ZURICH — Swatch Group is cooperating with the developers of one of Switzerland’s most expensive and biggest new mountain resorts in a bid to boost sales in the increasingly embattled watch market.
Nick Hayek, chief executive officer of the manufacturer of watches ranging from the mass market Swatch to upmarket Breguet and Blancpain, chose the panoramic site of the forthcoming Bürgenstock Resort Lake Lucerne to unveil the long-term deal.
The agreement envisages representation for all Swatch Group’s 18 watch brands, alongside Harry Winston jewelry, in five stores around the resort, offering more than 7,000 square feet of selling space to wealthy visitors.
No sales forecasts were revealed. But when it opens in summer 2017, Bürgenstock, which is being bankrolled by 500 million Swiss francs, or $505 million, of Qatari money, is expected to attract significant guests flows, notably from the affluent Middle East. Nearby Lucerne is also a magnet for cash-rich Chinese shoppers.
Related Galleries
In an unusually large-scale scheme for Switzerland, the resort will include four hotels, apartments, a conference center, spa and medical and rehabilitation facilities. The latter in particular are targeted to prosperous foreign visitors looking to combine treatment with Swiss hospitality and repose.
Swatch Group will also provide various artworks, including items from its Art Peace Hotel in Shanghai, where the watch group has sponsored an artist-in-residence program.
The venture does not, contrary to expectations, include any new Bürgenstock-themed watches. However, the two sides said their cooperation was “flexible and open” and could be extended to special watches with extra functions, or joint advertising campaigns, in future.
Bürgenstock is a historic site dating back more than a century and located on a spectacular wooded terrace perched 1,550 feet above Lake Lucerne, with stunning views. After a period of neglect, the site was identified by Qatari funds looking to invest in Swiss hotels.
Swatch’s move is the latest in series of steps to expand its retail presence and raise brand awareness through high-profile real estate acquisitions and rentals. The group has spent an estimated 400 million Swiss francs, or $404 million, on a landmark building in Zurich’s prime Bahnhofstrasse shopping street. Separately, it will rent an 8,000-square-foot showcase for its Omega watch brand at a massive new retail, office and entertainment development being built aside Zurich airport.
The moves come as Swatch this month reported that group revenues slipped 3 percent to 8.45 billion Swiss francs, or $8.53 billion, last year, while net earnings fell by 21 percent to 1.12 billion Swiss francs, or $1.13 billion, as margins have come under significant pressure because of the strong Swiss franc.
However, Swiss watch exports have also dropped, notably because of a steep decline in sales to Hong Kong, the single biggest market. Industry exports fell by 3 percent by value last year, while the latest figures for January showed an accelerating trend, with exports down 7.9 percent year on year at 1.15 billion Swiss francs, or $1.16 billion.