PARIS — Luxury watchmakers head to Geneva this month armed with renewed self assurance, having climbed back into growth territory following a two-year slump.
The industry’s first gathering of the year, the Salon International de la Haute Horlogerie, or SIHH, held in Geneva from Jan. 15 to 19, will set the tone for the coming months.
It takes place with the entire stable of 17 luxury watch brands who attended last year and a newcomer: Hermès. The French luxury firm, which launched series three of its collaboration with Apple Watch in the fall, has defected from rival trade show Baselworld.
Along with gawking at pricy new timepieces, fairgoers will seek clues about how the market is shaping up for the future, as the industry enters a period of tougher comparative figures. After months of retrenchment, marked by layoffs and cost-cutting, and finally relieved by the return to growth, watchmakers are jockeying for their standing in a competitive environment.
The Federation of the Swiss Watch Industry last month noted the uneven nature of the recovery, with key markets either growing briskly or falling moderately.
Analysts are forecasting annual growth of around 3 percent for the high-end watch sector this year and beyond. By contrast, Bain & Co.’s Claudia D’Arpizio has predicted annual growth of 4 to 5 percent for the luxury industry over the next three years.
“While destocking is largely complete, we are not observing a drastic upswing in confidence for watch demand. Rather, we see a market that is normalizing gradually to slower growth rates,” analysts at Bernstein wrote in a research note this month.
Analysts at RBC Capital Markets said they will be closely eyeing attendance numbers at this year’s show.
Last year, SIHH drew 16,000 visitors, numbers that were boosted by opening up to the public for the first time. This year, organizers say they expect more than 15,000 visitors, and have set aside the last day, Jan. 19, for the public.
The team at RBC added they will be looking at products from the key brands at Compagnie Financière Richemont, the owner of half of the brands showing at SIHH this year, with an eye on pieces in the below-$10,000 range.
“We will be particularly interested in sub-$10,000 novelties that can appeal to both new watch buyers and seasoned collectors alike, with the potential to become hits in 2018, like the Cartier Panthère watch in 2017, for example,” RBC said.
Analysts expect consumers to become increasingly picky, resulting in winners and losers among labels with diverging results in the coming months. That’s in contrast to past luxury booms, when high-end brands across the board were lifted by a growing market.
The recent crisis in the watch industry was marked by drops in sales at constant exchange rates of 5 and 7 percent respectively in 2015 and 2016, according to Bernstein figures. While business appears to be normalizing at a more tempered growth than fast levels of a decade ago, the crisis has had a lasting effect on the industry. The luxury consumer has become more discerning.
“For us, the new normal, the golden rule, is to push the notion of quality to the maximum,” said Baume & Mercier chief executive officer Alain Zimmermann.
Working with experts from elsewhere in the Richemont group, the label has been focusing on accuracy in a world where magnetic fields of everyday life — the covers commonly used on tablets, for example — can interfere with a watch’s performance.
For a project that spanned several years, and included a quest to increase a watch’s power reserves and stretch out distance between watch-maintenance appointments, the Baume & Mercier label decided to lean on Richemont expertise, including the group’s ValFleurier components manufacturer.
Richemont has regrouped specialists from its various brands by areas of expertise, forming a research and innovation division that it has placed in Switzerland’s Microcity, a hub that includes researchers from the country’s prestigious engineering university Ecole Polytechnique Fédérale de Lausanne, the nonprofit research and development center CSEM that is known for its role as the inventor of quartz watch technology, and the start-up incubator Neode.
At SIHH, Baume & Mercier will present a new edition of its Clifton model with the Baumatic technical features resulting from the years of development, with a self-winding caliber, flat white dial with porcelain-type finishing and enlarged date windows, priced at around 2,600 euros.
“It will be, I am certain, one, if not the watch of SIHH 2018,” said Zimmermann, who lauded its technology and performance, noting it was destined not to be made in a limited numbers for a small, privileged group, but rather for “a large number of young people discovering watchmaking who want to treat themselves with watches that clearly look to the future.”
While Zimmermann is not the only executive with this sort of ambition, his comments reflect the pressure on watchmakers to broaden the appeal of high end timepieces to a younger audience while maintaining an aura of exclusivity — in addition to the need to justify prices.
The executive noted that the straps of the watch are interchangeable, without needing a tool — a response to demands for ease and customization — so a black strap can be easily swapped for one in brown or blue.
“In the future we’ll be able to liven them up with a strap with a pretty cool kind of leather — but that’s music for the future,” he said.
Also pushing its credibility in the value-for-money department while boasting its engineering prowess, is one of the fair’s largest brands, Richemont-owned IWC Schaffhausen.
Celebrating its 150th anniversary, IWC will bring 27 limited-edition models as well as a wristwatch with the original hour and minute displays from Pallweber pocket watches in the late 1880s.
As consumers tighten their purse strings, the company want to remind the world that its founder, American watchmaker Florentine Ariosto Jones, set out to make pocket watches with the best value for money by bringing together craftsmanship from Switzerland with manufacturing technology from the U.S.
“Our founder’s entrepreneurial spirit and his untiring quest for engineering excellence have left a lasting impression on IWC,” IWC ceo Christoph Grainger-Herr said in a statement ahead of the SIHH gathering.
At Richemont, the higher-end watch segment is expected to grow more slowly than the company’s jewelry brands, reflecting the broader industry trend.
Markets are eyeing its efforts to centralize interaction with wholesalers, with regional account managers replacing sales representatives for the individual brands, as well as integrating some production at the group level, according to Bernstein analysts.
The group on Thursday reported a 7 percent rise in sales at constant rates, for the last three months of 2017, lifted by brisk growth in the retail business of the company’s jewelry and watches divisions. The watch business was up 5 percent over nine months, at constant rates, the company said.
The swift retail growth beat expectations, analysts said.
As the luxury industry embraces the digital world as an important vector of future growth, SIHH this year has joined the push online. An official app features an interactive floor plan, real-time news from exhibitors and an internal messaging system. At the center of the trade-show floor, organizers set up an area called SIHH Live, designed to resemble a television set and meant to serve as a communication platform for debates and presentations.
The show will also include two exhibits, reflecting efforts by the industry to draw in new generations of watch enthusiasts. One features 19 Cartier mystery clocks, and another, called “The Beauty of Time,” traces clock making history with pieces from the Middle Ages to the present.
As watchmakers navigate between the past and the present, Ulysse Nardin is bringing a new Marine Torpilleur Military edition, inspired by pocket chronometers used by sea captains of the 1800s. The watch, limited to 300 pieces, is priced at 7,900 euros.
The Kering-owned brand, which joined the fair last year, is attending with a new ceo: former Apple Inc. executive Patrick Pruniaux, who was appointed in August.
Piaget, meanwhile, is moving to bolster its legitimacy in the field of ultrathin watchmaking, bringing a 4.3-millimeter thick Altiplano Ultimate Automatic, priced at $27,000 for an 18-carat white gold version.
As the industry pays increasing attention to women, the brand’s pricier offer is the Extremely Lady watch, a pink gold, mother-of-pearl and diamond piece, its gold bracelet chiseled for a furlike engraving. It carries a price tag of $50,000.
Van Cleef & Arpels is bringing a new version of its Midnight Planétarium watch, designed for women, featuring Mercury, Venus and Earth rotating around the sun at their actual speeds, while the diamond moon counts an orbit of 29 1/2 days.
Reflecting an era of transparency, Girard-Perregaux is presenting a skeleton version of the Neo Tourbillon with Three Bridges, meant to invoke some of the world’s most sophisticated works of engineering — the Millau Viaduct in France, the Mohammed VI Bridge in Morocco and De Oversteek in the Netherlands.
Audemars Piguet, celebrating the 25th anniversary of the Royal Oak Offshore at SIHH this year, is presenting three new versions of the sports watch. The label crafted two versions of the Royal Oak Offshore Tourbillon Chronograph, with a redesigned movement and using ceramic, instead of metal and rubber, for the crown and pushpieces.
“It’s the big event of the year, because it allows us to present our new products…meet the press and commercial partners from around the world—it’s an essential week,” said Zimmermann, of SIHH.