Amid challenges in the international market for luxury watches, Patek Philippe is detecting opportunity in the U.S.
Ahead of a New York exhibition slated to open in July with highlights of its 178-year-long history in watchmaking, the Swiss-based brand is wooing customers on both coasts and cozying up to its retailers.
Larry Pettinelli, president of Patek Philippe’s U.S. business, said “it certainly was challenging in the beginning of 2016,” due to the unpredictability of the presidential campaign. “The first four to five months were OK, but not great,” he explained inside Patek Philippe’s store operated with Gearys in Beverly Hills. “I think overall we ended up just fine. It was the tale of two different halves.”
He said American customers have the means to spend. “It’s OK if they lose 2 percent in the stock market if they’re up 2 percent,” he said. “That doesn’t make a difference to them if they make a mortgage payment.”
What matters, he said, is “if they feel comfortable in making a purchase.”
Controlling supply is also crucial. In 2016, Patek produced only 55,000 watches. But high-end labels could be bracing for an uneasy time in the second half of 2017, according to LVMH Moët Hennessy Louis Vuitton chairman Bernard Arnault’s warning on Jan. 26 that the luxury sector could face its biggest correction since the collapse of Lehman Bros. in 2008.
In response to the sobering statement from Arnault, who controls Hublot, Tag Heuer and Zenith in LVMH’s portfolio, Pettinelli said, “With Europe in a down spiral and the Asian market not helping anymore…it’s challenging for other brands to figure out where their business is going to come from.”
He cited India and China as potential markets. Patek Philippe has no retail doors in India, but it has two in China to cater to customers who don’t travel abroad to buy its watches. “Sooner or later, China is going to be a bigger player,” he said. “They’ll be a huge domestic market.”
One of Patek Philippe’s targets this year is the U.S. The New York exhibition, to be held at Cipriani 42nd Street and to encompass more than 13,200 square feet, is a sequel of sorts to its British exhibition staged in 2015. And Pettinelli hopes the Stateside publicity will spur sales as the expo in the U.K. had. The Brexit vote, which diminished the pound’s value, also helped buoy sales there.
Unlike its rivals, Patek Philippe doesn’t pursue athletes for endorsements, even though it counts on men for about 70 percent of its business. Instead, it stresses mechanics, like new silicon-based technology to lighten the weight of springs and gears.
At a dinner cohosted by Gearys in Beverly Hills for top customers on Tuesday, Pettinelli highlighted one style that combined a retrograde tourbillon, perpetual calendar and minute repeater in rose gold.
Requiring two-and-a-half years to produce and costing “north of $500,000,” Pettinelli said such watches are in demand.
“When they come into this country, they’re pre-sold,” he told 40 diners in between courses of seared scallops, parchment-wrapped branzino and beef tenderloin in green peppercorn and cognac cream. Surrounded by vintage cars and shiny motorcycles collected by Bruce Meyer, uncle of Gearys owner Tom Blumenthal, Pettinelli placed a microphone next to the tony timepiece held by a man wearing a white glove so that guests could hear the chimes, gongs and hammers ticking smoothly between brown straps crafted from Louisiana alligator skin. “This is someone’s watch. We haven’t told them we borrowed it.”
In a way, the watch was a wrist-sized summary of Patek Philippe’s business strategy.
“We’re not looking to be a high-visibility company,” Pettinelli said. “We just want to make the best watches we can.”