaker. “We know that the stock level at retail worldwide is low. Sales are good, so the retailers are enthusiastic.”

Jeffrey P. Hess, ceo of Old Northeast Jewelers in Florida, said he had increased his spending by 25 percent.

“There was a sense of newfound prosperity. All of the brands were bringing out fresh product, and the brands were much more forward-looking than they have been in the past three years,” he said, referring to the aftermath of the 2009 global economic crisis that decimated Swiss watch sales.

“I’m very bullish on the economy in the U.S.,” Hess added. “Our stores were up by around 35 percent in sales last year, so we went to Basel ready to buy.”

Marie Lassagne, head buyer for watches and jewelry at Paris department store Le Bon Marché, said she noticed a return to watchmakers’ roots that chimed with the timeless models that her clients are coveting, and a soft color palette with lots of gray, as opposed to last year’s ubiquitous black and white.

“It’s quite reassuring for buyers like us to invest in these kinds of pieces,” she said.

Industry officials expect strong growth in the United States and Asia to help propel exports of Swiss timepieces to a new record in 2012, after reaching 19.3 billion Swiss francs, or $21.8 billion at average exchange for the period, in 2011.

However, growth is set to ease from the 19.2 percent posted last year as China, the world’s fastest-growing watch market, has forecast more controlled economic growth in 2012.

“It still will not be a totally smooth ride, just like 2011 was a year with relatively little visibility,” said Karl-Friedrich Scheufele, co-president of Chopard. “I think the potential in Asia is still big, but we would prefer growth there to normalize. It’s better to have nice, steady growth rather than the explosion of recent years.”

Hublot made a splash by selling a one-of-a-kind $5 million diamond watch, one of the most expensive timepieces ever produced, to a buyer from Singapore, topping its previous $1 million and $3 million models.

“The $1 million was our Mont Blanc, and now the $5 million is our Everest,” said Hublot chairman Jean-Claude Biver. “We have reached the limit of what a watch, on the surface and in terms of thickness, can receive in diamonds.”

Many brands continue to experience production bottlenecks, a situation that has led to a spate of acquisitions in recent months, as watch firms seek to secure their pipeline of movements and components, now that Swatch Group has started phasing out some of its supply to companies other than its own.

Even Swatch Group brands were not immune to the shortages, though. Marc Hayek, ceo of Blancpain, Breguet and Jaquet Droz, was spotted wearing a prototype of Breguet’s Classique Chronométrie, which hopes to set new standards of accuracy in a mechanical watch, but he refused to take any orders for it before next year.

“I decided that I don’t want to sell it this year because if everything goes well, production pieces won’t be available until December at the very earliest,” he said. “It doesn’t help us, if we cannot deliver, to take the orders here.”

David Yurman said the industry was back on solid footing after the 2009 debacle. So far this year, his brand is up double digits, with its watch division growing 60 percent.

“I think we’ve hopefully learned a lesson, so actually it was good for us because we tightened up lots of things, and we’re still looking at all the processes in our company to make it work better,” said Yurman. “The buyers have also become much more astute to what the market really is.”

One market all brands are focusing on is the female one.

Tag Heuer unveiled its Link Lady in the presence of new brand ambassador Cameron Diaz, and Tag Heuer ceo Jean-Christophe Babin said the brand hoped to increase the women’s share of its total sales to 40 percent from 30 percent.

Ebel, meanwhile, will introduce its new Onde and X-1 ladies’ collections in the fall.

“I think there’s a huge demand, and there’s been very little innovation in the women’s category,” said Efraim Grinberg, chairman and ceo of Movado Group, which owns the brand. “Ebel is a brand that’s always had a feminine bent, so it really is the brand that should own this category.”

Patek Philippe expanded its offering of “grand complication” timepieces aimed at women with its Ref. 7140 Ladies First Perpetual Calendar. “I think women were ready since a long time, but the retailers were maybe more afraid,” noted Patek Philippe ceo Thierry Stern.

Other exceptional ladies’ pieces include Chanel’s Première Flying Tourbillon, celebrating the brand’s 25th anniversary in watchmaking. It came with 228 baguette-cut or round-cut diamonds.

Battered by the soaring price of gold and precious stones, some luxury brands reached out to younger customers with more accessible price points.

De Grisogono, for instance, launched the glow-in-the-dark Tondo by Night watches, which come in a rainbow of colors with signature shagreen straps and are aimed at women aged 18 and older. “It’s hurt enormously,” De Grisogono ceo Fawaz Gruosi said of the increase in the price of raw materials. “Obviously, you can’t increase prices every two weeks.”

Others experimented with new materials.

Harry Winston tapped Nelly Saunier, a “Maître d’Art” (Master of Art, in English) specializing in feathers who has worked with Jean Paul Gaultier and Riccardo Tisci, to design four dials featuring geometric feather motifs.

Harry Winston ceo Frédéric de Narp said the brand was preparing to open its largest salon worldwide in Shanghai with a high-profile event on April 27 that will feature “several hundred million dollars’ worth of merchandise” of the glittering diamond variety, and a slew of celebrities.

“Contrary to all the other brands that see China as a mass market for luxury goods, we consider the Chinese as being perhaps the most discerning customers for luxury products today,” de Narp said.

Dior placed tiny pink or white feathers on the oscillating weight of its new Dior VIII Grand Bal pieces, set on the dial like a miniature jeweled fan. Other models were inspired by its haute couture creations, with extraordinary dials featuring luxe materials including mother-of-pearl, turquoise, jade, opal and sugilite, set with stones such as sapphires, spinels and tsavorite garnets.

On the sportier end, new gold alloys appeared. Omega highlighted its patented Ceragold technology in two new Seamaster Planet Ocean watches, while Hublot used its scratch-resistant Magic Gold in its first timepiece designed in partnership with Ferrari.

In the middle range, Seiko created buzz with its Astron watch, billed as the world’s first GPS solar watch.

Guess Watches said it would launch a Global Blogger Search in May to recruit about 100 contributors from 50 countries for its Guess Access Blog and Facebook page.

“We want to be number one on Facebook,” said Cindy Livingston, president and ceo of parent company Sequel AG, noting that Guess Watches had gone from 60,000 to 1.3 million Facebook “likes” in the space of six months.

Citizen, meanwhile, will soon relaunch its Web site with a revamped version of its “Unstoppable” ad campaign, featuring brand ambassadors including Eli Manning of the New York Giants.

“This year will be a record-breaking year for us in TV advertising,” said Jeffrey Cohen, president of Citizen Watch Company of America Inc. “The power brands like Citizen that have a very strong story and have a very strong compelling message, not only in terms of product, but also for marketing and advertising to the consumer, are the ones that really won this holiday season.”

Indeed, the middle segment could prove the main battlefield for watch brands in 2012.

In news that was sure to cause ripples among independent retailers, Swatch Group ceo Hayek revealed he would soon expand the foothold of its Hour Passion multibrand format, which carries brands such as Rado, Longines, Tissot, Hamilton, Swatch and Certina, and which, until recently, was confined to airports.

In addition to two existing stores in Russia, Swatch Group plans to open Hour Passion units in New York, Miami, Paris and Rome in 2012.

“If it works and we are profitable as rapidly as we have been in Russia, then you will see that this format will come on line in many countries where the traditional retailer is not capable of doing the business,” Hayek said, adding there could be at least 10 such stores in the U.S. over the next 18 to 24 months.

“Everybody wants to do luxury, luxury, luxury. That’s a mistake. Most money is made in the lower- and middle-market segment, not in luxury,” he said.

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