Europa Star Time.Business 5-19

GL OB

|C HA PT

ER 5.1 9|

4

/€ /$ 1

CH F

60

Y

RE S P W IL O N HY EE T IC RT D H S O E TO S W FR KE I S N EP S V O A WA N T A M EY C H L E O IND L EY N IT U S TR

N

T IO

AL ED I

20

F O G RE KIN TU A FU M E CH TH AT W

ES C FA 7 °4 0 EL LN N S NA TIO PA N NA ER INT S E IO T 4& 35 E R ES N° PE IV U RO D Q EU A UR O

TO BREAK THE RULES, YOU MUST FIRST MASTER THEM. THE VALLÉE DE JOUX. FOR MILLENNIA A HARSH, UNYIELDING ENVIRONMENT; AND SINCE 1875 THE HOME OF AUDEMARS PIGUET, IN THE VILLAGE OF LE BRASSUS. THE EARLY WATCHMAKERS WERE SHAPED HERE, IN AWE OF THE FORCE OF NATURE YET DRIVEN TO MASTER ITS MYSTERIES THROUGH THE COMPLEX MECHANICS OF THEIR CRAFT. STILL TODAY THIS PIONEERING SPIRIT INSPIRES US TO CONSTANTLY CHALLENGE THE CONVENTIONS OF

AUDEMARS PIGUET®

FINE WATCHMAKING.

IN STAINLESS STEEL

Elegance is an attitude Simon Baker

The Longines Master Collection

Editorial

WATCHMAKING IN

THE AGE OF DIGITAL COMPLEXITY

D

BY SERGE MAILLARD

isruption is everywhere, fundamentally changing our daily lives and the very essence of the existence of Homo sapiens. Seen on that scale, the current upheavals in the 400-year-old watchmaking industry might seem microscopic. But through the microscope we at Europa Star have trained on the watch industry for four generations, these changes seem immense! And they are accelerating at an exponential rate.

Let’s start with distribution, which has been totally disrupted since the arrival of digital technology. Unlike the well-oiled networks of the past, the jungle we’re dealing with today is more or less impenetrable to everyone. So far, online sales have mainly favoured the secondary market (the watch having an unusually long lifespan), the disposal of unsold items (aka the grey market), but also counterfeiting. The options for buying a watch are so numerous today that it’s impossible not to get lost in the complexity.

Today, the real price of a watch is increasingly determined by its resale price. This leads to another striking effect of the digital upheaval: the growing polarisation between winners and losers in the industry. In a nutshell, the players that are “in-between” (manufacturers or retailers without strong recognition from end buyers) have suffered from the upheavals brought about by the digital revolution.

The watch as an object has also been fundamentally transformed. After a period of doubt about its impact, the smartwatch is now asserting itself as the standard everyday watch (rather like the Swatch in the 1980s and 1990s). What does this leave for the Swiss watch industry? Fundamental rethinking, and difficult strategic choices in the face of increasingly complex sales channels and consumer habits in the digital age.

Digital networks, which are supposed to make our lives simpler and more fluid, do exactly the opposite: our daily lives are both faster and more complex. Watchmaking is not immune to this ontological upheaval.

8

IT IS FIVE TO MIDNIGHT in Swiss German, on the QLOCKTWO.

GLOBAL EDITION | CHAPTER 5.2019 CARL F. BUCHERER PATRAVI SCUBATEC BLACK MANTA SPECIAL EDITION With the COSC-certified Patravi ScubaTec Black Manta Special Edition, Carl F. Bucherer is demonstrating its commitment, as part of its longstanding partnership with the Manta Trust charitable organization, to the conservation of the oceans and of a particularly rare species: the black manta ray. The Lucernebased watch brand also relies on sustainable materials in the process.

COVER STORY

CARL F. BUCHERER: ECO-CONSCIOUS WATCHMAKING

14

WHAT’S NEXT?

20

22 54 60 88

THE FUTURE OF WATCHMAKING: A DIVERSE PANEL ANSWERS OUR QUESTIONS PRE-OWNED: IT'S BEEN A LONG TIME COMING, NOW IT'S HERE NO “HOTLINE” (YET) BETWEEN WATCH VALLEY AND SILICON VALLEY DIFFERENT CASES, DIFFERENT FUTURE

CARL F. BUCHERER Bucherer AG Langensandstrasse 27 CH-6002 Lucerne Tel. : +41 (0)41 369 70 70 www.carl-f-bucherer.com

114 LAST WORD TO START

IT’S FIVE MINUTES TO MIDNIGHT

68

HIGHLIGHTS

88 &

CASE STUDIES

98 ICE-WATCH MOVING INTO ANOTHER SEGMENT 100 HOW LOUIS ERARD IS ENGINEERING ITS METAMORPHOSIS 102 VICTORINOX ADAPTING THE STRATEGY TO A CHALLENGING YEAR 104 SWATCH NEW HEADQUARTERS AND A LOT OF QUESTIONS 106 CERTINA AND THE MID-RANGE DILEMMA 108 MIDO: SWATCH GROUP’S “VINTAGE & HIGH-TECH” STRATEGY 110 HAMILTON: “WE’RE MAKING THE MOST OF THE VINTAGE TREND.”

70 URWERK 72 URBAN JÜRGENSEN 74 JAQUET DROZ 76 LONGINES 78 TITONI 80 JEAN MARCEL 82 TRASER 84 EBERHARD 86 ORIENT 87 HKTDC

INTERVIEWS

90 GUY SÉMON: “NOT ENOUGH CONNEXION BETWEEN THE MANAGEMENT AND THE CONSUMER” 92 MANUEL EMCH: “THE FUTURE OF CREATIVITY LIES IN THE HANDS OF INDEPENDENT STRUCTURES” 94 PETER STAS: “WE’RE ALREADY IN TALKS WITH HEALTH INSURANCE COMPANIES IN GERMANY” 96 STEPHEN FORSEY: “THERE’S A VERY WORRYING RISK OF A LOSS OF KNOW-HOW”

SUBSCRIBE TO EUROPA STAR www.europastar.com/club | SUBSCRIBE TO THE WEEKLY NEWSLETTER www.europastar.com/newsletter | CHAIRMAN Philippe Maillard PUBLISHER Serge Maillard EDITOR-IN-CHIEF Pierre Maillard CONCEPTION & DESIGN Serge Maillard, Pierre Maillard, Alexis Sgouridis DIGITAL EDITOR Ashkhen Longet PUBLISHING / MARKETING / CIRCULATION Nathalie Glattfelder, Marianne Bechtel/Bab-Consulting, Jocelyne Bailly, Véronique Zorzi BUSINESS MANAGER Catherine Giloux MAGAZINES Europa Star Global | USA | China | Première (Switzerland) | Bulletin d’informations | Eurotec EUROPA STAR HBM SA Route des Acacias 25, CH-1227 Geneva - Switzerland, Tel +41 22 307 78 37, Fax +41 22 300 37 48, contact@europastar.com Copyright 2019 EUROPA STAR | All rights reserved. No part of this publication may be reproduced in any form without the written permission of Europa Star HBM SA Geneva.

The statements and opinions expressed in this publication are those of the authors and not necessarily Europa Star.

ISSN 2504-4591 | www.europastar.com |

RÉCITAL 26 BRAINSTORM® CHAPTER ONE SAPPHIRE “WRITING SLOPE” CASE, PATENTED DOUBLE FACE FLYING TOURBILLON, THREE-DIMENSIONAL MOON PHASE, BIG DATE, 10 DAYS’ POWER RESERVE, PATENTED SPHERICAL WINDING SYSTEM. LIMITED EDITION OF 60 MOVEMENTS. MORE THAN SWISS MADE , SWISS HANDCR AFTED

bovet.com GENEVA , BOVET SHOWROOM - LES AMBASSADEURS - AIR WATCH CENTER · GSTAAD, ADLER INTERLAKEN, KIRCHHOFER · LUCERNE , EMBASSY · LUCERNE , LUGANO, ST-MORITZ , ZURICH, LES AMBASSADEURS

“The Wiki of Watches” GQ Magazine, November 2019

BROWSE THROUGH ALL OUR MAGAZINES SINCE 1950 EUROPA STAR CLUB Get your access to 100,000 pages of watch history on

www.europastar.com/club

CALIBER RM 63-01 DIZZY HANDS

RICHARD MILLE BOUTIQUE

© Didier Gou rdon

SWITZERLAND Ru e du Rhôn e 78 1204 Gen eva - Tel. +41 22 810 85 73

www.richardmille.com

14

Cover Story

CARL F. BUCHERER

Sponsored content

ECOCONSCIOUS WATCHMAKING

BY SERGE MAILLARD

With the new Patravi ScubaTec Black Manta Special Edition, Carl F. Bucherer pursues its support of the Manta Trust charity, which we introduced on the front cover of Europa Star exactly two years ago. This time, the brand has gone further, as the rubber strap of the watches is made from recycled plastic bottles recovered from the Mediterranean Sea. Design-wise, the new model also proves that it is absolutely possible to be both sustainable and exciting. A presentation.

T

The Patravi ScubaTec Black Manta Special Edition

he fight for the preservation of the environ- Two years later, the issue of environmental preserment is a battle that goes far beyond the vation is even more acute. And Carl F. Bucherer is watch industry. Climate change has, as we going even further in its commitment this year, as have seen this year, propelled thousands of people time is ticking for the future of the oceans. With the into the streets, worried for their future in light of the new COSC-certified Patravi ScubaTec Black Manta increasing pressure put on the planet. Giants in the Special Edition, the brand reflects its long-standing food, fashion and car industries all partnership with the Manta Trust, try to promote a “greener” face, as The watch itself with a focus on a particularly rare consumers press for change. species: the black manta ray. But shows how recycling While many watch brands are also this time, it’s not only about financan be used in tackling this issue, some have been cial support: the timepiece itself is more committed than others to the industry, while made of sustainable and recycled this agenda. Carl F. Bucherer is defi- drawing attention materials: this diver’s watch is not nitely one of them. More than seven to an endangered just dedicated to the oceans, it also years ago, the brand started sup- species that is embodies some of the ways they porting the UK-based charitable can be protected. suffering from foundation Manta Trust, which has The fabric used in the distinctive dedicated itself to the cause of this very waste. natural rubber strap of the Patravi rare manta rays since 2011. Today, ScubaTec Black Manta Special it is active in over 20 countries, with the goal of pre- Edition, sewn with bronze-coloured contrast stitchserving the maritime ecosystem and the rays’ habitat ing, is composed entirely of recycled bottles reon a long-term, sustainable basis. covered from the Mediterranean. Around 30 plastic And actually two years ago we partnered with Carl bottles are needed to create one metre of the yarn F. Bucherer to create what was really the first “eco- used for the textile components in each strap. The conscious” front cover of Europa Star with manta fabrics are manufactured in Italy, which guarantees rays swimming around the Patravi ScubaTec Manta short transport distances.

Trust Limited Edition. The 188 watches produced Several million metric tons of plastic waste end then all featured a different manta ray engraving on up in the oceans every year – an enormous threat the back, transforming each of them into a unique to our ecosystem and obviously to the habitat of piece. It was also a good opportunity to interview the manta rays too. In a clever and coherent apGuy Stevens, the CEO of the Manta Trust, to learn proach to environmental protection, Carl F. Bucherer more about concrete steps the charity is taking to “unites” several causes: the watch itself shows how preserve the well-known but fragile manta rays and recycling can be used in the industry, while part of their natural habitats around the world. the revenue goes to protecting an endangered species that is suffering from this very waste.

Guy Stevens explains it best: “Thanks to the kind support of Carl F. Bucherer, this year the Manta Trust will be able to launch an exciting explorative research project to gain new insight into the movement patterns and behaviour of manta rays in the Yucatán Peninsula. Increasing our understanding of this little-studied species will enable us to introduce more effective regional protection.”

16

PATRAVI SCUBATEC BLACK MANTA SPECIAL EDITION REFERENCE NUMBERS: 00.10632.28.33.99 MOVEMENT: Automatic, CFB 1950.1 caliber, chronometer (COSC), diameter 26.2 mm, height 4.6 mm, 25 jewels, power reserve 38 hours FUNCTIONS: Date, hour, minute, seconds CASE: DLC-coated titanium, titanium/ceramic bezel, automatic helium release valve, screwdown crown, sapphire crystal with anti-reflective coating on both sides, water-resistant to 500 m (50 bar), diameter 44.6 mm, height 13.45 mm DIAL: Black dial with manta ray silhouette STRAP: Rubber strap with recycled PET, diving folding clasp in DLC-coated titanium

17

COSC-certified, DLC-coated and ready for action

ABOUT THE MANTA TRUST This charitable foundation has dedicated itself to the cause of rare manta rays since 2011. The Manta Trust is active in over 20 countries, tirelessly leading projects and awareness campaigns on behalf of this endangered species. Its goal is to conserve the maritime ecosystem and the rays’ habitat on a long-term, sustainable basis. The Manta Trust works to achieve this with an international team of researchers, scientists, conservationists, and education and media experts in the fields of research, teaching, and cooperation. Carl F. Bucherer has already contributed in a number of ways over the years – for instance by sponsoring satellite tags to track the movements of manta rays and funding an educational film. Together, the partners hope to make a lasting contribution to the conservation of this fascinating species.

18

Following its launch at this year’s Baselworld, the Patravi ScubaTec Black Manta Special Edition has been available around the world since September 2019. Unlike the model introduced two years ago, this edition is unlimited.

The timepiece combines an elegant sporty aesthetic with robustness, useful functions, and a water resistance of up to 50 bar (500 m). Its 44.6 mm titanium case – new in the Carl F. Bucherer collection – boasts a DLC coating whose black hue contrasts with the case’s bronze-coloured elements, as a tribute to historic diving helmets.

Super-LumiNova adorns the indices and hands, which frame the silhouettes of two manta rays on the black dial.

The unidirectional rotating ceramic bezel enables the wearer to set the dive time – one of the watch’s safety features, alongside the automatic helium release valve. The DLC-coated titanium case back features a detailed engraving of a black manta ray.

The timepiece is powered by a CFB 1950.1 automatic movement with a power reserve of 38 hours.

Its high level of precision has earned it official chronometer certification from the independent Swiss Chronometer Institute (COSC). Each watch is accompanied by an individual COSC certificate.

Carl F. Bucherer’s bold approach to sustainability The Patravi ScubaTec Black Manta Special Edition is not just a symbol of sustainability; it also makes an active contribution to the conservation of the oceans and the responsible use of our resources. It is showing the industry new ways to embrace this important topic.

As a company, Carl F. Bucherer has indeed also comprehensively embraced sustainable working practices over the years. We can testify to it, having been a partner of the brand for many years now. It also demonstrates the important point that the best companies take a long-term approach to business.

The most successful watch brands are rewarded for their continuity and reliability in the way they treat their long-term partners (and we’ve been around for more than 90 years). That has never been clearer than it is today. A sustainable spirit encompasses many aspects: financial, social, environmental and, ultimately, human.

The new timepiece introduced by Carl F. Bucherer equally goes to show that good (and bold) design in timekeeping goes hand in hand with sustainable processes, at a time when many brands are asking themselves how to incorporate new ways of crafting watches. We end with a revealing anecdote on this point: the Patravi ScubaTec Black Manta Special Edition also served as design inspiration for the watch we spotted on Sylvester Stallone’s wrist in “Rambo - Last Blood”. The most iconic heroes also move with the times!

The watch that Sylvester Stallone wears in “Rambo - Last Blood” is a one-of-a-kind version of Carl F. Bucherer’s ScubaTec collection. Can you see the resemblance to the new Black Manta Special Edition?

19

QLOCKTWO 110 letters, arranged in a mysterious matrix, indicating all times of the day and night. Only with light. The words on the clock face change every five minutes. In each corner, four illuminated dots represent the minutes in between. This unique method of indicating the time is available in over 20 languages. Hand manufactured in Schwäbisch Gmßnd, Germany. www.qlocktwo.com

20

ES G

N

EW

C

H

A

LL

EN

W N H EX A T T ? ’S

PE

G ’S

AS

CI

DO

N

AL

I ER

KI

SS

ILE

M

MP

A

CO

I ER

W AT C

P BY

H

D

RE

AN D SE RG EM AI LL AR D

Challenges are stacking up on every side. The watch industry finds itself facing not a single threat, however big that might be, but a whole series of challenges. All manner of questions are jostling for attention; questions about the product itself, the technology it uses, and how it is distributed. But there are also societal, sociological and geopolitical questions. The world is changing.

The world is moving on. The world is a very confusing place. It’s hard to see the way forward; it’s difficult to make the right decisions, to know which path to take. Europa Star has launched a vast survey, and talked to many leading figures in an effort to begin to plot a course through the uncharted territory that lies ahead.

21

WHAT’S NEXT?

THE FUTURE OF WATCHMAKING AN INTERNATIONAL PANEL ENTRY-LEVEL What future do you see for the more affordable part of the Swiss watch offering in the face of the increasing domination of the Apple Watch in this segment?

POLARISATION We see a growing polarisation between some brands or models that are highly sought-after and the rest of the offering in the Swiss watch industry. How do you explain this?

We selected six major issues which are having a profound impact on the watch industry’s present and also on its future. Some forty (including the Interviews & Case-Studies section, starting page 88) industry figures responded to our questions. Certain trends are clearly discernible, but there are some discordant notes. Together, they offer a pertinent image of the watchmaking landscape as it currently stands. Here are the questions we put.

22

DISTRIBUTION There is more complexity than ever in distribution channels. What is your view on the evolution of watch distribution? What will be the role of the traditional retailer, ecommerce sales and direct-to-consumer sales by brands?

PRE-OWNED How do you explain the rise of the pre-owned segment, operated now by brands themselves and traditional retailers, alongside the online platforms that were already active in this segment?

OPPORTUNITIES Is it possible to increase the pool of people interested in Swiss watches around the world? China has now been more or less conquered, there is no “new China”, and production volumes are falling in Switzerland.

HIGH-END Can the watch industry live solely off its high-end offering?

Doesn’t it need a broader ecosystem to survive?

“WE HAVE TO REINVENT THE SWATCH OF THE 21ST CENTURY” JEAN-CHRISTOPHE BABIN, BULGARI

ENTRY-LEVEL

“The weight of Apple is relative” “The weight of Apple in this segment is relative in my view. It’s difficult to compare it with the core and entrylevel watch offering. This type of product addresses a market which is not really part of the more traditional watch offering. Smart watches are an interesting product technologically, but this kind of technology suffers from rapid obsolescence. Moreover, they generate absolutely nothing in the way of emotion. The user will sooner or later go upmarket: to a Swiss watch that will last and with an emotional investment. The future of Swiss watchmaking lies in the over-CHF1,000 category – barely the price of an iPhone X that procures zero emotion and will be fit for the bin in 2022.

“That said, it is true that watchmaking can’t limit itself exclusively to what we call the high-end. The industry needs volumes, in other words brands with a reasonably priced entry-level offering. Sadly, the current trend is to erode that segment in particular, which has been neglected in favour of a general rise in prices, often over-the-top. Today more than ever, badly positioned, uncreative entry-level brands are doomed in the long run. Many brands can still respond by reversing the trend. Which I hope they will do! But before that, they need to innovate and dare to stand up to Apple. The Swatch Group are the only ones capable of doing it, but apparently they don’t want to go down that path despite their huge expertise in electronics.”

DISTRIBUTION

“The best multibrand stores will become even stronger” “The distribution models we’ve known for decades, unchanging, are undergoing a revolution. Agents have disappeared off the radar. Basically, there are three active channels today: brand-owned boutiques, multibrand stores and e-commerce. For the brands that have a sound network of proprietary boutiques, cutting the number of low-performing multibrand stores

is gradually developing into a major policy trend. As a matter of fact, we’re in the process of resizing our network of multibrand retailers to work only with the best in a true partnership spirit. This development is dictated by the market and its players, who have changed enormously. As for e-commerce, that is set to grow. But certainly not to the point where it will make physical stores disappear. They will remain the ultimate point of connection for the customer.”

PRE-OWNED

“I absolutely refuse to get involved in this grey market by another name” “This phenomenon concerns a handful of large, traditional brands first and foremost, those who figure among the most dominant in the watch collection market. At the same time, that allows those brands to exercise greater control over the flows of their own products and over their perceived value. Of course, that’s without mentioning the collateral advantages, such as increasing their existing customer database.

But now let’s be honest: 80% of pre-owned watches have never been worn by any customer. It’s a grand bargain sale of new, unsold watches with a 40% discount, which is very damaging to the watch industry.

I get phone calls every week and I absolutely refuse to get involved in this grey market by another name.”

OPPORTUNITIES

“Large swathes of China don’t yet know what Swiss mechanical watches are all about” “As regards China, only a part of the Chinese continent has been conquered, because they know about Swiss mechanical watches. Large swathes of the country don’t yet know what Swiss mechanical watches are all about.

The slowdown in China has nothing to do with the fact that Swiss watchmaking has reached everybody and the market is saturated, far from it. Above all, it is a result of economic and political mechanisms.”

23

HIGH-END

“The model for the industry has always been a pyramid” “The model for the industry has always been a pyramid, which is how it forged its success and staying power. And that model has to go on. But the responsibility for that rests on the shoulders of groups, who

control those segments and have the brands for them.

And who today are alarmingly immobile. We have to reinvent the Swatch of the 21st century. Ice Watch have done it, but they’re not Swiss.... We at Bulgari aren’t affected by that, because we’re at the very high end of the market, which is doing fine, and in a jewellery group which underpins that position.”

“A GENERAL POLARISATION OF THE MARKET” JEAN-CLAUDE BIVER, LVMH

“The future of the entry-level range will be tough. We have to create new needs and striking innovation, as Swatch did in its time, for example. It’s not a comfortable position to find yourself in today, between the

two opposite poles of the smartwatch and the mechanical watch. And distribution is also increasingly polarised, between multibrands and monobrands, added to which there’s a concentration of the multibrands themselves. So there’s a double polarisation!”

“WE MUST ELIMINATE THE MISTAKES OF THE NEW SWISSNESS LAW” RONNIE BERNHEIM, MONDAINE

ENTRY-LEVEL

“Most of the Swiss originated cost is not counted in the law” “Recent years have harmed the lower and middle price category of Swiss watches because of the new Swiss law, which is based on a fundamental misconception.

I am in favour of a solid Swissness law, but without the destructive flaws we needed to adapt to. Today, we cannot count as Swiss content most of the Swiss originated-cost, such as our offices, legal fees, rent and the essential after-sales service. The law does not honour elements which are at the core of ‘Swissness’, such as quality and long-term reliability through an international after-sales programme. Let us correct the framework and we can be more successful again in a world where newcomers from the digital world and start-ups use marketing as their key factor of success.”

24

OPPORTUNITIES

“Any industry needs volumes to succeed” “I am optimistic for the Swiss watch industry if we can re-adapt the framework of operating in the middle and lower price category, mainly by eliminating the mistakes of the new Swissness law. Any industry needs volumes to succeed. Rolls Royce and Bentley had to be taken over by mass producers in order to benefit from the know-how gained through competitive and innovative mass production. Research in materials, technology and procedures are essential for the long-term development of high-tech equipment. In the 1970s, Switzerland was already trapped in luxury watches only. Swatch, M-Watch and the like have proved the financial viability of lower-priced products and showed efficient ways of producing and marketing Swiss watches in spite of aggressive low-priced Far Eastern products, while the German and French watch industries collapsed.”

LIVE YOUR

PASSION

TOURBILLON PERPETUAL CALENDAR MANUFACTURE Handcrafted in-house movement.

Manufacture Collection : in-house developed, in-house produced and in-house assembled movements.

frederiqueconstant.com

“THE HIGH-END SEGMENT CANNOT EXIST WITHOUT THE REST OF THE INDUSTRY” ANDREAS LEIBUNDGUT, DELMA

POLARISATION

“Many brands are actually more relevant than ever” “I don’t share this analysis. Over the past years, a lot of brands have experienced substantial growth and have developed greatly to the point that I think they are more relevant in today’s market than they have ever been, both in the high-end and more affordable price segments!”

DISTRIBUTION

“Fewer, stronger partnerships” “E-commerce and direct-to-consumer sales will continue to grow as consumers and especially the brands get more comfortable with it. With the growth of these channels, the retail space occupied by brands will be more selective, especially for bigger brands with their own boutiques. Traditional retailers will seek to differentiate themselves with the brands they carry and the experience they offer their customers. Brands and retailers will value fewer, stronger partnerships.”

PRE-OWNED

OPPORTUNITIES

“China is saturated” “The pool of people interested in Swiss watches will not grow endlessly. But there is still great potential ahead in several markets, although not as big as the Chinese market. At the same time, China has been moving from a growth market to a saturated one and as such it will become even more important for brands in China to differentiate, clearly position themselves and engage with consumers.”

HIGH-END

“A new piece of the pie for retailers and brands”

“There will always be a demand for all segments”

“It is a reasonable next step. It is a growing segment within the watch market and neither the brands nor the traditional retailers have previously had a piece of that pie. Thus, I think it’s only logical that brands move in as they like to exercise control over that market and gain access to the consumers they have missed out on so far, while the traditional retailers want to stay relevant with these consumers and want a piece of that growing pie too.”

“The high-end, mid-tier and low-end propositions have always co-existed and will in my opinion continue to co-exist. I do not think that one can exist without the other. One feeds the other and there will always be a demand for higher-end, more exclusive and exquisite timepieces, just as there will be demand for lower priced watches. The question is rather what defines these segments and the products that are active in it.

What do the consumers desire from products in these different segments and where do we, as a brand, want to operate in the future?”

26

“COMPLEXITY IS THE NEW NORMAL” VIJESH RAJAN, FAVRE-LEUBA

POLARISATION

“Technology gives a new meaning to watches” “Three factors are crucial. Technological innovations are giving a new meaning to watches: a few brands lead the market and consumers are gravitating towards them. On the other side, some traditional brands have failed at implementing meaningful innovations, which has led consumers to shy away from them. Third, oversupply of stocks with problems of discounting etc. has led to a shift in the consumer mix, which has fewer ‘true’ watch enthusiasts. Brands must engage with a new generation of globally connected consumers who have been totally swept up by better efforts from other connected categories.”

DISTRIBUTION

“E-commerce will grow but eventually settle down” “Complexity is the new normal in all parts of the value chain of business, including distribution. However, traditional distribution methods will continue to remain lead channels over the next 5-10 years. E-commerce will grow rapidly, undoubtedly. But it will settle down at low double-digit contribution levels in most places.

Consumers still attach importance to the touch and feel of products, to the physical shopping experience, and these are vital aspects which brands must also promote responsibly. Direct-to-consumer channels will similarly grow but plateau at some stage. Retailers too need to enhance the consumer shopping experience, and invest in increasing trust and convenience factors if they want to stay relevant in the scheme of things.

Those who do better will grow and consolidate.”

28

OPPORTUNITIES

“Go beyond Swissness” “Global penetration of Swiss watches is still low in many countries. But brands will have to take a local view of markets and dig deeper to leverage opportunities. This is especially true of Asian markets and lot of other rising economies, where the Swiss tag has a lot of aspirations. Brands will have to take a more serious view of these ‘low priority’ markets. They will also have to go beyond Swissness and take a look at how their value proposition is more meaningful for end consumers.”

HIGH-END

“Don’t abandon a large demographic dividend” “The survival of an industry is a factor of the costs and premiums available. It does not matter which end of the segment is operating. There is a very large demographic dividend available in operating at the mid- to low-end of the market, which Swiss brands should certainly strengthen. The cost challenge is important but, if modelled correctly, it can pay back attractively. The high-end market will be a timeless one, where consumers will always be looking for something special and price will not be a constraint. Having said that, ecosystems need to evolve and many new directions start from unrelated industries that end up affecting the watch industry too.”

“SWISS BRANDS LEFT TOO MUCH SPACE FOR GENERIC WEBSITES” MARIO PESERICO, EBERHARD & CO

ENTRY-LEVEL

“Smart watches are a considerable challenge” “Even if we do not operate in a market segment that is affected by the Apple Watch, I think that the producers of Swiss watches sold below 1,000 Swiss francs are facing a considerable challenge. Smart watches in general may not have experienced the fast development that was probably expected at the beginning, but they have certainly gained a market share that belonged to someone else, and numbers that make them the biggest ‘item’ among watches.”

POLARISATION

“Always existed, but more evident today” “I believe that a certain polarisation has always existed, but it’s probably been more evident recently, particularly in the medium-to-high market segment. It is possible that the unprecedented diffusion of information in the last ten years has helped reach new people, to the point that some products tend to identify the brand, rather than the reverse. This is sometimes the case with our Chrono 4 model for Eberhard. What is sure is that bigger brands have financial resources that allow them to implement communication campaigns that are totally out of reach for independent producers, hence the increase in the visibility gap.”

DISTRIBUTION

“Swiss brands left too much space for generic websites” “The switch to digital channels has been more rapid in the fashion universe than in watchmaking. This has left space for the growth of generic websites that have 30

not helped to enhance the image of watchmaking, presenting all brands and models at the same level, with big discounts and without poetry. For this reason it is important that Swiss producers support their traditional retailers in developing their own e-commerce, so that their expertise and experience are transferred to the digital world. Moreover, recent studies show that the average price of watch sales online is not increasing as expected, and big players are realising that consumers of high-prestige products are not particularly motivated to buy online.”

PRE-OWNED

“A watch is considered a first step towards a better watch” “The change comes from a new attitude towards durable consumer goods. I remember the time when we had to fight to buy pieces that we wanted for our historical collection. Now, a watch is often considered a step towards a new, more expensive timepiece, so it is re-sold more easily. The positive aspect is that this is a new entry door to the universe of Swiss watches for those who cannot afford to pay new prices. It is another way to disseminate watchmaking culture.”

OPPORTUNITIES

“The biggest challenge is the new generation” “It is becoming more and more difficult to open up new territories, there are hardly any left. The best that we can do to increase the pool is to conquer the interest and passion of the new generations, for the sake of our commercial results and of Swiss watchmaking culture. This is the biggest challenge today. Nevertheless, there are some huge territories (the United States for example), where the population size and average income leave ample room for growth.”

HAUTLENCE HL2.3 PUNK Over the last decade, Haute Horlogerie has ventured into every conceivable niche, even the most improbable, such as this paradoxical incursion into the territory of “No Future�. Engraved with an A for Anarchy, this mechanical complication with chain-driven jumping hours and retrograde minutes has never been seen before. Nevertheless, the authentic spirit of rebellion embodied by the punk movement (whose members would not have hesitated to smash up this watch on stage) died out a long time ago. All that remains is this Haute Horlogerie version.

31

“THE SWISS WATCH INDUSTRY IS BECOMING AN OLIGOPOLY – WHETHER WE LIKE IT OR NOT” DR FRANK MÜLLER, THE BRIDGE TO LUXURY

ENTRY-LEVEL

“Pray that Apple doesn’t go round!”

“In the face of the technical advantages of connected watches, the brands able to offer social status, exciting storytelling and emotions will continue to enjoy success. However, branding is expensive and distribution selective. Hence, those who just offer mechanical functionality and design will struggle to survive. The industry needs to pray that Apple does not one day offer an iWatch in a round steel case.”

POLARISATION

“Every crisis strengthens the strongest” “The answer is powerplay. The strong brands have got stronger over the years. Every crisis such as 9/11, Lehman and so on helped them gain market share at the expense of smaller and mostly independent brands.

Better access to classical distribution, resources to build up retail (own boutiques) and online, stronger marketing budgets made sure that the powerful brands leveraged access to consumers’ minds and emotions. The polarisation will continue.”

DISTRIBUTION

“Consumers are not looking for self-praise from the brands” “It will still take some time until the industry finds out what the consumer wants: a neutral place of judgement that ennobles watch brands, and not self-praise. That place used to be the traditional watch and jewellery retailer. But it may be too late. In many mid-sized cities traditional, family-owned and competent retailers have vanished as the brands created their own distribution universe and moved away to the big cities. Consumers need to be educated to dare and enjoy luxury in a com32

plex process of sophistication. Brand boutiques and online platforms will not sufficiently provide for that journey.”

PRE-OWNED

“A single logic: owning the consumer relationship” “First retailing, then online and now pre-owned, all these developments follow the same logic for the brands: owning the consumer relationship, controlling the sales cycle and eventually making more money. The reasons? Changing customers, stronger competition, dividend-hungry owners and ambitious executives in search of sales bonuses.”

OPPORTUNITIES

“Not a traditional business cycle, a structural crisis” “The luxury industry in general and the watch industry in particular are not facing – as many brand owners, CEOs and executives would still like to believe – a downturn of typical business cycles but a structural crisis. The democratisation of luxury, a change in social values around the world, the technical revolution, demography, globalisation and other factors will lead to a barely growing, if not shrinking, consumer base.

There will be no new China – and only those brands who adapt to this new reality fastest will have a chance of suffering less – as the industry will continue to suffer. The big players will be able to cope with painful restructuring processes. However, it will be very tough for independent brands to survive in stagnant and saturated markets. The Swiss watch industry will change dramatically over the next two decades, becoming an oligopoly – whether we like it or not.”

Tangente Sport. Made in Germany. This new automatic timepiece demonstrates just what Glashßtte watchmaking is capable of—namely outstanding water resistance and exceptional robustness. Equipped with the NOMOS bracelet and the innovative neomatik date caliber, DUW 6101. Now at select retailers, as well as here: nomos-glashuette.com

“WE ARE ONLY AT THE BEGINNING OF BUSINESS IN CHINA” JULIEN TORNARE, ZENITH

ENTRY-LEVEL

“Strong competition, but not all clients want a smart watch” “I believe the low-end brands are definitely facing very strong competition with the Apple Watch, but I also believe that there will be a concentration of the strongest players and a decrease of the others. Not all clients want to have a cell phone on their wrist, even if they cannot afford an expensive brand. I am not too concerned, as connectivity will expand to more formats and the watch will be only one of many. And let’s not forget that a cell phone on your wrist does not differentiate you from your neighbour and also that a smartphone is obsolete when you buy it. A mechanical watch with a soul and emotion is eternal!”

POLARISATION

“It will change again in the near future” “Some models became iconic and mean a lot to the buyers. But there has always been such a phenomenon in the past and things evolve constantly. I believe it will change again in the near future and other models and brands will also play a primary role.”

DISTRIBUTION

“Some important markets are missing strong retailers” “Mono-brand boutiques are a great tool to build up brand image, awareness and desirability, but I also believe strongly in the retailers’ business model. We don’t sell shirts or shoes, we sell complicated products and many clients enjoy having the neutral advice of a multi-brand retailer when they don’t know what they really want, or they need information on the watches themselves. In a mono-brand boutique you will be told that the brand is the best in the world, of course! However, some impor34

tant markets are missing strong and dynamic retailers and that is why some brands decide to go with a boutique. This is a risk. E-commerce will improve, but gradually, as volumes today are still very small for the industry. Successful sales are often for special limited editions available only online.

People going online are also looking for discounts and can end up on unofficial websites where they take the risk of buying a fake or poor-condition timepiece.”

PRE-OWNED

“Good news for our industry” “Pre-owned is good news for our industry and is natural in today’s world where we're all talking about sustainability and second-hand products. This segment is getting stronger and brands should get ready and organise themselves to facilitate this and offer it as a service to their clients.”

OPPORTUNITIES

“We must not rely only on tourism, but develop locally” “I don’t believe China has been conquered. Maybe from a European point of view. The country is huge and its middle class is growing, offering enormous potential. We are only at the beginning of our China business. Other countries will grow and more clients will emerge. One key is to work on local clientele as well and not only rely on tourism flows, as they represent a big risk when things go less well. Indonesia, Vietnam, India, Latin America and Africa are still to be developed, and let’s not forget that new clients are emerging everywhere as a new generation.”

The vintage wave has seen reinterpretations of many timepieces from the 1960s and 1970s, among them the Monaco by TAG Heuer, produced in five variations for the model's 50th anniversary.

35

“THE OBSESSION WITH CHINA IS HARMING THE REST OF THE WATCH MARKET” ANDREW BLOCK, SECOND TIME PARTNERS

ENTRY-LEVEL

“Too many irrelevant brands” “I actually see a very dim future for the affordable Swiss watch segment, but it is not all attributable to the strength of the Apple Watch. First, this segment is too crowded with many irrelevant brands. Second, there has been little innovation or excitement: many of the Swiss brands within this segment are part of luxury groups that show no signs of escaping the internal strategic paralysis that has impacted brand performance globally. I also believe that ‘Swiss’ as a label is a ‘non-factor’ in the consumer mindset within the affordable category. My advice: fewer brands, more innovation, embrace digital as the primary distribution channel and start understanding the market demographics for this segment and how to approach them.”

POLARISATION

“Auction vs. grey market” “The simple explanation is that the phenomenon is limited to four brands: Rolex, Patek Philippe, Audemars Piguet and Richard Mille. All have been active players in the global auction market and have seen their watches either maintain or increase their value. They have operated directly within the auction market, helping rising prices. This strategy has obviously worked. The other (more complex) explanation is that these brands have mostly refrained from using the grey market as a channel to eliminate inventory issues. Those that have been active on the grey market have seen their brand value erode dramatically.”

DISTRIBUTION

“Look at the consumer studies” “Distribution of Swiss watches has been a strategic rollercoaster for over ten years. But studies have shown 36

the following: consumers want choice when selecting a watch, they want to see at least three brands before deciding what to buy and half of them are unsure of what they want when they enter a store. So there is a place for multi-brand retailers, especially as they hold long term relationships with consumers. They can coexist next to mono-brand boutiques, which play a role in building brand awareness. Unfortunately, many brands have exited multi-brand stores to support their own direct-to-consumer strategy, which they still know so little about. E-commerce has also a huge role to play in the distribution mix.”

PRE-OWNED

“A viable new channel for watch brands” “Pre-owned owes its recent popularity to the lack of strategic focus by the brands in their distribution. Retailers have embraced pre-owned because they have lost brands and need to satisfy consumer demand. Brands have only now begun to focus on the secondary market as a viable channel, which they previously totally ignored. Preowned has proven to be a market that new and young consumers have embraced and specialised digital platforms have done a good job marketing this category.”

OPPORTUNITIES

“Focus on the United States and digital” “The Swiss watch industry has focused on China as the next emerging market for well over the past two decades.

It has affected watch brand strategy in ways that have not always proven to be beneficial to selling watches to the rest of the world, with less allocation to other countries and reduced margins, as China has always had a lower margin structure from the rest of the world and less marketing support. Where is the next market opportunity?

Focus on the United States and digital! The penetration of fine watches in the USA is still minuscule. Yet for the longest period of time, it has been looked upon as ignorant when it comes to luxury and too expensive. Digital is also a huge opportunity.”

NIVACHRON™ – ANTI-MAGNETIC

COUNT ON ME

SPECIAL ARCHIVES FEATURE ON CERTINA IN EUROPA STAR THE TITLE EUROPA STAR WAS BORN IN 1959, JUST LIKE THE DOUBLE SECURITY CONCEPT. TO CELEBRATE THIS JOINT ANNIVERSARY, YOU WILL FIND A SELECTION OF EUROPA STAR ARCHIVES RELATED TO THE EVOLUTION OF THE DS

BY SCANNING THE QR CODE.

TO CELEBRATE THE 60TH ANNIVERSARY OF THE ULTRA-ROBUST DOUBLE SECURITY CONCEPT WE ARE LAUNCHING A TIMEPIECE THAT COMBINES THE TIMELESS STYLE OF THE PAST WITH THE DEMANDS OF TODAY. ITS INNOVATIVE NIVACHRON™ TECHNOLOGY ALLOWS US TO SET NEW STANDARDS IN ANTIMAGNETISM. CERTINA.COM DS-1 · SPECIAL EDITION WITH ANNIVERSARY PACKAGING · AUTOMATIC MOVEMENT · ANTI-MAGNETIC NIVACHRON™ TECHNOLOGY · SWISS MADE

“BRANDS ARE STARTING TO UNDERSTAND THE MECHANICS OF E-COMMERCE” STÉPHANE WASER, MAURICE LACROIX

ENTRY-LEVEL

“The race for market share with Apple is not achievable” “It depends how you segment the offer you call ‘affordable’. The price points in competition with Apple watches are very competitive: the race for market share is not achievable, as the Apple offer is quite complete. At higher price points, the consumer does not need wearables or smartwatches and we enter the category of luxury goods and accessories. Craftsmanship, heritage, design, exclusivity and quality play a role.

The consumer need is different and it’s toward this that we need to cater our product offering.”

POLARISATION

“The cycles are slow but the trend is clear” “Watches, just like fashion, rely on trends. The cycles are slower but the trends for luxury watches are clear. Do you remember the end of the 1990s, when fully integrated steel watches with straps were so hyped? Today, the trend is for designs from the 1990s, integrated bracelet and cases, case and bezel shapes with straight lines, and non-functional design elements. The brands that have recognised this trend are the most popular ones today.”

DISTRIBUTION

“Transparency and accessibility are key” “Digitisation and improved logistics are creating a more connected and faster world. But we have new tools to manage it. For a retailer today, it is essential to operate a digital business alongside brick-and-mortar in order to increase customer satisfaction. Transparency and accessibility are key. I have seen retailers successfully managing their setup while running offline and online businesses simultaneously.”

38

PRE-OWNED

“Watch brands did not understand the potential at first” “When e-commerce started a few years ago, watch brands did not understand the potential and the logic of digital. Some very smart people have seen these gaps and opportunities faster than the industry. The recent development of brands operating in the pre-owned market is a sign that they are starting to understand the mechanics of online and the importance of being to prevent uncontrolled brand activities through nonauthorised sales platforms.”

OPPORTUNITIES

“We are in the Asian century” “China is not the only potential source of growth for Swiss watches. Emerging markets like India or Russia are very interesting markets. However, it is believed that by 2050, 50% of world consumption will come from Asia – the so-called ‘Asian century’. Even though consumption of luxury watches in China has faltered in recent years, it will continue to deliver growth in the future.”

“EVERY WEEK, I SEE HIGH-END WATCH OWNERS SWITCHING TO APPLE WATCHES” MAX BÜSSER, MB&F

ENTRY-LEVEL

“I would be terrified” “If I was the CEO of an affordable watch brand, I would be terrified. But even high-end brand managers should be seriously scared. Every week, I see high-end watch owners switching to Apple watches. Convenience is trumping all the rest. Let’s face it, our industry is mostly responsible for that. By mass-producing what used to be high-end artisanship, by focusing on status instead of education, by creating boring look-alike products, by ‘dumbing-down’ the buyers, the industry has reduced the emotional attachment it is possible to have for a mechanical watch. One day, it could actually be too late.”

POLARISATION

“When status-hungry clients meet the gasoline of social media” “It probably all started when the fire of status-hungry clients met the gasoline of social media. Add a dose of greedy speculators whose interest in watchmaking starts and ends with money, and you have the recipe for one hell of a bonfire.”

DISTRIBUTION

“If your team is really great, you are going to survive” “There is no reason watch distribution should not follow a variation of Darwin’s theory i.e. ‘you either bring value or you disappear’. Certain retailers who keep on thinking that location and carrying the most sellable brands are their main assets may be replaced by brand-operated e-commerce. They will be saved by having a great team on the shop floor, who not only love watchmaking and are super knowledgeable but

actually can inspire, engage and help you curate your choices. Retailers need their own variation of Apple’s genius bar where everyone can enjoy talking about the watchmaking world with people who share the same interests or who can bring them to the next level.”

PRE-OWNED

“I don’t understand why it did not happen before” “I actually do not understand why it did not happen before. There is no reason the watch world should not follow the example of the car industry. Caring for your second-hand market is just great long-term thinking and investment. Until very recently, buying a pre-owned watch on the unregulated secondary market was one hair-raising very high-risk experience. I once bought a preowned Rolex from a ‘reputed’ eBay merchant. After inspection, the dial was not original (even though the vendor swore it was) but I knew it as that reference had never come with that dial. What I did not realise (and could not detect on photos) was that the case back was not from that reference, neither was the crown, and the crown stem was, well… a piece of metal but not from a watch. And… the glass was not a watch glass, but a piece of plexi which had been machined after market and glued on!”

OPPORTUNITIES

“The pool of new clients can be multiplied by ten” “The pool of new clients can be multiplied by ten – and does not need new geographical boundaries. It needs to rethink the reasons mechanical watchmaking exists and why it touched people’s hearts thirty years ago (when quartz had decimated our industry). Let’s talk soul, creativity, beauty, humanity and artisanship.”

39

“AFTER-SALES SERVICE IS COMPLETELY IGNORED IN CURRENT THINKING” CHRISTOPHE MUSY, MAURON MUSY

ENTRY-LEVEL

“Connectivity isn’t going to stay on wrists for long” “It is true that that this segment has been severely affected, especially by the advent of smartwatches. Yet these smart gadgets aren’t likely to stay on wrists for long, they’ll migrate closer to the brain. So I see a threat for the moment, but only for a limited time. Let’s hope the major groups in this segment will be able to resist long enough by introducing innovative products.”

DISTRIBUTION

“The change was caused by the brands themselves.”

“The change was caused by the brands themselves. In the short term, the different means of distribution are having to live together, but in a relatively near future, the neighbourhood retail trade is going to have to reinvent itself. It has a huge card to play, because after-sales service is clearly being sidelined at the moment.”

PRE-OWNED

“No longer the same fondness for objects as before” “The new generations don’t have the same fondness for objects. So they’re delighted if they can pay a much lower price for a watch and sell it again on a whim.

That was unthinkable for watch buyers a few decades ago.”

OPPORTUNITIES

“Increasingly tough to sell high volumes” “For high-volume brands, it’s going to be very tough.

They can’t go on growing. That’s why we’ve gone for a business model with limited annual production of watches. The Swiss watch industry needs to place greater emphasis on quality watches, whereas today, the top range is defined ultimately by the marketing budget first and foremost. A new ecosystem to explore is that of sustainable development in relation to future generations, with locally sourced components.”

“YOU CREATE A COMMUNITY OF BELIEVERS, NOT JUST BUYERS” OLIVIER R. MÜLLER, LUXECONSULT

ENTRY-LEVEL

“The war of the connected watches has been lost” “To put it bluntly, I would say that the war of the connected watches was lost by the Swiss watch industry five years ago. There are a few minor initiatives (in terms of volumes) which show that we could have competed, and I always like to mention Alpina and Frédérique Constant. Apple dominates a market in 40

which the object – the watch – is not the critical factor.

It is the data acquired from the contented and largely captive users of the ecosystem which is making the difference. Apple and Samsung aren't competing with watches, but with connected devices. We need to recalibrate the whole business model in terms of price positioning, margins and communication channels.

Swatch is dead, let’s reinvent the new Swatch!”

Entry- and mid-range giants also see a future in Haute Horlogerie.

The Japanese group Citizen has acquired the high-end brand Arnold & Son, which constitutes the highest-priced pillar of its multi brand strategy.

41

POLARISATION

“A few brands create a community of believers, not only buyers” “Why do Patek Philippe and Audemars Piguet perform so well currently with very few but very iconic watches? Because there is strong brand equity and a product which over time has become an absolute icon by not changing. I think the brand which is best in class for doing the same thing for more than 50 years is Rolex. Once you have gained a strong and positive brand awareness, you create a community of believers, not just buyers. The clients of luxury goods want to be reassured that the brand is giving them the status they want to show. Louis Vuitton and Hermès are referential for bags, so are Patek Philippe and Audemars Piguet for high-end watches.”

DISTRIBUTION

“The best retailers will be forced to open monobrand boutiques” “The mix of sales and communication channels depends of course on the size of the brand. If you are small, going directly to your end consumer will be the most efficient way to communicate and sell. It rewards you with higher margins, brand equity control and, last but not least, data on your clients.

Multi-brand retailers are not dead, but many will disappear, and the remaining ones will have mainly to concentrate on the B brands. A few – the AAA locations - will face the decision of operating mono-brand boutiques – mostly as joint ventures with the brand – or losing the coveted A brands. Successful brands will use a network of showrooms, mono-brand boutiques and e-commerce. The days of powerful retailers dictating the rules are gone!”

PRE-OWNED

“Preserving your brand equity in the long run” “Let’s face the reality: the big online players were playing an easy game – and still are with some weaker brands – by moving goods, which you can also qualify as grey market. Interestingly, the first initiatives to regain control over the sales of second-hand watches 42

came not from the big brands, but from niche players such as Greubel Forsey, F.P. Journe or MB&F who realised that controlling the CPO (certified pre-owned) preserves your brand equity in the long run. The most coherent approach was recently made by Audemars Piguet who opened up CPO boutiques, thus making sure that the watches resold have been controlled and that no counterfeits are sold. Major retailers such as Bucherer have also finally understood that, as in the car business, people won’t keep on buying new watches if they can’t resell their old ones.“

OPPORTUNITIES

“We can still develop a lot of business around the world” “Even though there won’t be a ‘new’ China any time soon, we can still develop a lot of business around the world. Keep in mind that the Swiss watch industry controls only 2% of volumes (est. for 2019, 20 million watches on 1 billion units sold worldwide), but 53% in value, as 95% of the watches above USD 1,000 retail are Swiss made! We are too niche and we have abandoned the lower price segments. This is a major and potentially lethal mistake! We have lost more than 10 million watches since 2000 and that figure could be even worse if mechanical watches hadn’t compensated for some of the losses made by quartz watches.”

HIGH-END

“Only volumes can justify the R&D and the manufacturing capacities” “Nurturing a whole industry doesn’t work anywhere!

If you look at the car industry, even though BMW is a premium brand they keep selling at an accessible price range with the 1 and 2 series. Porsche as a luxury brand has never given up the premium level where they sell to aspirational clients… the clients of the future for the brand! You can only compete on a global basis if you make sure that you occupy all the price segments, because only volumes can justify the R&D and manufacturing capacity. A pyramid whose basement becomes thinner and thinner will collapse one day!”

“THE SMART WATCH IS BECOMING A HEALTH MONITORING DEVICE” RENÉ WEBER, VONTOBEL

ENTRY-LEVEL

“We will continue to see a decline” “As we have already seen in recent quarters, the lowend will continue to see a decline but the mid-end is impacted, especially quartz watches. Smartwatches, like the Apple watch, are increasingly turning into health monitoring devices and therefore offer an additional benefit, which is not the case for Swiss watches in the affordable sector.”

POLARISATION

“Limited production, but also long-term focus” “One of the main reasons for this polarisation is the limited production of brands like Patek Philippe (62,000 units per year) and Audemars Piguet (40,000 units) or even Richard Mille (4,600 units). But even the largest Swiss watch brand, Rolex, belongs to the category of ‘sought-after’ watches, despite its high production volume (est. 0.9mn). Its success is also explained by marketing and its very long-term focus.”

DISTRIBUTION

“Large watch retailers will become even more important” “There is a big difference between brands and their distribution strategy; the no. 1 (Rolex) and the no. 4 brand (Patek Philippe) focus on selective watch retailers, whereas other brands have a mix of own stores and third-party stores. In the watch retailing industry,

we have seen a strong consolidation with Bucherer becoming the no. 1 in the world through its acquisition of Tourneau in the USA, but also the UK retailer Watches of Switzerland expanding through acquisitions. Brands will continue to reduce the number of points of sale, but the large watch retailers will become even more important in the future as brands will focus more on professional retailers. E-commerce will grow but it will continue to be a small part of the high-end watch industry. After having seen a strong expansion in monobrand stores, we do not expect many more openings as most brands now have a global network.”

OPPORTUNITIES

“A big problem remains countries with high import taxes” “We believe there is still some potential in the world, but of course it cannot be compared to the Chinese impact we have seen in the last few years. However, there are countries which have a very small exposure to Swiss watches, which are also impacted by luxury and import taxes. For example, India makes up just 0.7% of Swiss watch exports, compared to 8.1% for Mainland China or even 1.3% for Thailand. The Philippines and Indonesia remain also very small. In Latin America, we see high import duties in Brazil and Argentina; for example, Brazil represents just 0.1% of Swiss watch exports, whereas Mexico in comparison has 1%. A change in the tax regulation is necessary for these markets to get a higher share.”

HIGH-END

“It already accounts for 89% of the Swiss watch industry”

“We believe that brands like Rolex, Omega, Cartier and Patek Philippe will continue to be a “product” which people are dreaming about. The Swiss watch industry will continue to innovate and therefore we also expect further growth for the Swiss watch industry. In terms of value, the upper- and high-end segment (export value CHF >500) already accounts for 89% of the total Swiss watch industry!”

43

“SWISS PEOPLE SHOULD BE OUR BEST AMBASSADORS, BUT SO MANY KNOW NOTHING ABOUT WATCHES!” YVAN ARPA, ARTYA

ENTRY-LEVEL

“More and more older people are interested in smartwatches” “Of course the under-1,000 franc price bracket is going to suffer even more as a result of the development of smartwatches: since they branched into the health sector they not only interest geeks, young people and early adopters, but older people too, for whom they offer a real bonus. Moreover, you can’t just talk about the Apple Watch; I’ve worked for Samsung, for example: the players are many, the smartwatch market is highly competitive and Apple isn’t the leader in every country. To resist, you need to give a high added value alternative to what the smartwatches are offering today.

For instance, buyers appreciate niche concepts which are unique.”

POLARISATION

“People sometimes behave like sheep” “People sometimes behave like sheep and don’t dare to stand out from the crowd, thinking they will be better accepted if they wear and behave exactly the same as their ‘tribe’, until it is too late and they regret they did not live their dreams, passions and love. On the other hand, for others, money is so important that they think that buying a piece that is highly sought-after will be easier to sell later, but everything changes.”

DISTRIBUTION

“Stop being so arrogant or snobby in sales” “The process of evolution is accelerating in every domain, so of course also in distribution. The old business models are over. I think that the new keywords are authenticity, creativity, honesty and value: if you offer those, you can sell in a store, online or directly to customers and offer a true shopping experience, rather than doing it in an arrogant or snobby way.”

OPPORTUNITIES

“There is still so much to do in aftersales service” “We must think quality and not only quantity. There is still so much to do in terms of after-sales service: when I hear the deadlines and prices of some of my competitors, it is unbelievable. We must educate the planet about our industry and it should begin in the Swiss schools.

So many Swiss don’t understand a thing about watches and they should be our best ambassadors.”

44

“DIGITAL NATIVES AND CROWDFUNDING ARE OPENING UP PROMISING PATHS” THIERRY HURON, MERCURY PROJECT

ENTRY-LEVEL

“The 8.5 million loss in volume will never be made good” “The 8.5 million watches lost from the entry-level range of the Swiss watch industry over the past five years as well as non-Swiss fashion watch volumes will never be made good. Among other things, this slide is a result of the irresistible rise of smartwatches, but also of the Swiss watch industry’s delay in embracing online sales. Innovations in functionality (hybrid watches) and materials (watches in recycled plastic), as well as distribution (online sales, Kickstarter and other crowdfunding sites, ‘affluendors’) are all sources of inspiration for further, much-needed innovation in this segment, where the shake-up isn’t over yet.”

POLARISATION

“Social recognition or economic turbulence” “The historic success of watchmaking is due, at the very most, to 5 to 8 brands representing virtually 60% of global sales. With their strong identity and ability to play on the scarcity of their offering, they have everything it takes to accomplish their strategy. As vectors of social recognition and prestige in numerous countries, they will escape the turbulence affecting hundreds of other brands.”

46

DISTRIBUTION

“Recover the intermediaries’ profits and databases” “The most powerful watch brands want to deal directly with the end customer in a dynamic of profitability and image control. That enables them to recover their intermediaries’ profits, gain far easier access to their customer data and exert greater control over their supply chain.

The consolidation currently in progress is also working in favour of the most experienced retailers in the best geographical locations. The latter work with the most powerful brands, either by negotiating preferential locations in their stores (Rolex, Patek Philippe), or by managing proprietary stores (Omega, Breitling, Audemars Piguet). The current retailers in the entry-level range are facing fierce competition from networks external to the watchmaker/jeweller ecosystem. As for the future of distributors in difficulty, that lies in partnerships with lesser-known brands wishing to add a conventional distribution network to their original online network.”

OPPORTUNITIES

“Duty-free offers the most favourable prospects” “Just one market seems to be offering a favourable outlook. That’s the duty-free and travel retail market, which is showing promising potential in the medium term, especially in Asia, owing to the growing number of Chinese and Indian travellers. But new and innovative paths are opening up elsewhere, driven by the digital natives. There are powerful examples in the entry-level watch range, such as MVMT in the United States and Paul Valentine in Germany (online pure players), or in crowdfunding sites (more than 240 watch brands were successfully launched on Kickstarter in 2018).”

“SINCE THE POOL OF CUSTOMERS IS NOT EXPANDING, EVERYBODY WANTS TO GET INTO DIRECT SELLING” THOMAS BAILLOD, MERCARI ACADEMY

ENTRY-LEVEL

“The mid-range customer is less well-off” “In the entry-level range, there’s a phenomenon of consumers who are going to move on from smartwatches to mechanical watches. But the effect on the bottom line will be nil, because even more are going to be replacing their Swiss watch with a smartwatch. Which explains why quartz is receding. There’s also an economic phenomenon, with an increase in inequality: a 500-dollar watch is still very expensive at the global level. The mid-range customer is less well-off, they no longer have the means to buy a watch in the $500-$2,000 range, which is suffering. The gap is widening. Moreover, the 60%-Swiss-made standard has had a direct impact on quartz brands without much added value. They used to offset that with the movement. Today, they’re having to raise their prices. On the other hand, the ‘false’ Swiss-made watch costing less than 100 francs will survive.”

POLARISATION

“A brand rationale rather than a financial one” “The industry is very polarised, with four brands leading the dance: Rolex, Patek Philippe, Audemars Piguet and Richard Mille. Yet they have very different business models when it comes to distribution: the first two work exclusively on a wholesale basis, while the last two are transitioning towards a wholly retail model. At the same time, they share fundamentally identical traits: independence, a certain vision and freedom of decision applied over the long term. They’ve adopted a brand rationale rather than a financial one. In stock groups answerable to shareholders, collectors are well aware of the fact that they lack identity and soul.”

DISTRIBUTION

“Direct-to-consumer sales are moving upmarket” “As is often the case, the groundswell of ‘direct-to-consumer’ sales first began in the entry-level range, with Daniel Wellington and brands launched on Kickstarter. This phenomenon is slowly moving up through the ranges.

In any case, the distribution networks are saturated, so a new brand is almost automatically going to head towards direct selling. Today, some distributors have just abandoned the entry-level segment, because everything is available over the internet. For those brands, the savings made by the ‘direct-to-consumer’ model allow them to do more marketing. That has also sown huge doubts in consumers’ minds: ‘Why should I pay so much for a watch?’

“A business always sets out to make profits by the shortest route. But all romanticism aside, watchmaking is still business: people don’t count for much. And today, where distribution is concerned the shortest route is online sales, especially if a brand already has name recognition. A brand will achieve more growth by selling directly online than it can by selling to China or Hong Kong today.”

PRE-OWNED

“That’s signing the death warrant of selective distribution” “The largest suppliers to the grey market are the brands themselves.

And they instigated the crime by forcing their retailers to take more stock. The latter had to expand their customer base via the internet and by using the catch-all term ‘pre-owned’. A large part of the pre-owned market is liquidation in disguise: it’s a term that encompasses a large number of watches that come straight out of the factory and so can be sold without damaging image. But

47

beyond the discount, there’s also a whole, very lucrative market to be developed, because via the pre-owned market retailers have access to products they don’t have in their boutiques. That’s signing the death warrant of selective distribution. Today you can see more Rolex models in the windows of certain non-licensed retailers than in the licensed ones. Also, the difference between price (displayed in-store) and value (the actual price a consumer is willing to pay) is now plain to see. Chrono 24 and WatchBox have become the Standard and Poor’s of the industry. Today, the curtains have been drawn back and the king is naked!”

OPPORTUNITIES

“We need to be less individualistic, the watch industry has a global battle to fight” “The current problem is that if the battle to win wrist share and extend the consumer catchment area is going to be global but profitable for everybody, every brand will be fighting for its profit margins in the next quarter. I often use this metaphor for the watch industry: the ice sheet is melting, but every bear tells itself it will survive if the neighbouring bear dies and it gets its fish! The profit equation is margin multiplied by quantity. But the plate isn’t getting any bigger, just the opposite, volumes are falling: 2.2 million fewer watches since the start of the year. As a result, the brands are focusing on increasing their profit margins through direct selling.”

“SOME GROUPS ADJUST BONUS SCHEMES SO THAT MANAGERS STOP FLOODING DEALERS” TIM STRACKE, CHRONO24

ENTRY-LEVEL

“Smart is a gateway for mechanical watch purchases” “Advertising the first Apple Watch as a luxury device was broadly considered a failure. Redefining it as a health and fitness device made it a success, finally.

However, I am not concerned about the mechanical watch industry. The latest US surveys show that during the rise of the smartwatches, the overall number of people owning a wristwatch rose by 25% within only 5 years. We assume that the smartwatch will make people want a real watch, rather than replacing it long-term.

So we consider the smartwatch as a gateway for future mechanical watch purchases.”

48

POLARISATION

“Family-owned brands vs. group-owned-brands” “The family-owned brands, namely Rolex, Patek Philippe and Audemars Piguet, follow a very long-term strategy in making their brand as desirable as possible. While the demand for their iconic sport models is reaching new records again and again (the search volume on Chrono24 for the Patek Philippe Nautilus increased 40% in 2019), the production volume cannot be increased fast enough. That obviously drives prices up, e.g. the Rolex GMT Master II ‘Pepsi’ is sold at 100% over official retail price on our marketplace.

“The group-owned brands act differently. As a publicly listed entity, short-term revenues are much more important for them, so they tend to sell as much as they can. But we do see some positive signals here as well.

Some groups adjusted their bonus schemes for sales and key account managers so they stopped flooding dealers’ stores with unsellable goods. Parallel market prices are much higher now than a few years ago and we think that this is really healthy for the entire industry.

Many watches are trading on Chrono24 above par now.”

CALIBRE 11 1969 was the year of the moon landing but also, more modestly, the year the Calibre 11 was born.

This movement was devised by Dubois-Dépraz and Büren for a consortium of businesses that included Heuer and Breitling and, later, Hamilton. The Calibre 11 was the world’s first modular automatic chronograph movement.

Today, 50 years later, it is still manufactured

by Dubois-Dépraz, the only member of the consortium to have retained its independence.

49

DISTRIBUTION

“Each of the three channels will take a third of the market” “Historically, traditional traders have accounted for the lion's share of the business. Today, luxury watch customers have much more diverse needs: some prefer to buy online, some prefer multi-brand stores and others want to indulge into a brand’s very own experience. Some customers like to go into the luxurious ambience of a high street jeweller, others are deterred by the security sluice and prefer to search for the right watch on their smartphone while on the move. In the medium term, we assume that all three channels will survive while attracting around 1/3 of total revenue each.”

PRE-OWNED

“Brands realise how hard it is to buy and sell pre-owned” “There are many reasons why people prefer to buy preowned: new releases are becoming more and more expensive, watches can last a long time and there are more and more limited or discontinued editions. The epic

draught of Rolex, Patek Philippe and Audemars Piguet models was certainly also a main driver behind the strong interest in pre-owned. The brands have, of course, acknowledged the trend and most have jumped on the bandwagon. But, besides Richemont’s smart acquisition of Watchfinder we have not seen nearly as much about that category as we have heard chatter about it. Some brands have probably realised how hard it is to buy and sell pre-owned.”

OPPORTUNITIES

“So much market potential with CPO” “Many observers see the CPO market as the ‘New China’.

We estimate the annual trade volume with used watches at approximately 17 billion euros. However, the potential of the ‘undiscovered treasures’ still slumbering in drawers or attics is even greater: the value of these watches is estimated at around 250 billion euros. So there is still a lot of market potential here. We are also following the sales figures of smartwatches with interest. This is a great opportunity to inspire people who have decided in favour of a smartwatch as a first step, perhaps as a next step also considering a high-quality mechanical watch.”

“IT’S NOT ONLY THE APPLE WATCH: THE IPHONE IS A TOUGH COMPETITOR WHEN TARGETING MILLENNIALS” GEORGES BRUNET, ZRC

ENTRY-LEVEL

“Focus on Millennials who already own a smartwatch” “I consider it is a good thing that Apple, Samsung and Huawei are developing watches since they are targeting Millennials. The youngest generations are not used to wearing watches, which could endanger the global industry eventually. On our side, we need to focus on their needs when they reach their mid-thirties or forties and start looking for a mechanical watch. A Swiss mechanical watch is not a fashion product nor a technological one. It is a jewel. The challenge for 50

the whole industry is to develop new communities of fans: if each brands wants to keep the whole cake for itself, this behaviour will be destructive in terms of advertising, product development, after-sales service and logistics for everyone.”

POLARISATION

“Few companies are really doing well, a lot are in survival mode” “This phenomenon is not unusual. Few companies are really doing well and a lot of companies are struggling to survive. In this situation, some think it is best to ‘follow’ the leading brands to make sure they are going to keep the sales figures up. It is a common re-

action when crisis arrives. But leading brands are getting stronger and ramping up their advertising presence, while weaker brands rein in their expenses and product development to focus on a ‘survival mode’. Of course, in the short term, it might be profitable, but in the long term it is destructive for the brand image and ultimately it will certainly create more identity problems than solutions.”

PRE-OWNED

“It's like a powerful secondhand advertising method” “It all has to do with price! It is an easier way to start collecting watches. Big brands have to sell hundreds of thousands of units per year, it is not that easy. So controlling pre-owned watches helps as well as raising brand awareness and presence. It is like ‘second-hand advertising’ if I might say so. More people are willing to wear your products and if they cannot afford it, they may go for a pre-owned model.

Increasing demand and maintaining a higher pre-owned retail value: strategically, it is quite smart. For example at ZRC, a MN64 model dating from 1964 was selling at 400 euros five years ago. Today, you need to spend more than 6,000 euros to acquire a model in good running order.

It means that our brand value has multiplied by 15 in five years and since not too many are still available on the market, this value is actually stable. Controlling the pre-owned market value is a key to increasing brand demand.”

OPPORTUNITIES

“Easier today for independent brands to expand”

DISTRIBUTION

“Above a 2,500 euros investment, you still talk to a human” “This is a big question! We are witnessing the emergence of huge distribution groups, following the postcrisis concentration. I believe that the watch industry is increasingly dividing into three main categories: everyday consumption, premium and high-end watches. Big brands are now taking care of their own distribution, ‘eating’ retail margins to promote and sustain their sales levels. Retailers should consider more sustainable brands with history and originality, and focus on niche markets. Very few brands are really succeeding online, except on the US and Chinese markets. So I believe that above a 2,500 euros investment, consumers still need to talk to retailers and feel the watch first. The problem is that in the past 20 years, at least 25% of retailers have disappeared in Europe and in the USA…”

“The most powerful brands keep demand higher than supply. Very few brands are able to do it. In fact, many brands have faced shrinking sales in the past five years and since the global economy is not booming, it is becoming hard for them to maintain volumes and hit their commercial targets, with the financial pressure they are facing. Independent brands like us have more room and freedom to expand: we can easily double our quantities for the coming years, since we just restarted. The solution is to succeed in convincing millennials to start purchasing Swiss watches, although they are now focused on the new iPhone 11, which is a super hard contender.”

51

“ALL PRODUCTS SOLD ON IMAGE ARE RAPIDLY DEVELOPING PRE-OWNED” FRED LEVIN, TROVERIE

ENTRY-LEVEL

“Historical buyers vs. new connected owners” “Below $400, we will continue to see a rapid and consistent decline, outside of the connected segment.

Beyond that, the situation should remain stable, as the decline of the historically older buyer should be balanced by connected watch owners who are dabbling in image-enhancing first Swiss watch purchases.”

POLARISATION

“Endless new players keep entering the industry” “The polarisation is due to a combination of factors.

First, with negligible barriers to enter the category, we will continue to see endless new players with new models – and few of these will have serious intentions, plans or resources.

Second, sought-after models are driven by brand equity, product design and features, as well as marketing, shifting supply beyond natural demand. Third, in most companies, leaders are most concerned about being promoted or keeping their jobs: critical decisions are often made based on what is the safest path and not what is in the best interests of the brand. Finally, the global pricing system will continue to fuel polarisation.”

DISTRIBUTION

“Jewellers help build success over decades, not months” “I believe that for the next 50 years, independent jewellers will continue to be an important element. Leading brands will have everything to say about this: 52

the top 5 brands (with Rolex leading the way) represent well over half of the market by value and I see them recognising the cost-effectiveness of jewellers, for building sustainable businesses and brands over decades (and not months or years).”

PRE-OWNED

“Disproportionate because of the nature of this product” “Technology and global communications have created liquidity on the Swiss watch market to unlock the value of pre-owned goods. This development will continue to fuel the segment. All products that are sold on image are rapidly developing pre-owned categories.

This has and will continue to impact the watch segments disproportionately because of the high value and high portability of the product.”

IT OM A N ’S I LO ED H NG N ER , G E BU T

PR IT E T I ’S N M BE O O E E W W C N

PO WE RO FT HE PA ST S BY

ER

GE

MA

ILL AR D

Nothing will ever be the same again. Long confined to the shadier corners of the digital grey market, fed by oversupply, short-term greed and brand managers’ bonus schemes, the “used” watch now has a new, more elegant name: pre-owned. Never mind if, more often than not, it’s actually “never worn”. Boosted by online sales, the secondary market has now joined the primary market, with established brands and retailers giving it a boost of legitimacy with their own services and certifications.

54

I

n the watch industry, the “fusion” between the primary and the secondary market is well under way. If you need proof, the selling price of new watches is increasingly determined by the resale price.

And non-authorised online sales platforms have become references for establishing the “real” value of a watch. To find out the current rating of a brand, many turn to the websites of pre-owned giants WatchBox or Chrono24.

“Google likes what the user likes. And many users want to know the price of watches, first and foremost,” says Tim Stracke, co-CEO of Chrono24, the leading online sales platform, which recorded transactions worth 1.3 billion euros last year. The manager estimates trade volumes for pre-owned at €15 billion per year. In comparison, the value of the worldwide market for new watches, at retail prices, is approximately €37 billion per year.

“Consumers are empowered by social networks and digital devices, and since they are no longer bound to a store’s hours of operation, they dictate how and when they want to interact with a brand,” says Danny Govberg, the founder of WatchBox. The heir to a prestigious jewellery firm from Philadelphia, founded more than a century ago, he has completely reinvented his business around the pre-owned market.

Discounts and unicorns: both factors of growth

Crown & Caliber to launch a trade-in programme. And an alliance was announced in the Middle East between leading retailer Ahmed Seddiqi & Sons and WatchBox. In the current reconfiguration, a new question emerges: who will ultimately be the main player in the pre-owned market? Third-party platforms, retailers or the brands themselves?

There is no official estimate of the potential value of preowned, but the figure could well be astronomical. There are many reasons for the emergence of Certified PreOwned (CPO), but you first have to start with the object itself – the mechanical watch, a particularly durable and tradable item. It’s actually a wonder that the pre-owned market did not rise more rapidly. “Rolex has about $8 What does “certified” actually mean? billion dollars a year in new watch sales. That means, just in the last ten years, there are $80 billion dollars in pre- A new keyword in this structure is the widespread use owned watches out there,” points out Paul Altieri, CEO of the concept of “certified” pre-owned (CPO), which is of Bob’s Watches, a leading American platform for sales meant to provide assurances to consumers still wary of of pre-owned Rolex. “Of course, not all these timepieces buying expensive items used and online. Even Amazon are for sale. But the brand has been around for decades.” has introduced a “certified pre-owned” section on its The emergence of online sales has first and platform. Paul Altieri of Bob’s Watches is foremost benefited second-hand watches “Consumers are sceptical about this new wave of certifica(and counterfeits), not new watches. Two empowered by tion: “A true certified pre-owned product opposite phenomena seem to have taken social networks can only be offered by the manufacturer of the secondary market to new heights: on and digital devices, the product, or from an independent prothe one hand, customers are attracted by they dictate how vider who is established and a recognised discounts on some models, while others authority.” Just like the word “pre-owned” and when they hope to invest in watches whose prices are itself, the label “certified” is often in a grey want to interact skyrocketing. zone. In an effort to bring more clarity and More broadly, the emergence of “true” with a brand.” transparency, some brands, like Omega watch collectors, a community that first Danny Govberg, WatchBox most recently, have released “certification began to talk directly to each other on foof authenticity” programmes. rums, is making a major contribution to the re-evaluation In establishing pre-owned practices that are closer to of timepieces from the past, and to the growth of watch the “normal” procedure in the world of Swiss watches, culture in general. Another striking element is the appeal one traditional actor is now playing a big role. Bucherer, of vintage mechanical watches to younger generations. the largest global watch retailer, has opened a new dedicated service, beginning with its boutiques in Geneva and Zurich, soon to be extended to the German and Organising a digital jungle British markets. It also has a dedicated e-commerce platform, and already conducts pre-owned operations However, the secondary market is a jungle in which true through Tourneau in the United States. vintage, pre-owned and never-worn coexist. Brands want “We have global ambitions. After we acquired Tourneau to regain control of this jungle, which is also an interest- in January 2018, we learned a lot of important operaing channel for unsold timepieces. A new phase of re- tive details for the Certified Pre-Owned business,” says structuring has started for this segment.

Odilo Lamprecht, Head CPO Europe at Bucherer. “That A strong signal of the changing face of pre-owned hap- has enabled us to launch a highly mature product pened when luxury giant Richemont bought British sec- onto the European market now. Our experience with ondary platform Watchfinder. Another came when the Tourneau has also shown us that customers appreciate world’s leading retailer Bucherer purchased American the fact that the Certified Pre-Owned offering is intewatch chain Tourneau, a specialist in certified pre-owned. grated in our existing boutiques. It’s all A third was when pre-owned giant WatchBox set up an about convenience for our customers.” office in Switzerland. Established retailers like London In thinking about the future of the watch Jewelers or Les Ambassadeurs have cemented alliances industry, expect “pre-owned” to change with second-hand specialists such as Crown & Caliber and notions of how, when and why we buy and WatchBox. More recently, Breitling also partnered with sell timepieces.

55

“WE ARE READY TO REVOLUTIONISE THE PRE-OWNED MARKET” ODILO LAMPRECHT, HEAD CPO EUROPE, BUCHERER

What triggered your decision to enter the pre-owned market?

However, the competition is already tough on this segment…

More and more people are interested in beautiful watches, and vintage models with a history are especially popular. There is rapidly growing demand. We have been keeping an eye on those developments for a long time. As watch experts, we understand that buying a pre-owned watch often comes with uncertainties. Our Certified Pre-Owned concept aims to give watch enthusiasts an entirely new platform and redefine the preowned watch business.

There are plenty of companies in the market. But many of them are start-ups that rely primarily on online sales.

Most sellers do not even have an offline presence. We sell offline as well as online. We believe that the offline range displayed in our boutiques is an important key to success. Customers like to be able to see and try on the watches. It turns the purchase of a luxurious watch into an emotional experience. With a company history dating back more than 130 years and a wide-spread presence in the market, Bucherer exudes tradition and important values, such as reliability. Trust is crucial in the Certified Pre-Owned business.

Can you share your expectations on the longer run?

What are the next steps in your expansion plan?

Bucherer aims to revolutionise this market and reintroduce pre-owned watches into the luxury segment. After all, coveted brands and models retain, or even increase, their appeal over time. We can offer collectors a carefully curated range of rare models and limited editions that they would otherwise be unable to find. A good selection of vintage items additionally gives us access to new customers. They are the ones who probably wouldn’t spend a lot of money on a new watch. We also believe that the pre-owned concept provides us with an opportunity to boost our sales of new watches, because customers may trade in their own watch for a new model.

We have global ambitions for our Certified Pre-Owned business. After Geneva, Zurich and Hamburg, there will be more outlets soon: in spring 2020 Paris and London will follow. But even if the Certified Pre-Owned offering has not yet a physical point of sale in a local Bucherer boutique, customers can still browse the range of our Certified Pre-Owned watches online.

56

“WE WERE NEGLECTED THEN FEARED, NOW IT’S FINALLY CHANGING” PHILIPP MAN, CO-FOUNDER OF CHRONEXT

“More and more brands understand that online selling is a very real phenomenon and is here to stay. At first we were not on the radar of the brands at all. Then we were greeted with a degree of fear, and finally now we have strong cooperation. As a result, we now work directly with 15 brands. The mindset of most brands is changing.

What we really want is to become the partner of established brands when it comes to pre-owned. The ideal scenario for us would be to become like authorised retailers, but specifically for second hand. For a very long time, anything that was not authorised or official

was considered ‘grey’. The term is not clearly defined.

However, what is clear is that the industry has serious distribution challenges. To resolve them, a real understanding of actual stocks and prices is required.

Brands are angry about discounts on online sales, and yet retailers do exactly the same thing in physical stores. Only, because it’s not public, they don’t have a problem with it... How can the industry get a better grip on inventory movements? The best solution would be a platform that welcomes both brands and retailers, pre-owned and new timepieces. And price parity between the store and the website that is good for the brand.”

“MARKET PRICES ARE CHANGING MUCH MORE RAPIDLY TODAY” PAUL ALTIERI, FOUNDER OF BOB’S WATCHES

“The pre-owned business is hotter now than ever. And the first concern of the buyer today is not price but authenticity. Watches are expensive items, so customers deserve to get some guarantees. We help to ‘clean up’ the market by offering original watches, but there are still a lot of Frankenstein watches out there.

A new challenge is that market prices are changing much more rapidly than 10 years ago. Then, prices could change ten times per year. Now it’s once per week. A lot of factors explain this evolution: social media, shortage of steel models, a lot of press and excitement. There’s been so much attention on pre-owned that prices are much more volatile. For the most part, prices have been up. Some claim it’s a bubble. I don’t think so. The only element that could stop prices growing would be

a global recession, way beyond the world of watches.

Another challenge: there are still a number of dealers that are a bit ‘shady’. We don’t work with dealers, all of our watches are purchased directly from individual customers. Moreover, I see more and more certification programmes established by the sellers themselves. This is wrong. The only person who can certify a watch is a third party, you cannot certify your own product. That’s a conflict of interest! If you want to certify a diamond, for instance, you go to the GIA, you don’t deliver your own certification.”

While the contemporary Swatch may be enduring challenging times, we're nonetheless seeing rising interest in the "vintage" output of the iconic Swiss brand.

57

“WHAT WAS MISSING WAS A TRUSTWORTHY LINK BETWEEN DEMAND AND SUPPLY” JOACHIM ZIEGLER, CEO, LES AMBASSADEURS

“When we launched our new CPO activity last April, we simply couldn’t keep up with the first wave of customers that were interested in this new service.

Even though the product is the same, the approach in dealing with used watches differs quite a bit from selling new ones, and it was a challenge for everyone in-

volved. Our team has adapted quickly and pre-owned is now an integral part of our business.

The world is constantly evolving, and so is retail. With the watch business booming for years, there are large quantities of watches waiting for a second life in our clients’ drawers and safes. At the same time, we have seen a continuing trend for retro watches. So the supply is there, as well as the demand. What was missing was a trustworthy link between the two.”

“WE USE THE POWER OF TRACKING TOOLS AND BIG DATA” SUSANNE HURNI, MARKETING DIRECTOR, WATCHBOX SWITZERLAND

“How can we have turned a blind eye to this phenomenon for so long? The brands have been a little arrogant in wanting to impose new watches. Young people have changed their consumption patterns and no longer necessarily want to own items for the long term.

We are neither a marketplace nor a consignment site, but currently own watches worth about $60 million.

We only sell what we have in stock. It actually all began with a segment of the WatchBox app which enabled customers to register their collections online, to find out about and monitor the popularity of their watches. With new tracking tools and Big Data, we can easily identify and cross-check which watches from which collector interest which other registered collectors.

We offer a form of market cleansing that also keeps the brand image strong, rather than asking for knockdown prices or destroying watches. Letting retailers resell last year’s watches 40% cheaper or destroying stock only weakens the brand image and annoys collectors.”

58

Over 200 unworn vintage Swatch watches, with original packaging and guarantees, went under the hammer of leading auction house Phillips in London last October.

BE O WEEK IN A T “ N W H THE B D E O AY A RE SI EN LI W TL A C O A IN N TC E VA H ” LL VA (Y E Y LL E E Y T)

–A

N

RE PO RT S BY

ER

GE

MA

ILL AR D

60

Digital technology is disrupting the world of watches, and the tools of disruption are being created chiefly in the Bay Area. The Swiss watch industry, although revered by local entrepreneurs, nevertheless seems very remote from the tech industry.

The time would seem right to finally establish a local presence to monitor the innovations taking place in Silicon Valley, especially as they are increasingly targeting the huge home market. We spent a week there to meet some of the key players.

S

houldn’t the Swiss watch industry have established some kind of presence in Silicon Valley back in 2014? This was to be a recurring topic throughout the week we spent in the San Francisco Bay Area. In the Swiss watch industry, we often hear that if you want to understand the true “spirit” of a brand, you have to visit a manufacture. This is equally true of the tech world, the world that is crafting the tools that are changing the way watches are now being made, sold and consumed.

A courtesy visit is long overdue. While exploring the impressive premises of Swissnex (a Swiss global network promoting education, research and innovation) on San Francisco’s Pier 17, we see representatives of iconic Swiss companies such as Nestlé, Swisscom and SBB. But not a single watch company or association is represented, even though the watch is undoubtedly one of the emblematic Swiss objects that is most impacted by the likes of Apple, Instagram and Google.

During our visit we also met Swiss star industrial designer Yves Behar, who has set up a sizeable office in San Francisco. The renowned specialist has already applied his talents to the rebranding of another iconic Swiss product, the Rivella soft drink, which has made a bold move to keep up with changing times. But the only watch companies he has worked with so far are not from his native country: they’re American (Movado) or Japanese (Issey Miyake).

The Swiss watch industry, accustomed to unchallenged global domination, has observed the rise of a new category of watches powered by Silicon Valley’s software with a mix of indifference, fear and denial (with a few

notable exceptions such as TAG Heuer or Frédérique Constant). And with good reason. The Swiss mechanical watch has experienced a boost in sales in the United States, while simultaneously, Apple has virtually single-handedly “created” the smartwatch segment, of which it now accounts for around half of global sales.

As is so often the case, the revival of “vintage” goes hand-in-hand with technological disruption.

In fact, Silicon Valley is a place with a deep reverence for mechanical watches. We met Jared Silver, the retailer who sells the most exclusive timepieces from niche brands such as MB&F, Urwerk, De Bethune and Ressence to tech entrepreneurs. For him, business is going fantastically well. To give one example of the vitality of the local watch scene, a group of tech industry executives has recently launched a new watch collectors’ club, Collective, which has led to a collaboration with Zenith on the production of a limited-edition El Primero.

To a large extent, the two worlds seem to be able to coexist. But while local tech companies, as software specialists themselves, may be impressed by the centuries-old expertise in “hardware” acquired by traditional watch companies, the tools they are crafting and the wearables they have been imagining for the last five years are a new part of the world of wristwatches, and they are introducing a considerable amount of disruption. They are changing the watch industry in (as yet) unimaginable ways. To monitor these tools is also to begin to understand their potential impact. And with that in mind, some kind of presence on the ground seems essential. We hope this report will show why.

61

DAY 1

watches in general just as smartwatches started to ramp up. But if you’re a brand producing watches under 1,000 “TECH ENTREPRENEURS dollars, you are ripe for disruption. Why spend 1,000 dollars on a quartz timepiece when you can spend 400 ARE NATURALLY dollars on a smartwatch and get all the functions?”

DRAWN TO THE NEW The jeweller continues: “We are insulated from that disGENERATION OF WATCH ruption because we specialise in high-end and ENTREPRENEURS” unique timepieces. Our customers are typically JARED SILVER, SILICON VALLEY JEWELLER extremely well educated, sophisticated in the sense that they are very in tune with culture, Who better than Jared Silver to study the arts, trends and society, and when they look at profile of Silicon Valley buyers, the very a piece of jewellery, they want to be different. people who are defining our new purchasThey want to stand out. Most of my customers, Jared Silver ing habits? His boutique is located in the faby the time they come to us, already own mulmous Rosewood Hotel, where most of the key deals of tiple Pateks, Vacherons and vintage timepieces.” the tech industry have gone down (as seen in the HBO What is the lifestyle of Silver’s customers? “Very casuseries “Silicon Valley”). In 2014, the second-generation al. That’s why brands like Ressence, Urwerk, Richard jeweller began representing a range of exclusive high- Mille and MB&F are doing so well. You can absolutely end independent brands, catering to a wealthy tech wear these striking timepieces with a T-shirt and jeans. clientele. “Our average unit sale is almost 12 times the The watch culture is very strong here, and we are really national average,” he says. “But mostly, we try to iden- just scratching the surface of it as a retailer.” tify watch brands that match our ethos as a company.”

Among them we find MB&F, Ressence, Urwerk and Richard Mille. “Most of our customers are entrepreneurs themselves so they are naturally attracted to stories of entrepreneurship, like that of Max Büsser “I WOULD LIKE TO BUILD or Richard Mille, who seem like-minded. At the same A BRIDGE BETWEEN time, what they are producing is mechanical artwork, SWISS WATCHES AND which is very different from the products of the Valley.” SILICON VALLEY” But what about the mechanical vs. connected conversation, in the heart of Silicon Valley? “What I see is a very YVES BEHAR, SWISS DESIGNER AND FOUNDER polarised market,” says Jared Silver. “I see people who OF FUSEPROJECT IN SAN FRANCISCO stick to the Apple Watch because they like the functionality. But they will always see it as a disposable item. When we enter the offices of Fuseproject in San And they also have timepieces that they like to collect. Francisco’s Design District, it becomes clear that the Actually, people started to become more interested in company’s work goes well beyond “design” in the strict sense. The employees work in a giant open space on projects that may include the complete rebranding and strategic redefinition of a client’s business. The list of customers of the company founded by Swiss-born star designer Yves Behar is long, ranging from Nike to L’Oreal, from Louis Vuitton to Prada, Samsung and Herman Miller. The man himself is a blend of casual outdoor lover and busy design conceptualiser, with an Owen Wilson- esque look. He has worked for a long list of European fashion houses, and knows better than anyone that the relationship with tech guys is not always a smooth road. These are two different worlds. “As a designer, I work with technology but also with craft,” he says. “In many ways, what prevents the Swiss watch industry from connecting with Silicon Valley is the chal-

DAY 2

62

lenge of access to technologies, as this ecosystem is very costly. And on the other hand, Silicon Valley doesn’t see craftsmanship as the huge opportunity that it is; there is a lack of imagination in this sense.”

Yves Behar believes that designers can create bridges between these two worlds. “This is how I see my role. The watch itself can be re-imagined as an object. But we also need to tackle new approaches when it comes to how a timepiece is introduced and bought by customers.

What’s really good here at fuseproject is the way we design the product, the experience and retail as an ecosystem. You have to bring all the pieces together. The new generation of consumers has been raised with Apple and Nike, brands that are really consistent in the way they present themselves.”

Yves Behar sees the phase of digital disruption that is changing the face of the watch world as “the opportunity of a lifetime, in an industry that has very much stayed the same for the last 40 years.” He would like to see bolder statements in terms of shapes, expressions and materials coming from Switzerland in order to connect to a younger generation. “When I grew up in Switzerland, watchmakers were trying new things, like the Swatch. If I compare the 1960s or 1970s and now, there was a sense of risk-taking that is missing today. A Swiss watch is now essentially an accessory for people who have everything. Today, we admire the disruption of the past... But there is still plenty to do in terms of customisation, distribution and new ways of engaging with people.”

So far, the paradox facing Yves Behar is that beyond wearables, the only traditional timepieces he has created were for an American and a Japanese brand: the con temporary version of the famed Museum for Movado

“Today, we admire the disruption of the past. But there is still plenty to do in terms of customisation, distribution and new ways of engaging with people.” – Yves Behar and a highly innovative and whimsical display for an Issey Miyake watch. Before leaving, the designer takes his smartphone out of his pocket and shows us an image that has intrigued him for a while: an Audemars Piguet from the early 20th century whose design fascinates him. “I would like to know more about this model, but I haven’t found any information so far.”

We’re guessing that Yves Behar, a bridge-builder between two industries, will soon be fielding calls from Swiss watchmakers. “I want to do more watches,” he says. “I think the wrist is the ideal place for a functional object. And it’s one of the most exciting industries because it knows how to make things and how to make them work for a long time, how to create inner and outer beauty. Very few traditional industries have managed to continue doing that. But I’m always asking the question: what are the next possibilities?”

63

DAY 3

THE PIER, A FUTURE HUB FOR THE SWISS WATCH INDUSTRY? AT SWISSNEX SAN FRANCISCO

Switzerland has a strong presence in the heart of San Francisco. Its consulate, cultural centre and scientific centre occupy a whole pier (n°17) on the famous city’s waterfront. The most interesting of these for the watch industry is the scientific centre, known as Swissnex. It serves as a liaison office between Swiss companies and universities and the highly innovative ecosystem of Silicon Valley.

The Swiss railways, telecommunications and pharmaceutical companies have a local presence through an onsite representative. But one big piece of Switzerland is missing: the watch industry. And this is despite the fact that Silicon Valley’s embrace of wearable technologies is having a huge impact on Switzerland’s Watch Valley.

A paradigm change is occurring, which merits even greater scrutiny. We are seeing the connected ecosystem investing increasingly in health devices. In early 64

September, Apple announced the launch of three medical studies in partnership with Harvard University, the University of Michigan, the World Health Organisation and the American Heart Association.

“With the Apple Heart Study, we found that we could positively impact medical research in ways that help patients today and that make contributions that will benefit future generations,” said Jeff Williams, Apple’s chief operating officer. “Today’s announcement carries our commitment to health even further by engaging with participants on a larger scale than ever before.”

Last March, Stanford Medicine researchers presented their findings from the Apple Heart Study at the American College of Cardiology’s annual scientific session and expo. The largest study of its kind, ever, it enrolled over 400,000 participants from all 50 states over a span of eight months. Apple and Stanford created the study to evaluate the Apple Watch’s irregular rhythm notification, which occasionally checks the heart’s rhythm in the background and sends a notification if an irregular heart rhythm appears to be suggestive of atrial fibrillation (AFib).

Other producers such as French company Withings (part of Nokia) also generate large-scale health studies through their connected products. Withings recently announced a new B2B business division called Withings Med Pro, which encompasses a data collection solution as well as a remote patient monitoring platform designed for healthcare practitioners, hospitals, care facilities and clinical researchers.

This year, Apple recorded its highest-ever revenue in a September quarter, at $64 billion, while its wearables segment was up 54% year on year. “My view is there will be a day in the future that we look back, and Apple’s greatest contribution will be to people’s health,” said Apple CEO Tim Cook.

A breakthrough in health monitoring could make smartwatches essential everyday products. Insurance companies are already monitoring the situation closely (read the interview with Peter Stas on p. 94). Even if the mechanical watch remains in another universe, with different goals, it would seem worth monitoring these developments too. The place to do so is Silicon Valley. And Swissnex seems like a natural fit for the Swiss watch world.

every single partner, digging through their archives and their history and coming up with the best solutions. One great thing about our team is that there are many mechanical watch enthusiasts, and they are eager to try to find the best combination between the utility of the connection and the design of the traditional Swiss watch. We want to find useful features that we can bring to the traditional watch world.”

DAY 4

TALKING WEARABLES AT GOOGLE JOHN ANGELO, WATCH FACE DESIGN LEAD AT GOOGLE

“Smartwatch Designer” is a new kind of job, one that did not exist ten years ago. John Angelo is the man in charge of watch face design at Google. We were lucky enough to have the opportunity to visit the company’s campus in Mountain View and talk watches with Angelo.

To say that Google has been quite active on the smartwatch front this year would be an understatement.

In January, it acquired the Fossil Group’s entire wearables division for $40 million. And in November it bought out the world’s number two producer of connected devices (behind Apple), the American brand Fitbit, for $2.1 billion.

“We launched our operating system for wearables in 2014,” recalls John Angelo. “The idea was to create an open notification system. From the start we wanted to work with a large number of partners.” Wear OS currently drives smartwatches from tech brands such as Motorola, Samsung, Huawei and LG, as well as connected watches made by traditional watchmakers including TAG Heuer, Montblanc, Hublot, Casio, Movado and Louis Vuitton.

“My specialty is designing watch faces, tiles, and system interactions in collaboration with our partner brands,” says John Angelo. “We actually spend a lot of time with

“There have also been moves within the company to bring in more fashion-minded people. This should facilitate the dialogue with the Swiss watch industry.” – John Angelo The designer emphasises his admiration for watches that stand the test of time: “You can still wear a Swiss watch several decades after the initial conception.

That’s a really big challenge for a designer in a tech company. Another major challenge is the power reserve and energy in the device. At Google, we have this concept of the ‘Joy of Missing Out’, a core purpose of which is to allow consumers to leave their phone on the side for a little bit.”

65

Contrary to popular belief, the smart device is not leaving the wrist to go elsewhere on the body, as Angelo explains. “Quite the opposite. One of our biggest priorities is health features like fitness and nutrition. The wrist is a convenient place for them. Google has developed other wearable projects such as Google Glass, but they are not intended to replace the watch.”

Following the acquisition of Fossil’s technology and teams, as well as that of Fitbit, Google is launching an offensive on the smartwatch world. Many expect it to launch its own hardware too. “There have also been moves within the company to bring in more fashionminded people. This should facilitate the dialogue with the Swiss watch industry,” says Angelo. “It’s a growing process, with a learning curve.”

DAY 5

THE WATCH ENTHUSIASTS’ CLUB OF SILICON VALLEY GABE REILLY, CO-FOUNDER OF COLLECTIVE

The idea of Collective was launched at the end of 2018 in Silicon Valley by two watch enthusiasts working in the tech industry, Gabe Reilly and Asher Rapkin (we recommend you stream the latter’s keynote speech from SIHH 2019). They partnered with Rob Caplan, owner of reputed Bay Area-based Topper Fine Jewelers, to create not only a new forum for local horology aficionados – they have a private discussion group on Facebook – but also a 360° platform that goes from organising exclusive events for the group to creating one-off timepieces with watch brands.

They came to our attention when Zenith announced the launch of a “Collective” edition of its Chronomaster El Primero last October. So it seemed like a good idea to meet Gabe Reilly, to find out more about this fledgling club.

“The beating heart of our 50-strong group is made up of people who work here in the tech industry,” he told us. “Whether they are product designers, software engineers or copyright attorneys, they love watches for two main reasons. One is the romance of mechanical timekeeping. The other element is a reverence for the contemporary technological side of innovation in watchmaking, like the Spring Drive by Grand Seiko or 66

the Defy by Zenith. Hence we love quartz too, unlike many whose default reaction is negative!”

“The club was largely born out of frustration,” he continues. “The passion of the community is growing but some watches are harder and harder to get. It’s not only about the ‘usual suspects’ – their shortages create a ripple effect for the industry as a whole. That can be really frustrating, because you feel you are being left out: some people who jump the line get these watches and it seems unfair. By combining the power of 50 people, we can build the watches we want with the brands we like.”

The main idea of the first collaborative watch with Zenith was to create “a version of the El Primero that would be inspired by the design language of Silicon Valley.” Although the initial stage of the process was “very comfortable” in terms of the creative concept and design, things got more difficult when they moved to the prototyping stage, as Gabe Reilly explains. “The leap from software to hardware made us nervous, as it was new for us to commit to something that we couldn’t come back from. In our daily jobs in software, we can test fifteen versions of the same thing to see which one works best. We realised we had to make a leap of faith.

But knowing the outer limits of your abilities is essen-

The main idea of the first collaborative watch with Zenith was to create “a version of the El Primero that would be inspired by the design language of Silicon Valley.” – Gabe Reilly tial so we wouldn’t micro-manage the process.” The watch has already been unveiled and will be delivered in January 2020.

We couldn’t resist asking Gabe Reilly, a tech executive with a passion for timepieces, about his vision of the future of the watch industry. “Just like Kickstarter and other new tools of distribution, we are a part of a new way of buying watches – through a club. People love mechanical watches in Silicon Valley. At the same time, I would like to see more openness from the traditional watch community itself to smartwatches and connected watches – in the same way as we have a reverence for the Spring Drive, quartz, ceramics or any other innovation coming from the watch world. After all, if Hans Wilsdorf were alive today, with his innovative spirit, he might well have worked here in Silicon Valley!”

To coincide with the 50th anniversary of the El Primero movement, Zenith has collaborated with Collective to create a unique edition of the Chronomaster El Primero, made available exclusively to the group’s members.

67

68

HIGHLIGHTS This sponsored section gives our partners the opportunity to introduce their latest developments. Be it exclusive timepieces, legends of watchmaking or disruptive models, it shows a variety of designs, techniques and proposals. In a nutshell, it offers a glimpse into the incredible creativity present in the watch industry.

69 69

HIGHLIGHT Sponsored content

URWERK

ATOMIC MECHANICAL CONTROL

GRAND PRIX D’HORLOGERIE LAUREATE (PART 3/3)

In this final episode about the AMC, we give more details about the watch itself.

The innovative and bold project has just been awarded with the “Prix de l’Audace” at the Grand Prix d’Horlogerie de Genève. The year 2019 couldn’t end on a better note for Urwerk!

“

Thank you, members of the jury, thank you all. Most of all, thank you for recognising and rewarding the sheer amount of effort put in by the whole Urwerk team. Our engineers and watchmakers, every “Urwerkian”, and our atomic partners at SpectraTime, together made his possible. When you embark on a horological enterprise on the scale of the AMC project, it’s better not to know how difficult it will be.

We now know that it’s hours beyond counting and labour beyond reckoning. And that’s what makes us proud to be standing here tonight”.

These are the words of Felix Baumgartner and Martin Frei, co-founders of Urwerk, after winning the 2019 “Prix de l’Audace”, a new award of Geneva’s Grand Prix d’Horlogerie. They added: “This prize for the most intrepid horological venture really sums up who we are.”

With the AMC clock and watch, Urwerk has created a physical marriage between two approaches to chronometry. AMC is not just a fascinating combination of atomic and mechanical systems; it brings together the two branches of watchmaking in one hybrid device, successfully bridging an existential chasm that has divided horology since the creation of the first piezoelectric oscillator.

The AMC clock and watch are unique in the history of horology. Each represents in its own way, the peak of evolution of a particular approach to keeping time. And when paired, this duo turns out

70

to be indomitable. The mechanical watch comprising balance, balance spring and lever escapement merges with the atomic clock representing the cutting edge of modern timekeeping technology. An ex-machina dialogue starts and the rest is pure magic…

The watch, like the atomic clock, is a novel construction and is designed specifically for the AMC project. It includes typical Urwerk features such as the power reserve indicator and two stacked barrels supplying a power reserve of four days. The watch also has Urwerk’s Oil Change Indicator, which shows when the movement should be serviced. One full rotation of the oil change indicator will take more than four years, with a recommended service after three and a half years of operation.

However its most ingenious features, though invisible to the naked eye, are revealed upon close examination of the movement. The watch was designed to fit on and work with its base unit — an atomic clock also conceived and developed in Urwerk’s workshops. This base station will rewind the Urwerk wristwatch, set it to the correct time and if necessary adjust its rate.

With the award at the Grand Prix d’Horlogerie de Genève, the AMC is recognised for what it really is: a bold step towards the future of watchmaking!

www.urwerk.com

HIGHLIGHT Sponsored content

URBAN JÜRGENSEN THE ONE COLLECTION

EARNING THE PRAISE OF MEDIA, RETAILERS AND COLLECTORS It may be a cliché the world over but “the proof of the pudding is in the eating” is a business metaphor that powerfully explains the ultimate goal of any enterprise or craft: no matter how much confidence we have as creators, ultimately another jury passes judgement on our work.

J

ust over six months ago at the Baselworld fair, Urban Jürgensen launched the One Collection, four new timepieces with a refreshing take on luxury stainless steel watch design. It’s a category that has seen very little real news since the defining design era of the 1970s, and that presented both an opportunity and a challenge for CEO Søren Jenry Petersen and his team: creating a collection that had something new to say while at the same time reflecting 245 years of legacy excellence, with the added pressure of designing the brand’s first GMT complication.

So how was the collection received by those three juries of the media, the retailers and the collectors?

In the words of Petersen: “A success with all three audiences. We had good confidence that the collection would benefit from a strong positive response.

I had worn one consistently during our testing and

72

QA phase, and it never failed to generate powerful praise, be it from someone who knows Urban Jürgensen well or people new to the brand.”

Clearly, launching a collection that meets with the approval of loyal brand partners and customers is key; however, in a competitive environment, having crossover appeal to new customers is vital, and here the One has triumphed.

Starting at Baselworld, the response from existing and prospective trade partners was high. As one new partner retailer in the USA for Urban Jürgensen put it: “The launch of the One Collection was just an added bonus for a brand with such unbelievable legacy, craftsmanship and quality of the product.” In other words, admirers of Urban Jürgensen have now become active partners thanks to the broadening of the collections from 1745, Jules and last year’s success, The Alfred.

That interest has translated into strong demand, and the atelier confirmed it had sold the entire 2019 allocation, with 2020 orders already beyond projections.

But what of the media? Across the professional and high-quality watch industry magazines and websites, the feedback and analysis have been extremely favourable: “Welcome to the Hall of Fame”, “Urban Jürgensen has nailed it”, and “Truly iconic watch design” to list a few. Petersen travelled to London in October where he collected the Editors’ Choice award from the ‘Square Mile Watch Awards’. In the citation, the editor Mark Hedly reflected the ambition to create something different:

“Rewriting the blueprint of how a sports watch looks and feel isn’t easy… but Urban Jürgensen has resisted (the) magnetic pull to create something altogether different in 2019. The sports watch is a timeless timepiece, but in the new Jurgensen One it has a fresh face that stands proudly apart from its forebears.”

Finally, how does Petersen feel about the last couple of years of design, perfection and now commercial success?

“We take nothing for granted. We knew that if we were going to enter a new category, we had to get it the right first time. It had to be done on our terms and based on our values and creative vision – as a team we could not be happier, and we are pleased the One Collection is being embraced so passionately by our clients and partners.” www.urbanjurgensen.com

HIGHLIGHT Sponsored content

JAQUET DROZ

GRANDE SECONDE SKELET-ONE CERAMIC

A POWERFUL NEW VERSION IN BLACK AND BLUE Sheathed in black ceramic, boasting a dial with blued steel screws and white gold indexes, and worn on a blue canvas strap, the Grande Seconde Skelet-One Ceramic by Jaquet Droz solidifies its modern, masculine identity.

Designed over two and half centuries ago, the Grande Seconde by Jaquet Droz never ceases to amaze. Its “Skelet-One” skeleton version, presented in 2018, marked yet another break: it was the first time the Grande Seconde did away with its dial. In its place: light, lightness and transparency.

Today, the piece returns with a new feature that gives it added modernity: a ceramic case. With a diameter of 41.5 mm, it’s in perfect harmony with the Grande Seconde Skelet-One’s open movement structure, featuring a black coating that intensifies its power and modern, masculine character.

Its straight lines contrast with the ceramic case’s skillful finishing, with a satin-finished top just like its lugs. In contrast, its polished sides foster a play of light that is amplified by a double sapphire “glass box” on the top and bottom, offering the largest possible opening onto the skeleton movement.

www.jaquet-droz.com

74

The Grande Seconde SkeletOne Ceramic’s movement features blued steel screws to join the 18-karat white gold hour circle and the sapphire dial.

The movement plate stretches all the way around the case, which itself does away with the casing ring. With this new construction, the gear train is entirely suspended and fixed to the skeletonised bridges that cross over the movement.

75

HIGHLIGHT Sponsored content

LONGINES

THE LONGINES MASTER COLLECTION

NEW SELF-WINDING MOVEMENT WITH MOON PHASE Longines reaffirms its watchmaking expertise with the addition of new creations that strengthen one of its flagship lines, The Longines Master Collection. Powered by a new self-winding movement developed exclusively for Longines, these timekeepers are characterised by a moon phase indicator and a refined aesthetic, creating a balance between technical excellence and classic elegance.

Longines is introducing new models to its mechanical line The Longines Master Collection, launched in 2005. The latest versions feature a moon phase indicator at 6 o’clock circled by an Arabic numeral date ring on which a hand points to the current day. The mechanism is powered by a new movement developed exclusively for the brand – the L899 calibre.

Available in two sizes (40 and 42 mm in diameter), the new models of The Longines Master Collection come with a range of different dials: black barleycorn with painted Roman numerals, silvered barleycorn with painted Arabic numerals or blue sunray with applied indexes.

The 40 mm variant is also available in a version with diamond indexes for a refined result. The new models of The Longines Master Collection are fitted with either a stainless steel bracelet or a black, brown or blue strap to match the different dial colours.

www.longines.com

76

The 40 mm stainless steel case of this model from The Longines Master Collection contains a new movement developed exclusively for Longines – the L899 calibre. It features a moon phase indicator at 6 o’clock circled by an Arabic numeral date ring on which a hand points to the current day. Its blue sunray dial is adorned with diamond indices. A blue leather strap completes this timepiece.

77

HIGHLIGHT Sponsored content

TITONI

HERITAGE WATCH

AN ICONIC TIMEPIECE FROM THE 1940S The Heritage Series is dedicated to the company’s long history of watchmaking.

With the relaunch of vintage watches, the Swiss watch company honours legendary models with some special features and unique design elements.

Titoni’s purpose in introducing the Heritage Series is to bring iconic timepieces produced in the company’s 100-year history back to life for today’s watch lovers and connoisseurs. The overall look of the first watch in this series reflects the post-war trend for simplicity. The case body is uniquely streamlined and both hands and numerals are filled with Superluminova so that you can tell the time in the dark too. The heavily domed crystal and the curved dial and hands underline the retro look of the watch.

The case back of this watch is decorated with an elegant swooping car engraving. It symbolises not only the design elements of those times, but also the euphoric mood after WW II. The Titoni logo is engraved in the centre top.

The original model was launched in 1948 under Titoni’s sister brand Felca.

The legendary brand was widely known in the Western world and the Middle East. This Felca watch was fitted with the famous AS 1250, a calibre designed by the British watchmaker John Harwood.

www.titoni.ch

78

Heritage Series (Ref. 83019 S-ST-638) The shape of the numerals’ typography also reflects the trend of the early 1950s. The red second hand provides just the right finishing accent.

79

HIGHLIGHT Sponsored content

JEAN MARCEL TANTUM

EXTREMELY SLIM Slender and elegant, the eight models from Jean Marcel’s new Tantum collection are mechanical Swiss made wristwatches with extremely flat cases. They are manufactured in a strictly limited edition of 100 pieces worldwide.

With his latest collection Tantum, Jean Marcel presents eight noble mechanical wristwatches in an extremely flat stainless steel case. Named after the Latin word for “only”, it features two automatic chronographs with an overall height of only 11 mm, four three-hand automatic watches with date – and an extremely slim 8 mm total height – and, as a special highlight, two hand-wound models that are only 6 mm high. Due to the minimal overall height of the watch design, the timepieces in the new Tantum collection can therefore be regarded as the flattest models in their respective market segments.

The JM H05 calibre, based on the ETA Peseux 7001, drives the hand-wound models. One of the thinnest mechanical movements of all, it is a vital part of the watch’s sensationally low total height of just 6 mm. For the first time, Jean Marcel has also incorporated the particularly slim movement JM A09, based on the ETA automatic calibre 2892A2 Élaboré, into the automatic Tantum three-hand watches with date, which again contributes significantly to the low overall height of the timepieces.

www.jeanmarcel.com

80

A breath on the Tantum watch glass reveals the "JM" company logo for a brief moment: this "mystery effect"

by Jean Marcel, a sophisticated secret signature incorporated into the sapphire crystal's antireflective coating, can be regarded as a unique sign of authenticity for the Swiss brand – thanks to an elaborate partial coating technology that cannot easily be imitated.

HIGHLIGHT Sponsored content

TRASER

P68 PATHFINDER GMT

THE PERFECT COMPANION FOR GLOBETROTTERS The P68 Pathfinder GMT from Swiss watch pioneer traser is the ideal companion for anyone who has more than just one home. The new GMT watch with integrated compass ring not only shows the time in two different places, but also indicates the way – by day and by night.

The P68 Pathfinder GMT offers many of the popular extras of its predecessor the P68 Pathfinder Automatic, which has made a name for itself over the years as a must-have for all outdoor enthusiasts. However, the new model series also offers the remarkable GMT function: set the time at home plus another time zone and avoid annoying mental arithmetic or dragging your loved ones out of bed back home on your next long-haul trip.

And if you happen to lose your way during a snowstorm under a cloudless sky while hiking in Iceland, the reliable companion on your wrist will help you. Using the integrated compass ring, the position of the sun and the hour hand, you can easily find your way with the traser P68 Pathfinder GMT, even in the remotest places with no mobile phone reception.

If the sun has already set, the P68 Pathfinder GMT brings light into the darkness: the hands and indexes of the traser watch light up even in complete darkness thanks to the in-house developed trigalight self-powered illumination technology. This guarantees perfect readability of the time even at night and in poor visibility.

www.traser.com

82

The P68 Pathfinder GMT is available in green and blue.

Whether you’re heading out to sea to relax or seeking an adrenaline rush in the wilderness, the GMT function from Swiss watch pioneer traser adds extra value to everyday life between the time zones.

HIGHLIGHT Sponsored content

EBERHARD & CO. 1887

A NEW CALIBRE FOR A LONG-TERM VISION A manual-winding model, a symbol of classicism, paying tribute to the brand’s founding date.

In 1887, when Eberhard & Co. was founded by Georges-Lucien Eberhard, La Chaux-de-Fonds was already the town that best represented the heart of Swiss watchmaking in the world. The historic Baroque style building, built by the founder and known in the town as “La Maison de l’Aigle”, brought together the watchmaking studios and the family home under one roof. Today Eberhard & Co. has returned to its roots by re-establishing its headquarters within the Maison de l’Aigle.

To celebrate this turning point, Eberhard & Co. inaugurated its first museum and introduced a new, exclusive calibre, the EB140, entirely produced in La Chaux-de-Fonds, as well as the new model destined to house the movement: the Eberhard “1887 Remontage Manuel”.

The EB140 calibre is a manual winding movement (14’’’- 28,800 vph-18 rubies) with exclusive architecture and special technical and structural specifications.

The aesthetic aspect also reveals meticulous attention to detail, particularly the bridge for the balance wheel and the large bridge for the gear trains, distinguished by the traditional “circular wave” finish.

The new “1887” model was designed to express all the potential of this calibre.

It is a watch with balanced lines, with a 41.80 mm diameter steel case that leaves ample space for a dial of extreme elegance, available in two versions with gold or rhodium-plated numbers and indices. The look is completed by a Jacquard silk strap, in two different versions to go with the two dials, dedicated to the “dandy” of the new millennium and produced exclusively for Eberhard & Co.

www.eberhard1887.com

84

The 1887 line has a retro feel, thanks to the “clous de Paris” workmanship and the trapezoidal date window, which was used by Eberhard & Co. for some historical models.

The logo on the dial is part of the historical heritage and is documented in the archives of the early 1900s. The sapphire crystal case back is certainly a high point: it proudly shows off the beauty of the EB140 calibre.

85

HIGHLIGHT Sponsored content

ORIENT STAR

CLASSIC AUTOMATIC MOON PHASE COLLECTION TWO NEW BRACELET ADDITIONS

Orient Star has introduced two stainless steel bracelet versions of its elegant Classic Automatic Moon Phase range.

First launched in 2018, this collection balances a power reserve indicator, with semi-skeleton and Moon Phase functions together with sophisticated design elements that reflect generations of independent Japanese watchmaking.

The calibre F7X62 offers a 40-hour power reserve with indicator and three-hand dial with hand-winding functionality. These timepieces are expertly hand assembled by Oriental horologists in the mountains of Akita, Japan, in accordance with the Japanese

86

principle of monozukuri, meaning the art and science of manufacturing.

The movement is housed within a 41mm stainless steel case, with super anti-reflective coating and water resistance to 50 metres. The latest additions are available with solid stainless steel bracelets and cases, coupled with either a classic black or ice white dial.

orient-watch.com

CLOSE TO 18,000 BUYERS VISIT THE EVENT

HIGHLIGHT Sponsored content

HONG KONG WATCH & CLOCK FAIR 2019 Global exhibitors and buyers still view the Hong Kong Watch & Clock Fair as a premier one-stop trading platform.

A survey reveals smart watches continue to lead the trend.

T

he 38th edition of the HKTDC Hong Kong Watch & Clock Fair and the seventh edition of the Salon de TE took place from 3-7 September at the Hong Kong Convention and Exhibition Centre.

The fairs welcomed close to 18,000 buyers from 104 countries and regions. Satisfactory growth was recorded in buyer attendance from emerging markets such as Brazil, Poland, Russia, Ukraine and Vietnam, along with established markets such as Belgium and Switzerland. Benjamin Chau, HKTDC Deputy Executive Director, said: “Despite the continuation of Sino-US trade friction, global exhibitors and buyers still view the Hong Kong Watch & Clock Fair as a premier one-stop trading platform. The fairs attracted renowned watch and clock brands, retailers and wholesalers.�

The HKTDC commissioned an independent market research agency to conduct an on-site survey, interviewing 839 buyers and exhibitors about their views on market prospects and product trends. Regarding the market outlook in 2020, respondents who expected to see overall sales remain steady or grow represented 48% and 32% respectively. In terms of product trends, smart watches (31%), automatic watches (22%), digital analogue watches (18%) and quartz analogue watches (14%) were viewed as the most popular categories for 2020. Watches that can interact with smart devices (51%) were predicted by respondents to be the most prevalent product development strategy for the coming year.

www.hktdc.com

87

S

IN

TE

RV I

EW S

&

C A SE

ST U

D

IE

D C IF D AS F E FU IFF E RE S TU ER , N T RE EN S T

As part of our “WHAT’S NEXT?” dossier, Europa Star takes a look at a number of case studies, with a particular focus on the watch industry sectors that appear to be in the most trouble: the entry-level and mid-range.

What lessons can these different stories teach us? It’s hard to say, because the overriding impression is that everyone has to invent their own solutions. This might be by moving up-market, devising new initiatives, mining the brand’s history, or even ripping everything up and starting again. Everyone must draw their own conclusions.

88

DE BETHUNE DW5 ARMILIA The Armilia, a strangely fascinating retro-futuristic one-off piece, is inspired by the world of graphic artist and production designer Franรงois Schuiten, one of whose drawings is engraved on the rose gold case. The Armilia is the product of extreme miniaturisation, its mechanical workings subsumed to the design as a whole, of which the time is just one element.

N “N U C O Y M ON T S AN AN N EN É D AG EC OU M C E TI G O O M O H N N E N SU N B M T ET W ER EE ”

G

INT ER VIE W

P BY

I ER

RE

MA

ILL AR D

A physicist, mathematician and craftsman, all at the same time, Guy Sémon is without any doubt one of the most brilliant researchers in horology. It is to him that we owe the development of the V4 from TAG Heuer, chronographs that are accurate to 0.001 sec., then to 0.0005 sec., the TAG Heuer Connected, the creation of new, revolutionary escapements such as the Pendulum or, more recently, the blade regulator of Zenith’s Defy, or again the carbon nanotube hairspring, to cite only a few examples.

90

“Let’s liken quartz to Kodak. And mechanical watches to painting”

Are wrists on the way out?

“Lots of people are saying now that connectivity in “How is the Swiss watch industry developing? That can wristwatches is just a passing fashion and it will soon be summed up in a few figures: in 2010, Switzerland pro- migrate to other supports, or even become physically duced 30 million watches, including 4 million mechan- hybridised. I reply to that kind of fantasy with an imical watches. In 2018, it only produced 21 million, includ- age: the Romans travelled in chariots, with wheels and ing 8 million mechanical watches. Quartz has shrunk a platform. Animal traction has given way to engines, by one-third in eight years, and it’s not over yet. Another but we still travel around on a platform with wheels.” comparison: in 2000, 85% of the value of the Swiss watch industry was divided between 15 brands. In 2018, 85% “The actual terrain is unknown of its value was divided between seven territory to many executive” brands, estimated as follows: Rolex 7 billion, Cartier 4 billion (but including “The new management of the larger jewellery), Tissot and Longines 3 bilgroups is now made up for the most part lion together, Omega, 2.5 billion, Patek of experts in Excel spreadsheets and Philippe 1.5 billion and Audemars PowerPoint presentations. But the actuPiguet 1 billion. A total of 19 billion. The al terrain is unknown territory to them. biggest names have continued to accelA blank space. When I was director of erate, the others are now lagging too “I reply to that kind of TAG Heuer, I regularly went incognito far behind. Another thing we’re seeing into the stores to do the selling myself. fantasy with an image: is that all the brands with prices below There’s no better way of understanding the Romans travelled CHF 4,000 are losing ground. what really motivates the consumer.

We can draw a parallel: let’s liken in chariots, with Today, those who really need a watch are quartz to Kodak. And mechanical wheels and a platform. becoming systematically rarer, because watches to painting. Kodak didn’t go Animal traction has you can see the time everywhere. Soon, digital and nobody even knows their there will only be three or four categogiven way to engines, name any more, even though they ries left: those who are looking for a gift were an iconic brand, present all over but we still travel for a special event, and that concerns around on a platform the world. Painting never had to go every price bracket; watch lovers who digital, and not only does it still ex- with wheels.” – Guy Sémon know nothing but have loads of money ist, today it’s attaining previously unto spend and go for the bling-bling or heard-of prices.” whatever seems to be the fashion; enlightened watch lovers and aficionados, but they’re a limited group; and lastly, the real collectors, of which there’s only a handful.

There’s a strong focus on a few brands, because a very “Too late to get smart” large proportion of consumers go for what they al“We launched our TAG Heuer smartwatch in 2015, just ready know. The sheep instinct predominates, espeat the right time. We sold 120,000 in three years – a cially in China, but not only there.” highly profitable operation in terms of image. A very fine marketing operation. There were two things you couldn’t afford to get wrong: a new watch incarnation, “There will always be Haute thanks to a watch exterior worthy of the name, and Horlogerie, the real thing” ‘Made in Switzerland’. With the new ‘Swiss made’ at 60%, you need to develop software in Switzerland. But “Whatever happens, there will always be Haute that’s impossible. Smartwatches are part of a global Horlogerie, the real thing, where manual and intellececosystem and that ecosystem is totally dominated by tual dexterity are mingled. There will always be people Apple. And now it’s too late. There are only two major who love things that embody what we are and what players left: Apple for lifestyle and Garmin for sport. characterises us, intelligence and time. That’s what You can forget about Swiss made smartwatches.” makes me always want to go on creating.”

91

“T A C H N IN RE E F U IN T AT U E D HE IV TU L EP H IT R E EN A Y E O M D ND LIE F C EN S S H T OF ST RU C TU RE S”

M

INT ER VIE W

P BY

I ER

RE

MA

ILL AR D

In the course of his career, Manuel Emch resuscitated the Jaquet Droz brand during the nine years he spent as its CEO and artistic director.

Then, over a period of seven years, he redynamised RJ-Romain Jérôme and transformed it into a disruptive brand. Manuel Emch now works as an independent consultant and is a board member and advisory council member in the luxury goods industry.

On the polarisation between the “booming four” on the one hand and Apple on the other “What’s left for the players between this frying pan and this fire? What space is there between the ‘booming four’, i.e. Rolex, Patek Philippe, Audemars Piguet, Richard Mille, a handful of mid-range brands and, at 92

the other extreme, Apple? In the US, for the first time, digital has overtaken analogue, software has overtaken hardware. It’s advancing fast. But it’s no good the Swiss complaining. Those who could have addressed the issue ten years ago didn’t – I’m thinking of Swatch first and foremost – and now it’s too late. Was it a lack of vision? Complacency? Ironically, Swatch, which already saved the Swiss watch industry once by creating a concept based on rupture that was ahead of its time, has not repeated the act. It has not innovated, and so it is one of the great losers.”

On taking risks “The Swiss watch industry lacks a risk culture. Not a managerial culture, but an entrepreneurial culture.

The Apple bandwagon has already passed. To fight over technology when you have neither the skills nor the technology tools is to fight a losing battle. That’s not pessimistic, it’s just realistic. The battle is over, profound self-examination is called for. You have to dare to do something different. You have to make choices and take risks. In the mid-range segment and well beyond, any brand that is not clearly and unashamedly positioned will lose. As one of my mentors used to say, ‘To construct, you first of all have to deconstruct.’”

On the breakdown of the fabric of watch distribution “This is a difficult period and there will no doubt, regrettably, be fallout in terms of jobs – not right away, but jobs will be gradually be eroded – and of training, but also of the industrial fabric, in other words creativity itself. And without that, survival will be difficult. Know-how is at

great risk of being lost. But the worst thing would be to get resigned to it. We have to rethink the entire model, think in iconoclastic terms, because tomorrow will be even more polarised. We’re facing a broad transition which cannot be warded off, and not just in the watchmaking sector.”

Has watchmaking gone out of fashion?

“To say that watchmaking has gone out of fashion is an exaggeration. Its continuing success reposes on one simple observation: that mechanical watches are not just an instrument, but an accessory. An emotive accessory of status which says a lot about you and which tells stories. And also, in a technological “The anachronistic world that’s developing so fast, people feel destabilised. Anachronistic objects objects and “handand “hand-made” watches have some- made” watches have thing reassuring about them. They something reassuring bring some kind of stability to a fastpaced world. It’s an emotive product. about them. They For further proof that it’s still highly bring some kind of A collecter of contemporary art, Manuel attractive, you just have to look at the stability to a fast-paced Emch has collaborated with many artists. Here is one Skull watch made number of initiatives and new brand world. It’s an emotive

by Swiss artist John Armleder for RJ launches, for example on Kickstarter.

– Manuel Emch Romain Jérôme during Emch tenure. product. ” There will be plenty of failures, but there’s room there for vision, innovation, creativity. As long as people are honest, transpar- About the strategy of the niche product ent and bold.”

“Nowadays, the large groups are acting above all On the success of the vintage and pre-owned seg- according to financial considerations. There’s not enough vision, courage and confrontation any more. I ments learned everything from a real entrepreneur, one who “The Swiss watch industry has been deaf for a long time shook up conventions, was bold, who dared (ed. note: and for many people the door to new watches has be- Nicolas G. Hayek). The future of creativity now lies come increasingly inaccessible. On the one hand we’ve in the hands of independent structures. That means created desire, and on the other we’ve placed the object product offerings that don’t seek the lowest common of that desire out of reach. So customers have found denominator to try and please the largest number of the solution in the vintage market, where they can find people, but which stand out by virtue of their creativwatches with a history, emotion, which are technically ity and boldness. There’s no silver bullet for success. reliable, and at far lower prices while still being an in- You have to take the risk of daring, innovating. With vestment. The brands saw a major money-spinner in an iconoclastic eye. Standing out from the crowd. Not that and created pre-owned departments to cash in on being afraid of the niche product – just the opposite. the market. It’s rather paradoxical, because in many Anything that sits on the fence, anything lukewarm is cases it was the same brands that created the situation. doomed. So vive la niche, vive la différence!”

93

LK A S U G RA S L R T ER N W E A M C IT AD S AN E H Y Y” CO HE M A PA LT N H IE S

PE “W T IN E E I N T ’R R IN S A E

INT ER VIE W

P BY

I ER

RE

MA

ILL AR D

Smartwatches? They account for 12% of turnover at Frédérique Constant and 35% at Alpina. With the creation of MMT, Peter Stas is one step ahead in the smartwatch race. And the race isn’t over yet.

But that hasn’t stopped them from also offering a perpetual calendar at an astonishingly low price. The horological splits? No, convergence. We met him.

Europa Star: In what way are smartwatches a danger for the Swiss watchmaking industry?

Peter Stas: The way I see it, and I already said this three years ago at the launch of MMT (Manufacture Modules Technologies SA), if the Swiss watch industry does not get involved in smartwatches, it will see sales fall increasingly and irrevocably. At Frédérique Constant, smartwatches already account for 12% of turnover, and at Alpina 35%. Next year, we’re going to introduce new technology that will raise these percentages even further. In my view, and we’re already seeing it although the official statistics aren’t showing it yet, watches in the over-CHF1,000 range will also be affected. The cannibalisation effect is gradual and is going to affect even the high-end brands.

94

Can the industry make up for lost time?

How do you explain the fact that you’re one of the rare Swiss brands to have really invested in this field?

Another reason for this development, which is inevitable in my view – and that’s also an opportunity for the Probably because I come from elsewhere. In the industry – is that the health aspect is going to become Netherlands I worked at Philips for eight years, which increasingly important, especially among taught me quite a few things, especialthe over-55s. The algorithms have already ly about electronics. Then I went into been developed, but not implemented yet. watchmaking, in Holland, right in the But gradually, smartwatches with “health” middle of the quartz crisis. I also studfunctions are going to become indispensaied the Swatch phenomenon at Harvard ble items. Apple will go there, but the first Business School and I remember that one to offer genuine, effective and reliable Nicolas Hayek said back then that to sucsolutions will carry off the trophy. We’re ceed, the Swiss watch sector had to be talking about millions of items a year. strong in every segment, from the top to Peter Stas Swiss made has a serious card to play here, the bottom range. It’s a lesson which still because not only does it go hand in hand with expertly stands. And the risk culture is lacking. Where there’s crafted watch exteriors – does a “health” watch have to be opportunity, there’s always risk. ugly? – it is also synonymous with reassuring reliability But I feel that the tone is changing. I recently talked with and quality. As proof that the medical world is keenly five or six CEOs of major companies and I noticed that interested, we’re in talks with health insurance compa- discussion is different now, they’re more open. Yet our nies in Germany for watches they’d like to buy directly door has been open from the start. MMT has become my to offer them to their insurance customers. It’s a poten- priority and that of my wife, Aletta. We’re going to focus tially huge market. Including China, around 150 million our efforts on that. smartwatches a year are being produced today. There’ll be no going back.

At the same time, at the other extreme, at Frédérique Constant you’re selling a perpetual calendar for One idea that we’re hearing more and more from CHF3,850. That’s an unheard-of price for this kind the heads of watch companies is that smartwatch- of complication. es worn on the wrist are just a passing fashion.

The market is difficult for everybody. You have to offer And that its functions are going to migrate… innovative items with an excellent price/quality ratio.

Migrate? Yes, connectivity is going to be built into That’s more important than ever. As it turns out, it’s a clothes, glasses and so on. That will come too, but after limited series to mark our 30th anniversary. There’s a four years of experience I can tell you that getting reli- whole audience of collectors who are very interested. It’s able measurements with a watch on the wrist, even a high-end mechanical watch at an affordable price. though it’s an ideal place, is already a tough task. And in a At the other extreme, we can see that smartwatches are watch, even though it’s a tiny object, you still have room also moving upmarket. The Garmin Marq collections, to place a dependable battery, a screen under a real dial, for example, are selling at between €2,000 and €3,000. a mechanical module and an electronic module. You can Connectivity is climbing into “our patch”, what the Swiss fit all that in a watch case, and by the way, we’re going watch industry thought was its private preserve. And the to issue a lady’s smartwatch with a 36mm diameter. But smartwatch brands are increasingly reactive. that’s impossible with glasses. There’s not enough space, It’s sad to say, but quartz watches are right in the line of they’re too small. How can you fit a battery worth any- fire. You can even find Garmins at €200 – enough to make thing in there? It wouldn’t be very reliable. You can also any young man waver. I’d be very worried if I was in some conceive of an earpiece, but there again, it’s too small, people’s shoes. But with “Swissness”, the resulting qualitoo fragile. We need to think along different lines. Today ty, expertise, the Swiss watch industry can and must still 95% of smartwatches are still a kind of black box. But have a successful future ahead. with MMT, we’re offering other solutions, with real dials, real hands. I can tell you that the number of interested brands, including the biggest, is growing all the time.

95

” SS YIN S A O G VE F R R KN IS Y O KO W F -H O W

INT ER VIE W

ST FO E “T P W H R H A O ER SE E LO RR E’ Y N

HAND MADE 1

P BY

I ER

RE

MA

ILL AR D

Greubel Forsey recently presented its Hand Made 1. As its name suggests, this exceptional watch was made almost entirely (95%) by hand. Europa Star took advantage of the occasion to meet Stephen Forsey, who told us of the constant effort by Greubel Forsey to conserve its know-how.

A concern which, paradoxically, is aimed at ensuring them a future.

96

Europa Star: We thought that the top end of the market had been spared the turmoil and disruption currently shaking up the Swiss watch industry, forcing it to reconsider the very foundations on which it stands. Is that not the case?

Stephen Forsey: Just because we’re right at the top of the ladder that doesn't mean we’re proof against changing times. We’re not on a desert island. We’re part of the watch industry, which is a whole.

Yet the advent of smartwatches has no direct influence on you…

Did Hand Made 1 grow out of the Naissance d’une montre (“Birth of a Watch”) project?

I think that it’s just a passing technological phase, that the technology will continue to evolve and that what we today call smart-“watches” – in fact they’re not watches at all, they’re computer terminals – will turn into something else altogether and probably end up migrating from the wrist, which they occupy today to the detriment of traditional watches. Also, society as a whole is evolving towards greater authenticity. We’re moving away from the image society, the marketing society, and it’s a development that is affecting all products. In response to allpervasive connectivity, there’s a growing desire to switch off and get back to reality.

Yes, the Naissance d’une montre project, run with the help of the Time Aeon Foundation and Philippe Dufour in particular, provided the impetus for this project. Under it, eleven watches have been made in all kinds of collaborations, including one with a Finnish watchmaking school, and thanks to this initiative we’ve recreated a real watchmaking community. The auction price of CHF1.5M for the first watch, bought by a Chinese collector, showed how strong interest in the initiative is. The watch was 70-75% hand-made. As for us, we wanted to go further, to achieve 95%. Today, only five components out of 308 are not hand-made: the sapphire crystal, the strap lugs, the barrel mainspring, the joints and the stones. Our idea is to make it a reference, a benchmark for hand-made watches. Moreover, we haven’t called it “Swiss Made”, but “Hand Made”!

Was it in the name of this “authenticity” that you started to make the Hand Made 1?

Our great advantage is that Robert Greubel Stephen Forsey and myself aren’t out to make commercial products. We’re motivated by something else. Our passion is creation, trades and crafts, know-how, people. Our Industrialisation also often means attaining greatprime concern is to conserve our creative freedom and er consistency and reliability, doesn’t it? consequently to compromise ourselves as little as possible. Therefore, we don’t work to a prior specification. We From the outset, the required goal was to guarantee launch ourselves into the unknown, without knowing the same level of reliability as for all our other prodhow long a project will take us. We set ourselves chal- ucts, the same precision for the components. That said, lenges and try to resolve them one after the other. it’s a totally different approach to the production of a part. For example, we work with an old, hand-guided “pointeuse 3 axes” and we achieve identical tolerances Making a watch entirely by hand is one heck of a chal- of around 2 microns. But if we take a week to set up a lenge today. Why do without CNC tools, for example? CNC tool, afterwards it works like clockwork. Whereas in this case, it takes us two whole weeks to make one There’s a very worrying risk of a loss of know-how. Today, single base plate, and to make three we start off with we train people less, and less well. It’s a real worry and a batch of six. Altogether, a completely hand-made a complex problem. Some watchmaking schools don’t watch means 6,000 hours of work, three man-years. provide any practical training, students are no longer required to produce a “school watch” – a qualifying “master piece”. We train CNC operators, but we don’t It’s excellent work, but it’s not a model that’s going know how to use a simple file. The schools are at the to perpetuate Swiss watchmaking! beck and call of the industry, and the industry has other needs than qualified watchmakers. It’s understandable Of course not. Manually we’re going to be able to that they don’t want to train future job-seekers, but we make one or two watches a year. But, like I said, we also feel that it’s very important, for the long term, to perpet- want to establish a reference. Above all, we hope it will uate traditional know-how. That said, it’s complicated, ensure that the skills continue to be handed down it demands a lot of effort and very few of the big brands and stay alive. And that, in our view, is a crucial consupport this kind of initiative. But to re-acquire that tribution, a vital one even, for the continuation of fine know-how, it’s crucial to come back to manual work.

Swiss watchmaking.

97

AN O EV W O IN A TH G ER IN TC SE TO H G M EN T

IC M

CA SE ST UD Y S BY

ER

GE

MA

ILL AR

ing margin would be too low without direct distribution. Finally, we do not have the technology or know-how.

Citizen proposed a joint project with Fossil, but the issue of the rapid technological obsolescence of connected watches led us to abandon it.

D Jean-Pierre Lutgen

Ice-Watch, known for its affordable timepieces designed for everyday wear, is directly affected by the rising power of the smartwatch. The founder of the Belgian brand, Jean-Pierre Lutgen, is conscious that the golden age of colourful plastic watches may be over. He’s multiplying initiatives to adapt, such as launching steel models and establishing a strategic partnership with Citizen. And next year, he will be unveiling a complete brand overhaul. We met him.

Europa Star: We see the Apple Watch on an increasing number of wrists. What measures are you taking to keep up with the situation?

Jean-Pierre Lutgen: Ice-Watch never wanted to get into the smartwatch, for several reasons. On the one hand, our price range does not allow us to do so: we operate in the segment up to 169 euros, while connected watches are more expensive. In addition, the operat98

In this new context, what market positioning is left for Ice-Watch?

My point of view is that behind every brand, there is a message and a function. If you don’t have a message, you’re dead. On the functional side, the connected watch leaves us behind, because it is autonomous and multifunctional. Tomorrow we’ll use our smartwatches to do everything. It’s a great tool! The message behind it is to show that you are technologically up to date, active and athletic. However, there are still other messages that can be conveyed. Whether at the very high-end or in the fashion segment, the watch remains one of the only objects that can reveal part of one’s personality and convey messages. It is up to us to create new or different messages.

So what will be your new message?

Aside from the new connected category, the lifestyle watch segment seems more crowded than ever, as the 'price of entry' to the industry has dramatically fallen. Who are your main competitors today?

Our message next year will not focus on technological performance, but on ecology. In the beginning, Ice-Watch’s message was colour, affordability, family, openness to the world, music... We will add a new ecological message to meet tomorrow’s challenges. Our strength in the face of competition and new players is that we already have a strong brand and well-established distribution networks, compared to brands that rely solely on social networks. We will also be rethinking our supply chain to incorporate more ecological elements. We’re moving into another segment, where the competition is different.

There are three categories of brands in our market segment. First, new actors like Cluse or Daniel Wellington, whose success is dependent on social networks. Then there are the licensed fashion brands such as Michael Kors, Guess, Diesel, Hugo Boss or Tommy Hilfiger, whose destiny depends on the situation of their ‘mother brand’. Finally, there are the pure watch brands, such as Casio, Seiko, Swatch, Festina, Pierre Lannier, Tissot, Fossil and Ice-Watch. We are the most stable brands, even in the entry-level segment, because we are not dependent on social networks or the fluctuations of a parent company.

99

TU O LO W DY IS IT E U S NG I S M I ET NE E R AM ER A O IN R D RP G H O SI S

H

CA

SE S

T

P BY

I ER

RE

MA

ILL AR D

From “entry-level mechanical watches” to “entry-level watchmaking excellence” - this more or less sums up the career of Louis Erard since 2004. CEO Alain Spinedi explains the reasons for and effects of the multiple crises affecting the priced Swiss mechanical watch brands and shows us how the brand’s strategy is adapting to the new situation.

100

The latest Louis Erard Le Régulateur, revisited

by Alain Silberstein.

A must.

he strategy implemented by Alain Spinedi at Louis Erard from 2004 was was viewed at first as innovative and clever, with its clear positioning “at the entry level of the Swiss mechanical watch” range. Over the next ten years, this positioning bore fruit, with the brand selling up to 20,000 watches a year.

But the strategy was gradually undermined. There were several concomitant factors for this. The first of these, according to Alain Spinedi, was the price rise imposed

by ETA. To cite just one example, the price of a Valjoux movement rose rapidly from CHF 150 to CHF 300 – an increase that was not only difficult to pass on for entrylevel mechanical timepieces, but one which also gave the Swatch Group an obvious competitive advantage. At the same time, the Swiss franc was escalating, making watches more expensive by the rules of simple economics.

Added to these external elements were a number of internal errors, which Alain Spinedi willingly acknowledges. One such error was the decision to break with the initial strategy of all-mechanical watches by introducing ladies’ quartz watches, then starting to produce men’s quartz watches. The consequence was that, while they succeeded in lowering the average price, they created no additional value, nor any steep rise in volumes. In his own words, “the brand was poorer, in every sense of the word”.

The weight of distribution

A new concept

At the same time, distribution began to undergo what “With Manuel Emch (read the interview on p. 92), we’ve proved to be radical changes. All over the world, and for adopted a more subtle approach, which seems to be different reasons, traditional distribution disappeared. working. Manuel has gone back to the grass roots In Switzerland, for example, a market in which Louis of Louis Erard, first and foremost the Regulator, the Erard posted one-third of its turnover, the network of brand’s distinctive timepiece. Everything below CHF small-town retailers (B and C-list retail customers, as we 1,200 has been removed from the collections. The say in the trade) unravelled as small, number of references has dropped multibrand stores closed. Businesses from around 300 to 40- 50. There are that stopped trading were not bought no more quartz watches and only up, others closed due to the combined men’s watches in the collection, excompetition from towns, shopping cept for one single ladies’ watch, the malls, the rise of e-commerce and social most expensive in our range, priced change. Little by little, all the small at CHF 4,000. towns fell.

“Our offering is redefining itself as In Asia – Malaysia for example – succesthe entry level to watchmaking excelsive openings of proprietary boutiques lence. It is aimed at A-list retail cusand ever more hegemonic malls retomers. To attract them, the product Alain Spinedi duced the brand's presence from 13 sales has to be refined, with greater emoutlets to just six. “Along with the whole phasis on the decoration, but withquestion of stocks to cope with, which Louis Erard new out going over the top. Because apart motto, “the entry delayed the arrival of new watches on from a few specific watches, none will the market,” underscores Alain Spinedi. level of watchmaking cost more than CHF 4,000, the average price being between CHF 1,200 excellence”, does and CHF 3,500. So we’re coming back indeed appear to Then along came big Apple with a limited collection, a deliberate niche. Beautiful, fine-quality, identibe well-received To top all of that, the arrival of the by distributors. fiable products, recognisable design.” smartwatch, especially its hegemonic, “high-end” version, the Apple Watch, was another push in the same direction Alain Spinedi Growth is over has no illusions. “For the average person, what’s better today? Isn’t it a better idea to look ‘with-it’ by wear- In his view, “The kind of growth we’ve seen in the ing an Apple on your wrist rather than a mechanical watch industry is quite simply over. And there won’t watch, which, when all is said and done, is obsolete?” be another China – which has calmed down radically, “There’s a profound change in consumer habits,” he incidentally – any time in the near future. So you have goes on. “Louis Erard was founded on rational choice, to choose your path and stick to it. Come back to the price, quality, beautiful design. Customers got their mature markets. You have to spark desire again, and money’s worth. But we no longer function on a ra- do it by means of the product. It’s the right time to tional level. We function emotionally, everyone’s say- start implementing our new strategy.” ing it. Now, you have to weave a whole story around Their new motto, “The entry level of watchmaking the product. The product itself is no longer enough. excellence”, does indeed appear to be well-received You have to insinuate yourself onto social media and by distributors. Although Louis Erard has decided to tell stories there, all kinds of stories. We told a story close down certain markets, others are returning, and with Leeds United football club, by putting a bit of promising doors that were closed until now are opendust from their grounds on a dial. The result? Zero ing up. The niche strategy (with an objective of 10,000 sales. So I wouldn’t say we missed the curve there, we watches) seems to be bearing fruit. decided not to take it. Given the price of the dust from the grounds, people preferred to go and drink a beer or buy an Apple,” he concludes with a smile.

101

C ST TI R H R N I A A G N LL T O EN EG X Y G T IN O G YE A R

VI A C IT DA T A S P O

CA SE ST UD Y

A BY

SH

N LO GE T

102

Victorinox, which manages the watch production of both the Victorinox and Wenger brands at its horological centre in Delémont, is active in a segment of the industry – affordable Swiss made watches – that has recorded historically low volumes in 2019. We took the opportunity of the opening of the brand’s latest boutique in Switzerland to discuss this challenge with CEO Carl Elsener Jr.

Europa Star: How important is watchmaking to Victorinox today?

Carl Elsener Jr.: Watches have become an important pillar of the brand and now represent 15% of our turnover. As you might expect, the Swiss Army knife remains Victorinox’s flagship product, accounting for 35% of our sales. Professional knives represent 25% of our sales.

In 2005, you took over your historical competitor Wenger, which also produces watches. What is the positioning of each brand?

We were in competition for many years but after the takeover of Wenger, we positioned the brands differently within the group. Today, Wenger represents our entry level, with watches whose main collections range from 140 to 300 francs. Victorinox watches are mainly positioned between 300 and 800 francs, although we also offer mechanical models that exceed the 1,000 franc mark. Our structure is now clear and we complement each other.

Where are the main markets for Victorinox watches?

We distribute our watches in more than 80 countries, and the main markets today are the United States, Switzerland and Germany, but also India, Hong Kong and Mexico. The perception of the brand varies greatly between these markets. For example, from the very beginning, we were perceived as a top-of-the-range brand in Latin America. This made it easier to launch our watches. In Switzerland and Germany, on the other hand, it took time for consumers to realise that we not only produce knives, but also quality watches and travel accessories. The Swiss were more difficult to convince than the South Americans!

“It took time for consumers to realise that we not only produce knives, but also quality watches and travel accessories.”

– Carl Elsener Jr.

Volumes in the Swiss watch industry have fallen sharply since the beginning of the year, particularly in your price segment. In light of this, what future do you see for Victorinox watches?

It is indeed a big challenge and we are going through a difficult year. But we are taking several initiatives to address this. We are working on new designs to make our watches more attractive to new customers.

We have also begun to invest more in travel retail by setting up a distribution and sales team dedicated to this important niche. Another essential point is e-commerce, and we have also set up a new team for marketing on social networks. We already have eshops in Switzerland, Germany, Great Britain, the United States, Canada, Japan and China. Each year we will add a few countries. And we also collaborate with platforms such as Tmall in China.

In 2018, you achieved a turnover of 480 million francs. What result do you expect for 2019?

We were expecting an increase in our sales, but for the time being it seems that we should be able to achieve a figure comparable to that of last year. I am not satisfied, but in the general context of the global economy and the challenges we face, it’s a respectable result.

I.N.O.X. Professional Diver 103

S UE LO AD H ST T QU AR IO N TE S R

SW N AN EW A O D H T F A E C Q

CA SE ST UD Y P BY

I ER

RE

MA

ILL AR D

The magnificent “serpent” designed

by Japanese architect Shigeru Ban for Swatch took more than eight years to rise out of the ground and unfurl its coils in the town of Biel/Bienne. But this uncoiling comes at a time when sales of the watch that in its day “saved Swiss watchmaking” are taking a serious nose-dive. Will it help them level out?

T

he new Swatch headquarters is an outstanding building. At its inauguration, the Japanese architect Shigeru Ban, the recipient of the 2014 Pritzker Prize (the Nobel prize of architecture), emphasised his already long history with the Swatch Group, for which he designed the iconic building in Tokyo Ginza back in 2004, and the close collaboration that was crucial to the success of an edifice such as this.

And you can well believe him, because the building – if you can call it such – is one of great beauty and offers an outstanding working environment while at the same time singling out Swatch’s “different” image. He encompassed the exterior and interior in a broad, reptil104

ian shape, the head of which reposes on a second, lower building housing the Omega and Swatch museums.

The architectural lines are woven into an organic whole. The 240m-long beast, which is 35 metres wide at its widest point, owes its undulating shape to a timber gridshell: a lattice composed of 4,600 beams, each precisely shaped and positioned, modelled one by one in 3D. Wood was chosen in preference to concrete or steel for numerous reasons – sustainability and ecology, phonic qualities, warmth, “Swissness” – but also because timber can be cut with extreme precision: despite its huge dimensions a structure like this has to be exact to the nearest millimetre.

Most of the façade, again if we can call it such, of this singular but almost immediately familiar shape, is made up of 2,800 elements in a honeycomb arrangement, the opaque, translucent or transparent alveoli of which are reminiscent of the scaly skin of a mythical reptile. Some of these elements open (in case of smoke), while others are translucent and shaped like inflatable cushions, or are in transparent glass. Here and there a balcony projects through the skin (for smokers).

The interior, made up of several staggered floor plates, offers a view both soothing and vertiginous. You feel as if you’ve been absorbed by an immense, vast wooden cocoon. The open-plan offices, spread over four storeys covering 25,000m² with no solution to encourage con-

The new Swatch headquarters in Biel, built by famous Japanese architect Shigeru Ban.

tinuity between the different creative, organisational, technical and logistical departments, offer huge but nevertheless warm and diverse workspaces. The acoustics, helped by the presence of wood, seem to be excellent and allow hushed discussions even in this wide open area.

The serpent finally rests its head on another building, also designed by Shigeru Ban, the Cité du Temps. This houses the Omega museum on the first floor, the Swatch museum on the second, and the Nicolas G. Hayek Conference Hall on the fourth, an elliptically shaped room that can hold up to 400 people (“reserved exclusively for the Swatch Group”, states the official press release).

Serpent in troubled waters Irony would have it that this inauguration of a superb building, the construction of which was decided nearly ten years ago, comes at a time when Swatch is experiencing a serious downturn. At the time of the competition, won in 2011 shortly after the tsunami, as Shigeru Ban himself recalled, the Swatch Group was breaking all sales records, for the first time crossing the 7 billion Swiss francs mark – a rise of nearly 11 percent compared to the previous year.

That is no longer the case. Turnover for the first half of 2019 is down nearly 4 percent. As for Swatch itself, estimates vary, but all are pointing the same way. According to Radio Télévision Suisse, Swatch sold between three

and seven million watches in 2018 (a wildly diverging figure), compared to 15-20 million at its peak.

Nick Hayek himself acknowledges it: “The Swatch brand itself is not making brilliant profits. But within the Group, thanks to orders for micro-batteries and microprocessors for example, it’s generating profit at Renata and EM-Marin. If you consolidate all that, then yes, Swatch is profitable.”

Nick Hayek also cites various other factors contributing to the flagging enthusiasm for the impish entrylevel watch. He no longer dismisses with a wave of the hand the threat from smartwatches, which are slowly but very steadily gaining ground, noting in passing that Tissot will very shortly have connectivity, via an in-house OS. But he also mentions the breakdown of distribution, underscoring the fact that the Swatch has slid from 8,500 sales outlets worldwide in 2016 to under 5,000 today, and that e-commerce is not yet offsetting this nearly 40-percent loss in physical outlets.

Will the serpent bring luck to the little plastic watch?

Will it help thrust it back into the limelight?

It is true that a building cannot do everything and is not enough to turn the tide. But, as we saw with the EPFL (École Polytechnique Fédérale de Lausanne), the Rolex Learning Center, itself a sort of “interior landscape” with organic shapes built by another Japanese firm (the SANAA agency) greatly contributed to bringing the school a higher level of international recognition. The serpent is a symbol of regeneration. The future will show us the extent of its powers.

105

H M MA AN A I :Q D I C U -R AL A A ? RT NG Z E O R

C AN E D D R M ILE T TI EC M H N E

CA SE ST UD Y S BY

ER

GE

MA

ILL AR D

While volumes for quartz timepieces continue to decrease in the Swiss watch industry, Certina, one of the oldest brands in the mid-range segment, is experiencing higher demand for its mechanical collections.

Its latest innovation aims at protecting the mechanical movement from magnetic fields. We met Adrian Bosshard, the CEO of Certina.

O

ver the long term, is there a future for Swissmade quartz watches? It’s the “moment of truth” for them, as they seem increasingly “stuck” between luxury mechanical timepieces and affordable smartwatches. Swiss watch brands have been recovering from the 2015 downturn, but the volumes produced are getting lower and lower each year. In three years, the branch has “lost” 4.4 million watches, mostly affordable quartz timepieces. And the situation has worsened in 2019. The industry is leaning towards mechanical watches.

106

DS-1 Big Date Powermatic 80 Special Edition

So, quartz or mechanical? It’s a crucial moment for Swiss actors in the mid-range segment. The biggest of them, Tissot, Mido, Hamilton and Certina, are part of the Swatch Group, by far the largest Swiss producer in terms of volume (and value). Certina is an interesting case as it is active in both the quartz and mechanical segments. While it had been emphasising its “Precidrive” calibres in the quartz range, the latest innovation – is it a coincidence? – concerns the so-called “DS concept” for its automatic range of watches.

We went to Hamburg to attend the presentation of a special DS-1 Big Date timepiece for the 60th anniversary of the DS concept. On the outside, we find a dark green dial with a Milanese mesh bracelet. On the inside, it has a Powermatic 80 movement that sets “new standards” thanks to a Nivachron balance spring. This innovative material was developed in cooperation with the Swatch Group to guarantee improved resistance to magnetic fields. Alongside Swatch, Certina is now one of the first brands in the group to make use of this new titanium-based material. We met its CEO Adrian Bosshard.

Europa Star: The “DS concept”, a key element for Certina, was invented in 1959. What is it exactly?

Adrian Bosshard: DS stands for “Double Security”. The concept’s original purpose was to ensure the highest degree of waterproofing, shock resistance and accuracy, thanks to the extremely robust construction of the watch case. Certina as a brand has promoted its reliability since it was founded in 1888, which explains why you’ve always found our watches on the wrists of sports aficionados such as climbers or divers. A growing enemy of mechanical precision is magnetic fields, a problem that was difficult to manage for a long time. A solution that more and more luxury brands are using is to incorporate a silicon balance spring. But silicon is an expensive material, and we wanted to stick to our affordable price range. Hence the introduction of the Nivachron™, an alternative to the silicon balance spring.

chanical watches on European markets. Overall, this is a good sign in terms of watch culture and education.

In the longer run, do you think there’s a future for quartz timepieces, both for Certina and for the Swiss watch industry as a whole?

I strongly believe so. The mechanical share is increasing, but we remain an important brand in the quartz segment. We are also working on innovation in the quartz segment, with our Precidrive system and COSCcertified timepieces. Of course, it’s quite a challenge to buck the trend and keep up volumes with quartz watches. But at the end of the day, Certina is a brand that is present in both segments. The watch industry evolves in cycles, and the trend might change again in the future. So our strategy is to strengthen both the quartz and the mechanical offering.

Adrian Bosshard

We reported on the Nivachron earlier this year when we covered the presentation of the Swatch Flymagic. So you’re the first brand within the Swatch Group to adopt the technology on a larger scale?

Yes. We will gradually adapt it to our entire mechanical production. As it is based on titanium, besides being anti-magnetic, the Nivachron balance spring is also highly resistant to fluctuations in temperature and presents excellent shock resistance, in line with the DS concept. Hence, it is the perfect way to celebrate 60 years of establishing a standard of reliability.

You operate in the mid-price segment of the Swiss watch industry. For years now, the volumes of the industry have been decreasing (-14.6 %, a drop of 1.6 million timepieces, for the first half of 2019!), while the average export price is increasing. How do you cope with a general orientation that is moving away from affordable offerings such as yours?

What we see, from our own figures, is that we too are experiencing a strong increase in average prices. So we’re moving in the same direction as the rest of the industry. We are selling more mechanical timepieces, in a higher price segment, and fewer quartz watches.

It’s a general trend, and it’s not only down to Asian customers. We’re also observing higher demand for me-

However, we see an increasing number of people wearing the Apple Watch, which is close to Certina’s and other Swiss made brands’ price point. It’s also considered a sports watch…

I see the Apple Watch and I also see a lot of people wearing no watch at all, because they can get the time from their smartphone. I remain convinced that a smartwatch and a traditional watch are two very different objects. On the one hand, you have pure functionality. On the other, you have an item that carries an emotional charge. Which one would you rather consider as an important gift? People start wearing a traditional watch when they seek real value.

What future do you see for Certina in a Swiss watch industry that is increasingly concentrated in the high-end segment?

Of course, we see the current trend of the luxury segment performing better than the mid-price segment.

But when you count the quantity of available wrists in the luxury segment, it’s actually a rather small pool. In the mid-price segment we have a higher potential for selling volumes of watches. Worldwide, some 1.3 billion watches are sold each year. We can certainly find our sweet spot there!

107

ST IN T O RA TA CH T E GE G G & RO Y H U IG P’ H S -T EC H ”

M SW I “V A D

CA SE ST UD Y

A BY

SH

N LO GE T

Mido’s Ocean Star is 75 years old, but its new version, the Ocean Star Diver 600, is equipped with silicon. It’s an embodiment of the Swatch Group’s strategy: to combine vintage designs with new materials and technologies, thanks to the conglomerate’s powerful industrial base. We met Mido’s CEO Franz Linder to discuss the situation.

A

vintage face to appeal to new generations, and a revamped interior to keep up with new technological expectations: that seems to be the new normal in the Swiss watch industry! With a polarised market, where daily life is ruled by digital technology in all its forms, the luxury mechanical watch is experiencing a comeback even stronger than in the 1990s.

But not everyone can afford a high-priced independent creation, or an iconic timepiece with a waiting list so long it will be “vintage” by the time you pick it up.

To cater to this trend, the more affordable face of the Swiss watch industry is also increasingly turning to automatic and vintage timepieces. The Swatch Group rules this (increasing) price range and is applying its 108

industrial know-how to create retro-looking designs.

Mido is a perfect example of what we could call the “vintage & high-tech” strategy, which industry leader Swatch Group is alone able to deploy on a large scale.

Last year, Mido’s Commander Shade Special Edition sold out during the Basel fair. This year the brand is focusing on the revamped Ocean Star. We interviewed Franz Linder, the man in charge at Mido.

Europa Star: In today’s watch industry, everything seems to revolve around vintage. At Mido, you’re launching a new version of the Ocean Star, a 75-yearold timepiece.

Franz Linder: It goes to show that we can always do better! Our ambition was indeed to produce the best interpretation ever of this timepiece from Mido’s history. And we have delivered: the Ocean Star Diver 600 has improved water resistance, it is COSC-certified and equipped with a silicon balance spring, a ceramic bezel and a helium valve. It’s also an important exercise to look back at 75 years of history: we dug into our archives to find the best possible features for this new creation. It’s a tribute to a vintage timepiece, but not just for the sake of commemoration: we wanted to update it to the current state of technology available in the watch industry.

The Swiss watch industry is experiencing a dramatic fall in volumes, especially in the most affordable ranges: in the first half of 2019, exports dropped by 14.6 %, a fall that represents 1.6 million timepieces.

Meanwhile, the average price is going up. Are you tracking this market development?

As a brand of the Swatch Group, over the long term we’re sticking to our price range, like every other member of the group. It’s true that the new versions of the Ocean Star are priced higher than our core range, at CHF 990 for the Ocean Star Tribute and CHF 1,590 for Ocean Star Diver 600. But it is quite logical, given the movement and materials you find in these timepieces.

However, this general upgrade also seems a logical step for the industry as a whole, in light of the increasing domination of the Apple Watch and other connected products under the CHF 1,000 mark. What is your assessment of the situation?

price point. In my opinion, they’re fighting over a different “cake”! And my guess is that the average price of smartwatches will go down even further.

Where are your key markets today?

I can only speak for Mido: we achieved our best financial result ever in 2018 – Traditionally Mido has always been it was a record year despite the arrival strong in Latin America, but today the of smartwatches. This year, the market “The biggest great majority of our business is in environment is more challenging, but challenge is to keep Asia. There is still room to grow in a the global situation is unstable for all Swiss watches in the large number of potential countries. I kinds of industries, not just watches. can only dream that our brand awarespotlight of younger Whether smartwatches have a big inness achieves the same level in Europe fluence on the Swiss watch industry’s generations.” – Franz Linder in the future as it has in Mexico alvolumes, it’s honestly difficult to say. ready. In this country, like in others, Connected instruments are technology-driven prod- the good thing is that the population is growing. But ucts, and they are looking for volume, but they are the biggest challenge is to keep Swiss watches in the competing within their own range and at a cheaper spotlight of younger generations.

The new Ocean Star Diver 600

109

“W A TH E M T H E ’R I E M E M LT VI O A O N ST K N TA O IN G F G E TR EN D ”

H

CA SE ST UD Y

Chrono-Matic 50 Auto Chrono

S BY

ER

GE

MA

ILL AR D

While smartwatches are visible absolutely everywhere in the United States, Hamilton, that most American of Swiss watchmakers, is experiencing a strong resurgence of popularity in the country, especially among younger generations. The brand is reaping the benefits of a long-term strategy from which it has not deviated, based on affordable, vintage-inspired mechanical watchmaking and pioneering e-commerce, while making the most of the industrial support of the Swatch Group.

110

O

ver the past year, Europa Star has established a new presence in the United States, making it possible for us to better cover this key market (re-read our major report on this subject from March 2019). America is once again becoming the number one destination for Swiss watch exports in the world, surpassing Hong Kong, which remains in the grip of geopolitical uncertainty. At the same time, there is a strong resurgence of interest in vintage-style mechanical watches in the country, even though the Apple Watch and Fitbit are visible everywhere (during a recent field survey we counted at least one of these models in every row of a Washington-Detroit flight!).

For Hamilton, a Swiss brand with American roots (now owned by the Swatch Group, it was born in Lancaster, Pennsylvania in 1892), the stars are aligning. With a strong presence in the cinema, over the past ten years it has implemented a strategy based around affordable mechanical watchmaking, in a niche between 500 and 1,500 dollars, inspired by models from its rich American past, including Elvis Presley’s Ventura and the Khaki Field. It has also relied heavily on online sales, which are exploding in the country. Today, the United States has once again become its number one market, neck and neck with Japan and Italy.

Direct-to-consumer at 30% growth

Not on the price surge bandwagon

“Reinterpretation inspired by the past is something we Nevertheless, the brand still achieves 80% of its sales have always done,” says Sylvain Dolla, CEO of Hamilton. in brick-and-mortar stores. Ten years ago, Hamilton “Today, it is in the spirit of the times, but we’re doing no boasted twice the number of points of sale in the more and no less than before. We are benefiting from United States, but it achieved only half of its current the trend of a return to the roots of design, especially turnover. The CEO says: “The fundamental work was among younger generations. For example, the Khaki to refocus on 360 high-performance points of sale, Field collection works very well as a whether independent watchmakers graduation gift in the United States. or regional chains, as well as to develThe Boulton’s relaunch in the United op our online platform.”

States also looks promising.”

The brand also benefits from its price For nearly a decade, Hamilton has not stability, at a time when the Swiss medeviated from its course, which bechanical industry has taken an “elevagins with visibility through the world tor to the stratosphere” since the beginof cinema. Its first collaboration with ning of the millennium. “The average Hollywood was back in 1932. Today, price has only moved one franc this Hamilton is very active on the silver year, to 900 francs. A move up the range screen – this year, we saw the Ventura would frighten me: the range between Sylvain Dolla has been CEO of in the new Men in Black movie, and 500 and 1,500 francs offers great potenHamilton since 2011. the Khaki Field Chrono in the Jack tial, precisely because there are very Ryan series, as well as the launch of a public version of few brands nowadays that offer mechanics at this price. the Murph seen in Interstellar. Hamilton is also active Quartz is secondary, it represents about 20% of our volbehind the scenes, through collaborations with cos- ume.” With ETA as a support within the group, Hamilton tume guilds, awards for cameramen and film schools. has invested heavily in developing mechanical calibres, “We gained a lot of market share in 2019 in the United and has introduced silicon balance springs for its chronStates,” explains Sylvain Dolla. “The strategic mix of ographs and NivachronTM for three-handed movements. cinema, the American spirit, mechanical movement, For next year, Sylvain Dolla has announced a “new, affordable price and vintage trend is a winning com- very contemporary and modern pilot line.” And at the bination. The digital direct-to-consumer channel is same time, a “limited edition of a revolutionary piece already 30% up from last year. In addition, our major of watchmaking history.” For him, it is vital to work on partners are performing well online.” both axes in parallel: “We have to be careful, because we see a lot of vintage being overused today. Recent brands that make vintage, it doesn’t make sense. We Khaki Pilot Pioneer Mechanical are not following the trend.”

111

RECOMMENDED READING

BY FABRICE MUGNIER, WATCHPRINT.COM

MOONWATCH ONLY The Ultimate Omega Speedmaster Guide 3rd edition

By Grégoire Rossier and Anthony Marquié

The Speedmaster is a timeless watch icon that has significantly evolved since its creation in 1957, a fact that sometimes makes it hard to identify certain models, particularly older ones. After several years of research and observation, the authors have created a technical, systematically and attractive book intended to become the reference work for this model.

The major focus of this work concerns the identification of historical Speedmaster models from standard production, in an era when there were often variations in the constituent parts of a watch.

Having observed that these numerous evolutions could occur independently of a change in reference number, the authors established an original nomenclature for this entire set of elements. Classifying and describing them represented a fundamental prior step toward providing a comprehensive and detailed presentation of the models.

Size: 307 x 250 mm | Pages: 598 | Price: CHF 250

DAYTONA PERPETUAL

By Fabio Santinelli, Paolo Gobbi and Ross Povey

Styles come and go but there is a watch that seems to be standing on the top of the wave since always. Actually, it is safe to say that the automatic Rolex Daytona models have increased dramatically in the past few years. Understanding the modern perpetually-wound 5 and 6 digit references is an art. In fact, both references saw a rich and often opulent variety of design options as well as dial materials – some of which will end up being highly collectible trophy pieces on the market. The “DAYTONA PERPETUAL” invites us to jump down the self-winding Daytona rabbit hole and discover the dynamic world of an iconic timepiece. The making of this project involved a meticulous research and selection of the objects, many of which travelled the world to reach Rome under the photographer’s lens; an attention for details so as to enhance the beauty and the peculiarities of each single watch.

Size: 245 x 322 mm |Pages: 292 | 541 original photographs | Price: CHF 390

Available at

www.watchprint.com

INDEX Acrotec COVER III Alpina 94, 95 Apple 61, 64, 65, 92 Arnold & Son 41 Artya 44 Audemars Piguet 4, 5, 14, 15, 16, 17, 18, 19, 91, 92 Baselworld 53 Breilting 55, 113 Bovet 11 Bulgari 23 Carl F. Bucherer COVER I Cartier 91 Casio 65 Certina 37, 106, 107 Chanel 9 De Bethune 89 Delma 26 Eberhard & Co 27, 30, 84, 85 Favre-Leuba 28 Fitbit 65, 66 Fossil 65, 66 Frederique Constant 25, 94, 95 Grand Seiko 66 Google 65, 66 Greubel Forsey 96, 97 Hamilton 110, 111 Hautlence 31 HKTDC 87 Hublot 65 Ice-Watch 98, 99 Inhorgenta 59 Issey Miyake 61, 63 Jaquet Droz 74, 75, 92

Jean Marcel 80, 81 Longines 6, 7, 76, 77, 91 Louis Erard 100, 101 Louis Vuitton 65 LVMH 24 Maurice Lacroix 39 Mauron Musy 29, 40 MB&F 40, 62 Mido 108, 109 Mondaine 24 Montblanc 65 Movado 61, 63, 65 Nomos 33 Omega 55, 91, 105, 112 Orient 86 Patek Philippe COVER IV 91, 92 Ressence 62 Richard Mille 13, 62, 92 RJ Watches 92, 93 Rolex COVER II, 3, 55, 91, 92, 112 Swatch 104. 105 Swatch Group 104, 105, 106, 107, 108, 109, 110 TAG Heuer 35, 65, 90 Tissot 91 Titoni 78, 79 Traser 82, 83 Urban Jürgensen 72, 73 Urwerk 62, 70, 71 Versace 45 Victorinox 102, 103 Wenger 102, 103 Zenith 34, 66, 67, 90 ZRC 50

THE WORLD OF WATCHES

A BREITLING AD PUBLISHED IN EUROPA STAR IN 1950 This Breitling advertisement must be one of the strangest ever published in Europa Star. Who would dare produce anything like that today? “Victory on Time�. A corpse hand emerges from the ground to grasp hold of time... Fair enough. But the message, however striking, remains a disturbing one.

A last word to start

IT’S FIVE MINUTES TO MIDNIGHT

BY PIERRE MAILLARD

T

he clocks are going crazy, their hands turning wildly in all directions. It seems like our days are numbered.... we’ve arrived at the final countdown. What am I talking about? About the state of our planet, obviously. About the health of our only home, which is threatened by accelerating destruction, and the spectre of tragedy and catastrophe on an unprecedented scale. It’s five minutes to midnight, and we have very little time left to try to turn back the clock, to put an end to the hubris of our voraciously destructive civilisation, recklessly eating away at the branch on which it stupidly thought it would sit forever.

Only a complete recalibration of our way of life, our behaviour, of our vast appetite to consume, and our limitless regard for our own comfort, can perhaps spare us the worst.

The impression that it’s five minutes to midnight affects every aspect of our present existence: democracy is being eroded by increasing inequality; economic growth is being pursued with blind, disconnected greed; society is being torn apart by individualism; technology is freewheeling towards dehumanisation; democracy is losing its vitality and entire species are collapsing.

And within this depressing picture, or own little corner, watchmaking, is no exception. For us too, it’s five minutes to midnight. I’m not talking about environmental catastrophe, but a series of disruptions that are upending virtually all the parameters on which the model has functioned for a good thirty years or so, since the renaissance of mechanical watchmaking.

These disruptions are visible in the product itself – with the arrival of the smartwatch, which has upset the status quo in the entry-level and mid-range; sociological change and altered consumption patterns – with millennials who prefer vintage and pre-owned; retail – with global e-commerce; market changes – with the slowdown in China; a kind of creative exhaustion in the mid-range; and growing polarisation between the high-end and the rest. And that’s not even beginning to consider the wave of Kickstarter brands that have come out of nowhere to nibble away at precious market share. In this special issue of Europa Star devoted to the future of watchmaking, we look at all these problems and obstacles in detail, through interviews with many of the people most closely affected, from brand CEOs to retailers and analysts.

But, as with our planet, so for watchmaking: the very worst thing we can do is to do nothing, to bury our heads in the sand and wait (in vain) for everything to blow over. In the face of mounting threats and a growing need for transformation, fear is a poor counsellor. What we need to take back control is imagination.

It’s five minutes to midnight. When midnight strikes, it’s either party time, or... catastrophe.

114

To all watch enthusiasts.

The “Traditional” case.

Born of a shared passion between a watchmaker, a designer and a mechanic with a long experience in the development and manufacture of tools, we wanted to honor the age-old watchmaker’s profession by producing the most careful and most precious toolboxes to accompany him every day in his work and to satisfy his passion...

PETITPIERRE SA, Chemin des Murgiers 12, 2016 Cortaillod, Switzerland Ph. +41 (0)32 843 44 22 - secretariat@petitpierre.ch - www.petitpierre.ch