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THE RETAIL ISSUE

2017

ITI ED AL OB GL

ST of an PA ast hic l e o Th e M th

Chapter

From Abu Dhabi to Zanzibar, Europa Star magazine delivers premium information about the fascinating world of watches. Its two folios Time.Business & Time.Keeper are circulated in more than 170 countries. Europa Star is made possible by a team of passionate people and a network of incredible contributors.

Philippe Maillard Pierre Maillard Serge Maillard Joe Thompson Fabrice Mugnier Dominique Fléchon David Chokron D. Malcolm Lakin Mr. E Jill Metcalfe Nathalie Glattfelder Marianne Bechtel Catherine Giloux Jocelyne Bailly Véronique Zorzi Alexis Sgouridis Dr. Frank Müller Claudio d’Amore Michael Tay Tirath Kamdar Joachim Ziegler Denis Asch Jens Lorenz Alain Guttly Imran Imranov Danny Govberg Hanspeter Pieth Shingo Kitazawa Françoise Lanoizelet Alon Ben Joseph Peter Petzold Andrew Block Lydia Dalle Nogare Pablo Fuster João Carlos Torres Sophy Rindler Sky Sit Thierry Huron Christophe Roulet

TIME.BUSINESS A. Lange & Söhne 15, 26 Apple 15 Audemars Piguet 7, 20, 57 Baume & Mercier 18 Blancpain 15 Breitling 64 Cartier 18, 22, 42 Casio 27 Chanel 57 Delma 30 Dior 64 ETA 23 F.P. Journe 64 Frédérique Constant 63 Greubel Forsey 26, 57 Guess 42 Hermès 4, 5 Hublot 15, 20, 25, 35 IWC 11, 26, 42 Junghans 33 Longines 63 Lorenz 58 LVMH 15, 21 Maurice Lacroix 60, 61, 62, 63 MB&F 15 Montblanc 15 Moritz Grossmann 34 Nixon 15 Nomos Glashütte 34 Omega 10, 22, 64 Panerai 11 Patek Philippe 15, 20, 25, 49, 57, 64 Raymond Weil 63 Richard Mille 15, 64 Richemont 15, 16, 18, 21 Rolex 20, 22, 25, 26, 35, 39, 49, COVER IV Ronda 43 Samsung 15 SIHH COVER III Swatch Group 14, 21 TAG Heuer 15, 41, 63, 64 Tissot 56 Traser 37 Ulysse Nardin 42 Urban Jürgensen 13 Van Cleef & Arpels 64 Zenith 42 TIME.KEEPER Americana 81 Atokalpa 76, 77 Audemars Piguet 16, 62 Baume & Mercier 37 Blancpain 45 Bulgari 30, 36, 37, 38 Carl F. Bucherer COVER II, 3, 33 Cartier 30, 40, 41, 54, 55, 56 Casio 19

Chanel 4, 5 Chaumet 47 Chopard 33, 37 Chronspire 80 Citizen 76 Concepto 76 CRJ 79 De Bethune 32 Delaneau 45 DeWitt 46, 47 ETA 68, 69, 70, 71, 77 Fabergé 38, 39 Fendi 42 F.P. Journe 63 Gucci 42 Hermès 42 H. Moser & Cie 76 Hublot 15, 27, 63 Jaeger-LeCoultre 61, 65 Jaquet Droz 30, 31 Laventure 79 LIV 81 Longines 61, 62, 65 Louis Vuitton 7 LVMH 8, 15, 21, 25, 27 MB&F 34, 35 Mido 61, 62 Munich Time COVER III Nivarox 76, 77 Omega 15, 27, 62, 65 Panerai 65 Parmigiani Fleurier 76 Patek Philippe 50, 51, 52, 61, 62, 82, COVER IV Piaget 38, 82 Raymond Weil 15 Richemont 8, 16 Romain Jerome 45 Rolex 15, 61, 63, 82 Seiko 76 Sellita 76 Sequent 80 Soprod 76 Søren Henrichsen 28, 29 Swatch 69, 70 Swatch Group 8, 16, 69, 70, 71, 76, 77 TAG Heuer 15, 21, 22, 23, 24, 27 Tissot 8, 68, 69, 70, 71, 72, 73 Ulysse Nardin 33. 65 Urban Jürgensen 58, 59 Urwerk COVER I, 9, 10, 11, 12, 13 Vacheron Constantin 15, 33, 34, 48, 63, 65 Van Cleef & Arpels 47 Vaucher Manufacture 76 Vienna Time 49 Vincent Calabrese 63 Zenith 8, 14, 15, 16, 18, 21, 24, 25, 26, 27, 65 ZRC 17, 57

RETAIL

BRICK & CLICK

World’s retailers’ answers to a shifting panorama.

| ON ITI ED AL OB GL

BRICK The resilience of bricks and mortar.

T AP CH 017 4.2 ER

FOLLOW THE SIGNS:

BRICK & CLICK How to be online AND offline?

PAST PRESENT FUTURE

THE LAST OF THE MOHICANS The outrage of a small retailer.

CLICK Pure players’ views on retail’s future.

MAURICE LACROIX, BACK TO BASICS Originally positioned at the entry level, the brand wanted to move upmarket and is now coming back to much more affordable products.

SWISS BRAIN VS SWISS MADE “The ‘Swiss-made’ label does not defend Swiss values and expertise.”

SUBSCRIBE TO EUROPA STAR MAGAZINE www.europastar.com/subscribe | 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 PUBLISHING / MARKETING / CIRCULATION Nathalie Glattfelder, Marianne Bechtel/Bab-Consulting, Jocelyne Bailly, Véronique Zorzi BUSINESS MANAGER Catherine Giloux MAGAZINES Europa Star Global (Europe & International) | 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 2017 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. Subscription service | Europa Star Time.Business & Time.Keeper | 5 issues | Worldwide airmail delivery CHF 90 | Subscription orders via: europastar.com/subscribe | Enquiries: contact@europastar.com ISSN 2504-4591 | www.europastar.com |

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PAPER-AND-CLICK, A BIT LIKE BRICK-AND-CLICK Since the beginning of the year we have revolutionised our paper edition, to increase our reach and promote our mission as an enduring place of reflection and analysis, serving the international watch industry. We have been present on the internet for more than 20 years (welcoming almost a million unique visitors each month). This autumn we launch completely redesigned sites in French, www.europastar.ch, and soon in English, Chinese and Spanish.

Old Paper Studios / Alamy Stock Photo

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As a reading of this issue’s substantial “Brick & Click” dossier will reveal, watch retail is truly in the doldrums – or, more accurately, in total disarray. It finds itself not at a turn in the road, but at a crossroads of a hundred and one different routes. Should it take the traditional highway, lined with solid brickand-mortar buildings, some of which, despite being brand new, are now falling into disrepair like ancient mausoleums? Or should it leave the physical world behind, metamorphose into electronic impulses and speed from click to click across the immense and limitless skein of the internet, hoping to catch something in its nets? Or should it take one of the narrower paths that wind through the long grass, follow the wind, become a nomad, open pop-up stores and invent new ways of doing business? The crossroads of indecision is peopled with hordes of people beset by doubts, unable to make up their minds. This way, or that? But the right answer to this question is not binary. The answer is more likely to be an “and” rather than an “or”. The solution is to choose a physical road, and at the same time to explore the virtual sphere. In short, we need brick and click, as one of our correspondents succinctly puts it (read our interview with US consultant Steve Kaiser). The watch is a material object, and an object of desire, that needs to be touched, felt and tried on the wrist. And we need brick-and-mortar locations in order for this to happen, as well as to be able to compare this one with that one. When it comes to actually buying the watch, that’s where the clicks come in. You can’t have one without the other. Any retailer who refuses to countenance both these options is doomed. Operators who confine themselves to a virtual showroom will find that many potential clients vanish into thin air. Nevertheless, for the time being, the brick-and-click landscape is something of a jungle. Yes, we are at a crossroads of indecision. New rules will have to be created, and the brands that come out on top will be those who understand that, while they can’t survive without bricks, they also need to be very active with their clicks. Physical retailers, whose bricks provide the venues for the material experience, play an essential role as influencers, advisors, guides and... after-sales service points! (We will be devoting a future dossier to this “blind spot” for the watch industry.) Abandoning the bricks would be suicide. We could say the same about our own role as a publisher. Instead of bricks and mortar, we have paper. But we also have the clicks. We are convinced that, without a parallel virtual presence, paper – a long-term medium – cannot survive. But without paper, online journalism – like a tap that is never turned off, forever emptying into the drain of oblivion – is condemned to an ephemeral and transitory existence. Yes, we need breaking news – it ensures we remain relevant – but we also, if we aspire to longevity, need reflection, analysis and perspective. And for this reason, paper – or brick – remains the best vehicle for weathering any storm.

TO BREAK THE RULES, YOU MUST FIRST MASTER THEM. THE VALLÃ&#x2030;E 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

AUDEMARSPIGUET.COM

FINE WATCHMAKING.

IN STAINLESS STEEL

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Watchmakers have been notoriously slow to seize all the opportunities afforded by the internet. After investing heavily in bricks and mortar, it was only natural that they should try to resist the inexorable onward march of e-commerce. Now, they no longer know where to turn. The old model has been placed on life support, but that hasnâ&#x20AC;&#x2122;t made the new landscape any easier to read. The testimonies and analyses that Europa Star gathered bear witness to the dozens of different ways in which the actors concerned are attempting to keep their heads above water. One vital lesson for the watch industry has emerged: bricks-and-mortar and internet retailing are condemned to find a way to coexist in the future.

S UO TE Q “In places like Hong Kong, brick-and-mortar stores are so accessible. It’s convenient for customers to go into a store and try on watches. You might be able to sell limited-edition watches that are exclusively online but there won’t be so much of a competitive edge if the same watches are sold at boutiques with same prices.” (Jimmy Tang, CEO of Prince Jewellery and Watch Company, in Style / South China Morning Post)

“Online luxury watch sales – estimated at just over 3 per cent of the watch market, or around €1.1bn, in 2016 – remain a small part, says John Guy, a luxury analyst and managing director at Mainfirst Bank.” (Financial Times)

“McKinsey & Company projects that by 2025, the online share of total luxury sales to be 18 per cent, worth about 70 billion euros annually, making e-commerce the world’s third largest luxury market, after China and the United States.” (Style / South China Morning Post)

“When Omega launched its Speedy Tuesday model in January — its first watch sold directly to consumers online — the full run of 2,012 was snapped up in just over four hours.” (Financial Times)

“Ultimately, the divide between online and offline might become less important, says (The Watch Gallery’s) Mr Coleridge: ‘Customers are not the slightest bit interested in whether they’re buying online or in a shop. For them it’s a process.’”

“Asked whether IWC envisions selling directly online at some point, (...) chief executive Christoph Grainger-Herr says it is a “logical consequence . . . The question is never ‘if’ but ‘when and how’.” (Financial Times)

(Financial Times)

“Brick-and-mortar stores are still very important. You can dream about the product when you touch and feel it but not through a computer.”

“We cannot view e-commerce as a threat but rather as a challenge, and one more channel and opportunity to sell.”

(Angelo Bonati, CEO of Panerai, in Style / South China Morning Post)

João Carlos Torres, Torres Joalheiros / Lisbon and Cascais

“The rise of e-commerce is advantageous to multi-brand retailers because, by virtue of our business model, we offer choice. And choice is clearly one of the key tenets of online retailing.” Michael Tay, The Hour Glass / Singapore

N O TI UC D O TR IN

Cracks are starting to appear in the mono-brand boutique model. Not only does it cater exclusively to a highly circumscribed and already loyal customer base, but any increased profit margins from the physical stores are entirely swallowed up by the running costs and exorbitant rents dictated by their prestigious city-centre locations. It’s a zero-sum game. Or worse. Clients, who these days often know more about the watches than the sales assistants trying to sell them, have been put off by outrageous price rises. Millennials are eschewing their parents’ ideal of luxury and turning to vintage chic, at a single blow overturning the brand hierarchy and forcing them into stylistic contortions. And we certainly haven’t heard the last of the smartwatch, despite its being dismissed as an irrelevance by most conventional watchmakers. Smartwatches have added to the general confusion and the mixing of genres, as well as cutting a swathe through the low- and mid-priced segments. The backdrop to all this is the internet: a seething hive of special offers, discounts, amazing (or suspect) deals, opportunities, consumer-to-consumer trades, comments and opinions. Anyone intending to buy a watch today is spoilt for choice. Or, perhaps more accurately, they are overwhelmed and confused by the tyranny of choice available today. Where will it all lead? That’s anybody’s guess.

nce upon a time, things were simpler. A watchmaker would find an agent for each country. That agent had representatives who would pack their watch samples into their attaché cases and pound the streets, knocking on doors and visiting retailers. These retailers were largely family-owned businesses that stocked a variety of different brands; they were well established in a clearly delimited territory, with a well-understood and loyal clientele. In those days, people might refer to “my watchmaker” as they might have talked about “my baker” or “my florist”. This model, which survived throughout most of the 20th century, has gradually , been eroded, to the point where it is now virtually obsolete. Many factors MULTI-BRAND RETAILER, SHOP-IN-SHOP, SUPERMARKET, have played a part in this transformation. Some, such as societal and techELECTRONICS SHOP, , nological developments, are external to GENERAL E-COMMERCE PLATFORM, SPECIALIST the watchmaking business. But others are entirely its own doing. First came E-COMMERCE PLATFORM, BRAND WEBSITE, the big groups’ ascent to a position of power, and the brands’ gradual reasser, , tion of direct control over distribution, VINTAGE E-COMMERCE first in the form of subsidiaries, later through the proliferation of own-brand PLATFORM, SALE ROOMS, ONLINE AUCTION boutiques. Then came the internet revolution, which facilitated the creation SITES, , SPECIALISED AGENTS, of a direct link from producer to conMEDIA E-BOUTIQUES, , , ETC. sumer, without the need (or expense) of numerous intermediaries. The edifice started to crumble. In an attempt to see the wood for the trees, Europa Star Time. Watchmakers have been notoriously slow to seize all the op- Business interviewed various players, experts, analysts and portunities afforded by the internet. After investing heavily in retailers from around the world. We would like to thank bricks and mortar (the bricks to vertically integrate their pro- them for their honest and open responses. duction, and the mortar to build their luxurious boutiques), From these testimonies and analyses, which bear witness to it was only natural that they should try to resist the inexora- the dozens of different ways in which the actors concerned ble onward march of e-commerce. Now, they no longer know are attempting to keep their heads above (increasingly murky where to turn. The old model has been placed on life support, and turbulent) water, one vital lesson for the watch industry but that hasn’t made the new landscape any easier to read. has emerged: bricks-and-mortar and internet retailing will The vertical integration of manufacturing has had the unfor- have to find a way to coexist in the future. Steven Kaiser, a contunate side-effect of encouraging overproduction, which in sultant in the USA, has coined a phrase that sums up the situaturn has fed into a burgeoning grey market. tion very neatly: Brick-and-Click Watch Retailing.

MONO-BRAND BOUTIQUE SOUVENIR SHOP

SOCIAL MEDIA VINTAGE

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STORE

EBAY CONCEPT STORE

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Statements by industry professionals made some 15 years ago reveal that even experts had only a vague idea about what watch distribution would look like today. No wonder, as our ability to forecast what lies ahead has become increasingly difficult. In a complex (meaning complicated and rapidlychanging) world, driven by the highly dynamic digital revolution, how can we be sure that the former and current values, structures and procedures of our social and economic lives will still apply tomorrow? Hence, predictions about the watch industry’s future in general and its distribution in particular will likely be scenarios with relatively fuzzy probabilities. And yet, it is tempting to take a look into the crystal ball. The sad destiny of other highend product categories such as writing instruments, porcelain, the gentleman’s wardrobe, antiques and silverware, not forgetting the recent travails of the watch business, clearly indicate that no one can take a safe future for granted. The past decade In the decade from 1990 to 2000 the watch industry’s business model was still mainly classical. Although the quartz watch revolution of the 1970s had initiated a painful restructuring process in Switzerland, creating the first dominant player in the Swatch Group, the industry’s post-World War II structure remained intact: the flow of merchandise followed the manufacturer-distributor-wholesaler-consumer trajectory (NB: including some grey market and corporate business). The industry was full of independent brands forming a coherent pyramid with a few top-end, more middle-end and a larger number of low-end priced offerings. They would serve

brick-and-mortar watch stores and jewellers in small, medium and big cities. At that time, the American consumer would have no knowledge about watches and pricing in China, Chile or Australia – and vice versa. As a matter of fact, one had to go to the painstaking effort of pounding the aisles of Baselworld once a year to collect enough catalogues and price lists to get some kind of global overview (in those days they were still given away for free…). And the decade of the 1990s witnessed the first still tentative steps into potentially huge but virgin markets, eastwards of the established ones.

The heyday Around the turn of the millennium, five major forces started to impact the industry and, consequently, watch distribution: • The renaissance of the expensive mechanical timekeeper, • the introduction of more modern branding, • the internet revolution, • an accelerating process of concentration at the manufacturing and wholesale level, • a shift in the commercial focus. Despite the quartz crisis, the Swiss watch industry had fortunately preserved its ability to invent and manufacture traditional fine mechanical movements, when consumers’ interest in traditional watchmaking returned suddenly in the early 1990s. With companies such as Blancpain (“Since 1735 there has never been a quartz Blancpain, and there never will be”) and TAG Heuer (“Don’t crack under pressure”), branding was modernised to offer consumers devices that would indicate not only the time, but also their social status. The internet started to give birth to new communication platforms that could spread information about brands, new products and their availability on a global scale. Collectors could share their enthusiasm internationally in pioneering forums like timezone.com or LOG (Lange Owners’ Group). Due to their substantial resources, worldwide networks and manufacturing abilities, the bigger groups were able to leverage their business and initiate a process of brand acquisition and concentration (e.g. Les Manufactures Horlogères/Richemont, 2001) and supplier integration (cases, dials, hands etc.). On the distribution side, smaller family-owned brick-andmortar stores outside of the big cities started to vanish, while a few in metropolises grew into national, sometimes even international chains. Reaching the markets through distributors or agents became a secondary priority for groups and brands. They now preferred establishing their own regional hubs and dealing with wholesalers directly. This led to new forms of partnerships with classical watch and jewellery stores, translating into more co-funded and co-organised marketing efforts in advertising, PR and events. To enhance recognition and image further, these partners were asked to install the suppliers’ branded showcases, displays and shop-in-shops – leading often to awkward-looking patchworks. And, in their quest for even more ways to boost sales and profits, brands commenced to truly integrate vertically towards the customer by opening boutiques (retailing), first as franchised projects with wholesalers, and later as their own stores. Furthermore, some brands experimented with factory outlets as a way of liquidating old stock. And based on the 1990s’ groundwork in emerging markets, major players were now able to benefit from the huge interest in Swiss and by then also German fine watchmaking in the former Soviet Union, the Middle East and, particularly, the Peoples’ Republic of China – while often neglecting their traditional markets.

These five forces were the drivers of an astonishing success story: Swiss exports of mechanical watches with a value of more than 3,000 CHF per unit would grow by 12.2% from 2000 to 2015 – on an annual average! And this was done while simultaneously absorbing such disturbing events as 9/11, SARS, and the Lehman Brothers and Euro crises.

New realities Today, the watch industry is in bad shape. It is struggling not with the usual cyclical economic downturn, but with an existential crisis. The reasons are related to the same five forces described above, while new ones have appeared alongside. Some problems have come upon the industry from the outside, and yet many have been homemade. • The hype over the traditional and fine mechanical wristwatch as the industry’s main growth driver is over. Since 2012, the share of exported expensive watches (value +3,000 CHF per unit) of all exports has remained stable at 60% (2000: 23%) – and if it were to grow again then it would be merely a statistical effect, as Switzerland continues to export less inexpensive timepieces. • The consumer is changing. Across many related high-end product categories, shoppers simply care less about luxury and prestige (the “millennial” phenomenon). The customer base is shrinking as the demographic factor sets in (Europe, Japan, China). According to the United Nations, the growth rate of people aged between 25–59 years will be halved in the next 35 years, while the 60+ age group is expected to rise by 240%. Of course, the BRICs will continue to provide new middle-class consumers, but there will be far less potential than in the past. • Examples of truly innovative marketing and product concepts from the traditional brands over the last 10 years are few and far between. Patek Philippe, Hublot, MB&F, Richard Mille and Nixon could be named as rare examples. • The smartwatch meteorite has hit the industry completely unprepared. In the space of just a few years, Apple, Samsung & Co. now sell almost as many timepieces as Switzerland exports (21.1 million units in 2016). With high-end watch brands introducing Android-based timekeepers too (TAG Heuer, Montblanc), and the advent of 3D printing, LIGA, silicon et al., classical watchmaking continues to be replaced (e.g. cases). And with information being so abundantly available on the internet, the technical revolution will continue to downgrade the myth of the fine traditional wristwatch further. At the same time, omnipresent smartphones and tablets continue to render classical timepieces obsolete. At worst, the fine watch will become a niche collector’s item like a Japanese maki-e fountain pen.

Scenario 3

Scenario 4

Volume

Scenario 3

Scenario 4

Scenario 2

Exclusivity

Scenario 1

The decisive factor The key to the survival of brands, groups and the industry itself in this new, tough and perhaps even end game is very much related to the distribution question: commercial ambition and commercial discipline. Most of the industry’s current problems are self-inflicted, and caused by one essential misstep: greed. The key to survival is control over distribution, which nowadays essentially means control of online commerce, which implies control of goods being sold, which is linked to a company’s reasonable long-term business plan and the management team’s ability and willingness to stick to it. Some players have understood the challenge: in 2016, Richemont started to buy back merchandise from wholesalers to clean up the market. With a share in Net-à-Porter, the same group keeps a foot in the door of internet selling platforms to control online commerce – for the same reason LVMH has recently launched 24 Sèvres. Good moves. Richemont has cre-

Scenario 1

ated a foundation for preserving traditional craftsmanship, while LVMH is investing in small luxury start-ups to keep the luxury industry’s offering alive and colourful. Good moves, too. Only if brand strategy and commercial ambitions are realistic, appropriate, long-term and converted into healthy distribution environments can the essence of the prestige of the luxury watch industry be defended: exclusivity! Exclusivity

• Up to today, the industry has rarely passed up any opportunity for a commercial push. On an annual basis, some 1,500 brands introduce around 15,000 to 20,000 new models – consumer overkill. Many firms have followed the car industry in introducing every possible category from A to Z, in order not to miss out (sports and pilots’ watches, traditional ones, master lines, ladies etc.). • Wholesale, retail, online shops, factory outlets and so many new ways of selling watches create a complex multichannel environment in which ambitious sales targets lead to an overflow of merchandise, eventually fuelling discounting and grey markets. Today, the liquidation price tag offered by grey market and online dealers for the slow-movers of any watch brand is some mere 20 cents on the MSRP dollar – and that means at variable production cost! Investments into retailing aimed at controlling the flow of products, prices, services and so on obviously make no sense if at the same time parallel channels are heavily nourished.

Scenario 2

Volume

Exclusivity = price points; volume = size of business. Scenario 1: healthy industry; Scenario 2: bigger volume business is pushed by global groups, yet independent brands disappear; Scenario 3: a growing business yet a shrinking one at the high end, due to the indifference of luxury watch consumers; Scenario 4: an overall shrinking industry due to declining demand, substitution by the smartwatch and industry mistakes.

The crystal ball However, in a stagnant and saturated watch market that will grow only moderately in the future (basically in line with national GDPs), even the most disciplined brands may give in and make short-term compromises. Gaining market share will be king. But what if, following the experience of other luxury segments, the market for mid-end and high-end watchmaking even shrinks? The industry’s homework for the future will obviously include more refined customer segmentation and marketing (including the elderly target group), truly creative branding concepts with epic story-telling, synergies and cost-sensitive lean operations, better customer service at reasonable prices, innovation and so on. But most importantly, the industry needs to leave its comfort zone and admit that the glorious past cannot be extrapolated any more. Yes, national banks change currency exchange rates and yes, governments introduce anti-corruption rules without informing the watch industry in advance. While it is a common industry experience that, every three to four years, major external calamities hit, most budgeting cycles from the corporate profit and loss statement down to single business plans for brand boutiques are based on a time horizon of generally no more than three years. Under such procedures, who feels obliged and is encouraged to bother about the next 10 to 20 years and to incorporate contingency plans for likely crises? The industry will be best served if – for a change – it expects the worst. So what can be expected from the future?

THE FUTURE OF DISTRIBUTION – 10 SCENARIOS The distribution system will remain turbulent. Technology will impact further and require more interest and investment from industry actors. On the one hand, flexibility, creativity and speed will be important, while on the other, strategy and commercial discipline must ensure that money is spent wisely.

B NEW CHANNELS:

H NEW BUSINESS MODELS:

a) The digital revolution will create new distribution and communication platforms like call centres with brand video-conferencing, for more and cheaper 1-to-1 communication with consumers. b) Virtual reality boutiques with virtual solutions for watch fittings. c) Home stores: direct selling on the “Tupperware” model. d) Subscription stores: subscribers receive a new watch after an agreed period of time at a reduced price. Some subscription brands may even offer lease options.

Global centralised logistics will reduce classical wholesaling further. By becoming a “gallery” (hidden retailing), brick-and-mortar stores will no longer have to purchase collections. The wholesalers’ revenues will consist of commissions and/or retainers. Consumers will receive truly new watches delivered to their home from central brand warehouses, and headquarters will take full control over the customer relationship. After a likely difficult period of adaptation, groups and brands will be able to reduce inventory cost, increase stock rotation and better allocate watches to where the demand is.

C OLD WHOLESALE CONCEPTS REIMAGINED: a) Fusion stores: lifestyle-orientated multi-category points of sale. These could be co-branded stores with thematically related offerings. This is valid for intra-brand line extensions too: new product categories will demand more complex branding and experience-orientated store solutions (e.g. Shinola). b) Pop-up stores and mobile points of sale. c) “Gallery” stores: showrooms for presenting and testing the products physically.

I RE-SELLING OF RETAIL: As not all retail is providing enough profitability to please shareholders, some car manufacturers (e.g. Mercedes-Benz) have started to re-sell parts of their retailing network to external investors. However, such outlets will continue to be under the indirect control of the brands, through contractual leverage regarding collections to be carried, pricing, corporate identity and design, etc.

D NEW COMPETITION AND DISTRIBUTION PLAYERS:

J HYPER-SEGMENTATION AND DEMANDING CUSTOMERS:

Information platforms (e.g. WatchAdvisor) will increase and transform themselves into paid agents, connecting brands and consumers.

Consumers will ask for more focused and better branding efforts at any touch point. With more demanding customers, point-of-sale experiences will have to evolve in parallel (e.g. home delivery of Hublots with a Ferrari; fragrance space at Harrods; the art of Ai WeiWei at Le Bon Marché). Branding fun, information provision, product testing and availability will have to be further harmonised; integrated marketing will be as important as ever.

E OMNI- AND MULTI-CHANNEL MANAGEMENT: Enabling customers to shop anytime, anywhere, in whatever channel they want. All market players will take advantage of all distribution channels available. Online brands have started to venture into offline (e.g. Daniel Wellington), while brick-and-mortar stores are trying out online selling, increasing the need for professional multichannel management.

F NEW (OLD) TERRITORIES: To reverse the trend of luxury mainly being sold in the major cities (according to Bain, more than 50% of all luxury sales occur in the top 20 global metropolises), groups and brands will have to rediscover the neglected “mid-west”.

G NEW EFFICIENCY: As market concentration continues, players will have to adapt their organisations to be cheaper, faster, more flexible, leaner and better. One special focus point: inventory management, with more globally integrated logistics chains and warehouse hubs.

K MARKET RESEARCH AND SMART STORES: a) So far, the watch industry has been very hostile concerning market research and external consultancy. However, institutes such as Responsio’s “Watch Monitor” offer completely new and relevant consumer insights that will help the industry better understand the outside world. b) The smart store: with more market research and (digital) consumer data available, CRM systems will become more powerful and able to manage consumer relationships throughout the entire sales cycle. Artificial intelligence will ensure that offerings are more personalised at the point of sale. As was the case some 15 years ago, it is difficult today to foresee the near future in watch distribution. However, if the industry is now ready to learn more from past mistakes, especially regarding overly ambitious sales objectives, it will be better prepared to survive – and, of course, there will always be a demand for mechanical, prestige and luxury watches. Yet, renewed efforts in terms of strategic wisdom, operational flexibility, marketing and service creativity, and a great deal of investment will be needed – and not just in distribution. The future will belong to those brands that persevere.

Sc C enar O ios S BR O M W IC O I AT K N N C -AN : G H D RE TA CL IL IC IN K G J BY

PS ON

A top watch consultant predicts e-commerce will revive U.S. brick-and-mortar watch retailers It’s a tough time to be a brick-and-mortar retailer in America. But to be a brick-and-mortar watch retailer is brutal. Malls are dying, store traffic is down, e-commerce is up, grey-market watch sales are booming, and authorised Swiss watch sales are tanking. “The Unites States remained weak (-5.9%) in the first half [of 2017],” the Federation of the Swiss Watch Industry reported in July. “The situation there has not improved for more than 12 months and for the time being there is nothing to suggest that the outlook will brighten soon.” So, why does one of the U.S. watch industry’s most experienced consultants say that the future of embattled multi-brand, brick-and-mortar watch retailers is “better than ever”? Because they will soon expand into to e-commerce. That’s the view of Steven Kaiser, founder and CEO of Kaiser Time Inc., a watch and jewellery consultancy in New York City. Kaiser has worked in the U.S. watch business for 35 years. In 1982, he joined the family business, David G. Steven, Inc., which distributed Baume & Mercier watches in the United States. Later, when the Richemont Group set up its own Baume & Mercier subsidiary in the U.S., Kaiser served as CEO for six years. In 1999, he left Richemont to set up Kaiser Time, first as a watch distribution company, then as a consultancy specialising in the U.S. watch and jewellery markets. Europa Star met with Kaiser at his office in New York City to discuss the future of watch retailing in America. Kaiser says the most important development is the coming embrace of e-commerce by Swiss watch brands and their authorised retailers. The dominant trend in watch retailing in America will be “brick-and-click,” he says. “It’s evolving that way. The future is

bright for the strong independent jeweller in conjunction with e-commerce. I don’t see brick-and-mortar and the internet as against each other. I see them as supplementing each other.” Increasingly, so do Swiss watch companies and their authorised dealers. The current slowdown in the U.S. is concentrating their minds – and changing them – about e-commerce. Not everyone who shops online is looking for a deep discount, Kaiser argues. “There are intelligent customers who want to shop online in addition to shopping brick-and-mortar. We are losing business as an industry because that customer cannot purchase watches the way they want to.” As a result, they either buy a watch from an unauthorised online site, or they buy a different luxury product online. “I think the majority of customers still want to purchase luxury watches within a store environment. But there is an increasing percentage who don’t,” Kaiser says. “Let’s say the percentage is 10% to 15%. That’s enough for a retailer to see a decrease in traffic. We as an industry need to service that customer as well. If they want to purchase online, the industry must provide a luxury online shopping experience for them.”

A tipping point The U.S. watch industry is at a tipping point on this matter, Kaiser says. Consumers are forcing the issue. They already buy luxury products online from fashion and accessory brands and from watch and jewellery retailers like Tiffany & Co. and Cartier. Those two iconic brands sell watches and jewellery online with great success, Kaiser notes. “Why does it have to be mutually exclusive? I think the consumer will continue to force the watch industry to adjust, which is going to make it better. Ultimately we all work for the consumer.” Savvy American jewellers also want e-commerce sales. The challenge is the partnership with the brands and their authorised retailers, Kaiser says. Both parties need to work together to effectively sell luxury timepieces online. “Brands need to provide the content and retailers need to provide a luxury experience to their customer equal to the experience in the store.” Swiss watch brands are getting the message. Top brands in the U.S. are currently working with top watch retailers on ways for authorised multi-brand jewellers to sell watches online. Kaiser declines to give details, but behind the scenes there are a several initiatives underway, he says. “Influential brands are doing their homework. They’ll come up with solutions that help the industry move forward. The industry is responding to these changes slowly, but that’s all right. Historically the industry moves slowly. But it always adapts.” That’s what makes him so optimistic about the future of brick-and-mortar jewellers in the U.S. “In five years, we won’t be saying anymore, ‘Am I going to be online?’ or ‘Is e-commerce going to hurt my business?’ No, we’re going to adjust. Brick-and-mortar and online will coexist.”

The future Kaiser summarises his vision of the future of luxury-watch retailing in America in three points. There will be fewer, but better, stores. “There are

B currently too many jewellers in the market. We have

way too many stores,” Kaiser says. However, America’s Swisswatch slump (Swiss watch exports to the U.S. are in the third year of a downturn) is culling the herd of watch retailers. The result is a shakeout that will eliminate weak jewellers and leave the best ones in a stronger position, Kaiser says. “Nobody escapes the business cycle. It’s a tough market. We are in a low cycle, but it’s changing. The strongest retailers, who continue to incorporate online into their businesses, are going to do better. Their future is huge.” Watch retailing will be multi-platform. As the indus-

C try adapts to e-commerce, watches will be sold through a combination of brick-and-mortar and online. Brands will be able to sell direct to consumers through their boutiques and their own e-commerce sites as well as through their authorised retailers via their brick-and-mortar stores and e-commerce sites. This will enable consumers to buy watches wherever they want. “It will work synergistically,” Kaiser says. “Some people will buy online, some in the store. Some people will educate themselves online and buy in the store. Some will educate themselves in the store and buy online.”

Kaiser is aware of new forms of watch retailing cropping up in the U.S., like luxury-watch rental services and retailers selling luxury goods, including Swiss watches, in luxury apartment settings. The U.S. has always been a crucible for retail experiments, Kaiser says. Some work, some don’t. He cites TV shows like the Home Shopping Network and QVC, which have proved successful for some watch and jewellery brands. Inevitably, though, they are small experiments in a giant market. “Nobody is really reinventing the wheel,” Kaiser says. Such niche retailing amounts to “a little here and a little there, but it is not significant.” The big opportunity in the U.S., he says, remains with a national network of retail agents. In a country with six time zones, they know their local markets and have the confidence of the local consumer. “If I owned a brand today, I would work with my retail partners.” Kaiser says. “There are certain things that nobody can do to match the independent jeweller. The good ones offer service, selection and experience better than anybody.” Kaiser says most Swiss watch CEOs understand the importance of retail partners in the U.S. market. That won’t change as the market shifts from brick-and-mortar to brick-and-click. “Brick-and-click,” he says. “That’s the future of the luxury watch and jewellery industry.”

The majority of watch sales will be done by mul-

D ti-brand, brick-and-mortar stores with an e-com-

merce option. Watch brands may well have their own brickand-mortar boutiques and their own e-commerce sites. But those platforms won’t match the volume of a brand’s retail jeweller network, Kaiser predicts. “Brand boutiques are great for PR and marketing. But if you look at the U.S. market, very few brands do really well with their own boutiques.” As for brand e-commerce sites, “Some brand loyalists will go there. But the significant part of a brand’s business is with multi-brand retailers. Most consumers want to shop in multi-branded stores. The majority of the business will continue to be at the independent jeweller level.”

US RETAIL FACTS • Average retail surface area: • USA: 2.2 m2 per person • AUSTRALIA: 0.9 m2 • UK: 0.46 m2 • In 2016, more than 7 million square metres of retail space closed down. • This figure was reached in the first seven months of 2017. • At the current rate, it is estimated that more than 100,000 jobs could be lost in 2017, in retail alone. • In parallel, on Wednesday 2 August 2017, Amazon recruited 50,000 employees. • In June 2017, Amazon paid 13.7 billion dollars for Whole Foods, the leading US brick-and-mortar supermarket chain specialising in natural and organic foods, with its 431 retail stores. It intends to create the shops of the future. (Figures published in Le Monde, 6/7/2017)

Sc BU ena C S rio O I T H M NE s F U E PE T S S TU D ITIOCLIM RE IGI N A AT TA ND E,

Competition and the Digital Future

AY LT E AE OR CH AP MI ING BY / S I S SS YS A AL GL AN OUR AN E H TH

The global retail landscape is littered with casualties of the changing profile of consumers and consumer behaviour. Baby boomers are all but retiring and Millennials born in the year 2000 will, by 2020, account for 40% of the luxury market, exerting their influence on global shopping habits with their minute-to-minute updates on social media of what’s hot and what’s not. Shoppers are hunting online for the lowest prices, and shopping malls and traditional retailers are struggling to attract customers through their doors. Even what were once considered mainstay fashion brands, controlling both their own standalone boutiques and webstores, are facing the threat of online retailers undercutting them on pricing (excess inventory Business climate strikes again!). Other trending observations we have made are that in 2016, in The Hour Glass is present in the markets mature retail markets such as the US, conof Singapore, Malaysia, Thailand, Hong sumers spent 31% of their discretionary Kong, Japan and Australia. In 2016, in most income on goods and 69% on services and of these markets, the watch industry exexperiences. Three decades ago, 45% of their perienced significant headwinds and conspend went towards goods. To compound traction. For 2016, The Hour Glass saw a 2% matters, by 2026, it is estimated that 25% of “To survive, bricksdecline in sales, and was fortunate to have all luxury goods consumption will be onand-mortar retailers sized its inventories to match demand line, leaving physical retailing of all goods must differentiate conditions. For the watch industry overall, products with only 20% of the overall diswe see that there is still a general inventocretionary spend of this consumer. With an and specialise. The ry overhang for several brands in the inincreasing number of independent dealers future is not solely dustry, which will take considerable time starting up new businesses by way of estabto be absorbed into the market. I remain lishing a social media account, the battle predicated on how hopeful that this can be done within the traditional retailers will have is to either watches are sold, but next 18 to 24 months. define and demonstrate their relevance to on who will sell them.” We continued to invest significantly with luxury shoppers, or face their fate of retail our core long-term partners: Patek Philippe, redundancy. Rolex, Audemars Piguet and Hublot. These companies not only The watch industry is notoriously slow to adapt to change, demonstrated tremendous resilience during this period, they and their recent embrace of the digitalisation of the world each continued to consolidate their strengthening positions in is approximately fifteen years behind the rest of the luxuthe market. ry goods sector. But now that the inevitable is firmly at the Though 2017 can be still characterised as a challenging envi- forefront of everyone’s strategic agendas, manufacturers ronment for the industry, the outlook for the world has be- and retailers are wasting little time in playing catch-up. come somewhat lighter and with that, we anticipate more Richemont is an example of a watch company whose leaderpositive consumer sentiment to return. As an aside, it is vital ship is embracing this digital transition with aplomb. Rolex that at every moment – and more so at times like this – the too has internalised an entire digital division staffed with industry focus its efforts on enticing newer and younger en- the best technology minds, and has begun to develop soluthusiasts and buyers into the watch collecting universe. It is tions to combat online grey marketeers and drive a superior only through them that our future can be secured. omni-channel experience with their retailers.

The implications are obvious and twofold. First, digital will be a key pillar of the industry. In the past year, several established brands owned by Richemont, LVMH and Swatch Group have sold limited edition capsule collections direct to consumers online, reportedly with tremendous success. These early wins will embolden them to further develop more such projects. What this tells us is that the conquest of the digital landscape is only just beginning, because as recently as last year, the battle for sales still existed exclusively in the physical domain. Key luxury groups are now recognising that online retailing is an additional channel of distribution, and acts as a complement to their bricks-and-mortar operations. The second implication is that to survive, bricks-and-mortar retailers must differentiate and specialise. The future is not solely predicated on how watches are sold, but on who will sell them. The demise of multi-brand specialist watch retailers has been bandied about for nearly a decade now. But, if anything, the current crisis enhances the strength of retailers with scale, reach and tech savvy, who have teams with deep specialist knowledge of the fine watch domain. While brands have been consolidating their distribution networks, the culling has been primarily on what the industry defines as “B” and “C” retailers. Networked retailers will be required to play a more important role in this transmutation of the watch ecosystem. The rise of e-commerce is advantageous to multi-brand retailers because, by virtue of our business model, we offer choice. And choice is clearly

one of the key tenets of online retailing. The world leaders in luxury fashion are not the brand’s own webstores but rather e-tailers such as Sephora and Yoox Net-a-Porter. Success in the realm of online multi-brand retail is far easier imagined than accomplished. Our reading of the manoeuvring in the online luxury space is that developing a full-price, multi-category, multi-brand platform is a challenge that even the most cash-rich luxury goods conglomerates have admitted difficulty in navigating. Two years ago, Richemont divested themselves of online luxury fashion juggernaut Net-a-Porter, merging it with its direct rival Yoox and at the same time declaring that their rationale was because with CHF 5 billion in cash, they (Richemont) did not have the resources to become a winner in this space! It is also too early to speculate on LVMH’s attempt at building their multi-category, multi-brand e-commerce platform 24 Sevres and its eventual commercial success. With the watch industry, we recognise that there are tremendous opportunities to be exploited, and the argument for engaging online is evidently stronger than that of remaining on the sidelines. But we see three key challenges for any authorised watch retailer intent on developing a global e-commerce platform for new, primary market watches.

Firstly, there is the notion of global pricing parity. Watches are not priced the same all over the world. Retail prices vary with historical market conditions, import duties, consumption taxes and foreign exchange rates. And the possible arbitrage between markets could be up to 25%. Several brands such as Rolex, Cartier and Omega are addressing this issue by geo-fencing prices based on IP addresses. A recent case of Omega releasing exclusively for sale, online, a special 2,012-piece limited edition watch was met with such overwhelming demand that Omega’s servers went offline several times in the span of a few hours. All the watches were sold to clients with the geo-fenced retail price of their home country, and the difference was as much as 20%. However, due to the limitation of the offer, clients accepted, and many were not even aware of the difference. We cannot discount the novelty effect of such launches but, should they occur more frequently, the results are unlikely to be as robust. Secondly, there is the issue of cross-border selling. Brands continue to assign the privilege of online retail to themselves whilst restricting their traditional specialist retail partners to the geographies that they operate within. However, with the rise of omni-channel commerce and a prospective desire to lever off pure play internet re-sellers, this model may soon be put to the test. Specialist watch e-tailers with large common markets that embrace online buying such as the United States, Europe and China may eventually give rise to the next corps of specialist retailers of the digital world. Such a development, however, will take time to manifest. Finally, logistics. The single biggest logistical challenge for all watch brand owners and resellers is their ability to have a returns policy when selling online. Unlike other fashion and leather goods, the cost of refurbishment of a returned watch can be in the range of 2% to 10% of the retail value of the new watch, depending on its price. Additionally, when volumes increase, it is within reason to anticipate that a separate after-sales division needs to be created to accommodate the servicing of returned watches. Assuming the preconditions stated above have been met, the first positive news about the internet is that it doesn’t always pay to be first. The second is that, owing to the apparent lateness of the watch industry to embrace the online realm, the real winners of the game have yet to be determined. In this quest to discover the digital El Dorado, there will be room for several players to securely entrench themselves, and even more ways to eventually disrupt and dislodge them.

Future Two years ago, we recognised that The Hour Glass was facing an inflection point in its phase of business and organisational development, that for us to respond to the digitisation that was taking place in the watch retail industry, to be future-ready, we had to unshackle ourselves from our incumbent mindsets and broaden our views of

where the world and the watch industry were headed. In the past 18 months, we saw to that. We reorganised our senior management ranks and flattened our organisational structure, reallocated resources to bolstering our technology, customer experience management and engagement marketing teams, committed to a series of course-altering technological capital investment programmes and, most important of all, engaged in a process of augmenting our organisational culture to meet the new demands of our business and clients. Part of this journey is our emphasis on developing an omni-channel model that humanises the shopping experience every step of the way, from our online engagement with clients to their offline interactions with our corps of watch specialists. When we think about the consumer, we must consider that the new consumer is one that survives in an ever-present connected social environment. The merging or blurring of online and offline does not exist, as they are no longer mutually exclusive realms. A shopper, whilst engaged in a physical retail store and dialoguing with one of our watch specialists, will be concurrently online chatting with a friend, a group of friends or engaging in product and pricing research on their mobile device. Appreciating all these developments, our team invested considerable grey matter in architecting our technology roadmap, and is due to go live with our inaugural customer experience management platform – a solution that will form the backbone of our group’s omni-channel strategy.

Smartwatches Evidently, there is a market for wearable tech, and smartwatches form one segment of this category. They are very useful, and I personally wear a Garmin watch when I exercise as it provides instantaneously highly accurate data that a conventional analogue watch would not be able to do whilst on the move. So I believe that functionally, there is a bright future for such devices. And I do not believe I stand alone in this view. I am certain traditional watch clients are interested in smartwatches. But not for the same reasons they would be interested in a mechanical timekeeper. Smart watches are really just the new tool watches for collectors. ABOUT Name: The Hour Glass Boutiques: Singapore, Malaysia, Thailand, Hong Kong, Japan, Australia Launch date: 1979 Category: High-range Brands represented: Patek Philippe, Rolex, Audemars Piguet, Hublot, Richard Mille, Breguet, A. Lange & Söhne, Cartier, Chopard, IWC, Jaeger-LeCoultre, MB&F, Urwerk, Kari Voutilainen, Roger Smith, Omega, TAG Heuer, Breitling, Nomos, Sinn Website: www.thehourglass.com

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D N

N D IE L EL V ” EI

“W M A U E’ FI ND L R TH RM W T E AT LY E I-B M BE STI R O L L A

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IL A N “We have a main Flagship Store in Milan, still run by the founding family. We also operate the Rolex and the renewed Patek Philippe boutiques there. We employ around 70 people altogether, including several watchmaker technicians. We have just opened the first Hublot boutique in Milan, inside our Flagship Store, a separated but still integrated space. For us, the year 2015 was outstanding with the World Expo in Milan, which attracted more than three million visitors. It was an exceptional year. Naturally, 2016 couldn’t match it, but we were still up 14% on 2014. For the past two years – this may come as a surprise – Milan has been the most-visited city in Italy. It’s an easily accessible city, much more so than Rome or Venice, and it attracts more diverse visitors, not only tourists but also professionals, between industry, fashion, culture and the numerous trade shows of all kinds that are held every year. So our customer base is 30% Italian and 70% foreign. Italy has always been an avant-garde, very mature market for the watchmaking industry. Italians have a “special relationship” with watches. We’re multi-brand and we still firmly believe in that model. Patek Philippe and Rolex are exceptions in a way: their reputation is such that they can fend for themselves, which is why we launched dedicated boutiques with them. But we believe in the power of brand competition and maximum

choice for the customer. Customers always ask our opinion and they like to compare brands and their models. We are attached to our identity and we always try to filter the marketing displays of the brands. We have a broad portfolio of brands and the watches ought to be argument enough in themselves! We’ve built up long-term relationships with our customers, who respect our opinion, just as our partner brands do. Many products in the industry can seem rather similar today, but our vendors know how to explain the differences between one brand and another, and the characteristics peculiar to each brand and each model. That’s our role. That’s why we don’t suffer too much from competition from brand-owned boutiques, some of which are just 200 metres away ... I think that the customers of mono-brand boutiques aren’t the same as those of the multi-brands. While the customers of the former are 100% certain that they want a particular brand, those of the latter are open to different brands. In fact, the mono-brand boutique concept isn’t very highly developed in Italy. Of course, our mission is becoming more and more difficult as customers are increasingly knowledgeable. But that’s not always a good thing. When customers have done their research and formed an idea for themselves, they’re rather rigid in their assumptions even though the information online is not always reliable, and pay less attention to our advice. That devalues our work somewhat. But we’re still ‘watch consultants’.

We haven’t expanded beyond Milan, because Online sales are part of the future, there’s “A digital strategy Italy is a market that is highly fragmented no getting away from it. Social media have decided in the meeting into regions. And from Milan, we have interalready changed customer behaviour. We’re national visibility. We’re even compared to already able to trace some sales from posts room of a brand or a giants like Wempe or Bucherer, sometimes, on Instagram. But a watch is still one of group in Geneva can’t although we’re much smaller. But we’ve the most complicated items to sell online. be applied blanket certainly had a historical presence in the They’re things you need to see, touch, try market, since 1940. We were the first to fashion in every market.” on… I observe that for the moment, few introduce A. Lange & Söhne into Italy, in retailers have their own e-boutique. It’s 1992, and Greubel Forsey. And we were also not an easy task. You can’t content yourone of the precursors for Rolex in Italy. We take risks and our self with reproducing an e-commerce platform. You have to staff aren’t ‘mainstream’, but always on the lookout for new create your own identity online, a shopping experience. We faces. And our partnerships are usually for the long term… think that e-commerce will never completely supplant bouOur proximity to Switzerland is an advantage in that respect. tique sales. But the boutique could increasingly become more Not to forget the special editions, like the IWC for the 75th of a showroom. We have a certain number of digital projects anniversary of Pisa, for example. in mind. The big issue is our expertise – how can we reproduce Stock turnover is a crucial issue. When we buy in for the next that on the internet? And we work with 45 brands; that means season, we’re always thinking of a handful of customers who we’re going to have to defend our identity. A digital strategy we’re sure will appreciate the models in question. decided in the meeting room of a brand or a group in Geneva As for vintage watches, they’ve enjoyed a real boom these can’t be applied blanket fashion in every market. Milan and past few years, but it’s a different world that demands a dif- Hong Kong are still very different places!” ferent approach, for example with regard to the guarantees, condition and conservation of the watches. We’re not present in that niche. As for smart watches, today we’re seeing ABOUT some new habits. For example, a smart watch on one wrist Name: Pisa Orologeria • Boutique: Milan and a mechanical one on the other. Nevertheless, I think Launch date: 1940 smart watches will have more chance of succeeding if they Category: High and middle range Brands represented: More than 45 brands look more like ‘real’ watches. Website: www.pisaorologeria.com

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“From the beginning we had a very clear strategy and positioning as a multibrand retailer. Our concept is unique and the brands realised the added value for them as well. We have our own brand identity with the famous “Doors Concept” (one “symbolic” door for each brand) that has become iconic the world over. We have seen major changes in Switzerland in 2015 with a very unfavourable exchange rate, resulting in new travelling and buying habits for tourists and locals alike. In 2016 we were able to stabilise results, also thanks to the opening of our new boutique in Lucerne. And we are now about to grow our second retail brand called Watches of Switzerland, for which we will be opening our third boutique beginning of 2018 in Interlaken. During these last years, we paid more attention to adjusting our range and have the right offer with a good mix of special pieces, best sellers and new watches. Business has continually picked up over the last few months with positive growth compared to last year in just about every boutique and every segment. For the last 5 years we had a multibrand watchfinder on our website, which now includes more than 4,500 watches from 30 different brands. You can make your own selection and set an appointment online to see the watches in our boutiques. Five years ago, that was a revolution, but it has become standard today. The experience we gained through that tool helps us today for our next step that we are currently working on: ecommerce. I am very positive about the future, if retailers and brands alike are ready to adapt flexibly to the challenges ahead. I

think it will be a perfect combination between online and offline, one nurturing the other to create more demand and traffic. Online will create new opportunities for the traditional business in boutiques. But at the end of the day, service quality will make the difference. Accordingly, we train every day to stay ahead of the crowd. In order to live up to our claim “The Leading House of Leading Names,” training is one of the key elements of our success. We offer regular training courses for our sales force internally and encourage them to attend as many of the courses offered by our brands as possible.” ABOUT Name: Les Ambassadeurs Launch date: 1964 Boutiques: Zurich, Geneva, Lucerne, Lugano, St. Moritz Brands represented: (Watches) A. Lange & Söhne, Audemars Piguet, Bell & Ross, Blancpain, Bovet, Breguet, Breitling, Cartier, Chanel, Franck Muller, Girard-Perregaux, Greubel Forsey, Jaeger-LeCoultre, Hermès, Jaquet Droz, Longines, Omega, Panerai, Parmigiani, Roger Dubuis, Ulysse Nardin, Urwerk, Vacheron Constantin, Vulcain; (Jewellery) Diamonds of Excellence, Graff, Messika, Mikimoto, Ole Lynggaard, Pasquale Bruni, Pomellato, Wellendorff Website: www.lesambassadeurs.ch

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ABOUT Name: Juwelier Lorenz • Boutique: Berlin Launch date: 1875 Category: High and middle-range Brands represented: Cartier, Jaeger-LeCoultre, Omega, Rolex, Baume & Mercier, Breitling, Ebel, Frédérique Constant, Longines, Maurice Lacroix, Oris, Parmigiani Fleurier, Rado, TAG Heuer, Tudor, Askania, Junghans, Meistersinger, Mühle Glashütte, Nomos Glashütte, Tutima Glashütte, Union Glashütte, Casio, Grand Seiko, Seiko, Bomberg, Certina, Michel Herbelin, Raymond Weil, Tissot, Erwin Sattler Website: www.juwelier-lorenz.de

Henri Rousseau, The dream, 1910

LIE

“Faced with chains, supermarkets and mono-brand boutiques, a good number of traditional family boutiques have closed. And this concentration of the market is putting the brands themselves in danger, because they’re dependent on a smaller number of retailers. Our boutique dates back 142 years. We recently renovated it and we could have designed something very modern, modelled on an Apple Store or an airport shop! But you find that kind of thing everywhere. We preferred taking our inspiration from the original boutique from a century and a half ago. All our inspiration comes from the passage of time. As retailers, we ourselves have to play on time. The way you design your space is crucial: we’re in the centre of Berlin, but when you walk through the door, you can slow your pace down. We have space here, a garden… It conveys an impression of tranquillity and isolation while everything around you is in movement. It’s a kind of stability and permanence, like the mechanical watch, an instrument that hasn’t really changed for centuries, apart from its quality and accuracy. Personally, I wear a model with a piece of meteorite in it, as a reminder of how we’re rooted in time. Time that goes back billions of years! We’ve also set up a museum dedicated to objects that have told the time since Antiquity. I know I won’t be attracting Berlin’s hipsters. But you have to be clear about what you want. My main target is aged between 40 and 60. Today, you no longer need to wear a watch. But remember when quartz arrived, mechanical watches

seemed obsolete. We’re in the luxury segment, so we address an exclusive customer base that appreciates art and history and has ready cash. I see our role like that of bespoke consultants. Because we address maybe 3% of the population. Crisis? Give me a break. 2016 was better than the previous year, which itself was better than the preceding year. Of course, the figures aren’t in the stratospheric region, because the competition feeds on promotional price campaigns. What we really need to do today is to tweak every parameter: everything should be geared to promoting a common watchmaking culture. If all you’re seeking is a return on investment, you have no idea of what watchmaking is all about. What’s more, the price issue is much more crucial on the internet than when you go to a boutique. What percentage of our target customer base will prefer to have a watch delivered to their door; how many will opt rather to go to the boutique? What will their choice be, between our physical garden and the digital jungle? I’m not going to go running after them. It’s like the vintage segment: if it attracts people towards watches in the first place, so much the better.”

R K E IS ET ”

“T W H T H E H E EN G E AV EM RE O E T Y Y N OB M L I EA A N T

WI ZE N V, DE NO B A RA NIM DE N BA RA D I M AN IN RL

“It’s crucial to go digital, and the watch brands have to start engaging with it now or things are going to get very complicated. An online presence ought to help protect the brands; the platforms serve both to promote and to sell their watches. Ultimately, I think we’ll post half our turnover online and half in the boutique. Our role as retailers is to help the brands to make their transition to online and to feel at ease there. But there’s one enemy in particular that both the brands and their partners have to deal with: the online grey market, where watches are sold at rock-bottom prices with a minimal mark-up. We mustn’t allow those players to come into power on the internet. So in a few months’ time we’re going to be launching our own online sales platform for watches, in agreement with the brands we represent. We’re in separate talks with each one. Combined with our physical presence in Berlin and BadenBaden that will give us a real boost. We’re anticipating growth in the order of 200-300% over the new few years, and we want to open five new boutiques, in Germany and in Europe.” ABOUT Name: Zewi • Boutique: Berlin and Baden-Baden Launch date: 2008 Category: High and middle-range Brands represented: Ulysse Nardin, Parmigiani Fleurier, Frédérique Constant, Louis Erard, Raymond Weil, Maurice Lacroix, Perrelet, Century, Arnold & Son, Franck Muller, Visconti, Pop-Pilot Website: www.zewi-luxury.de

E? ”

“W itz TH H er W E Y lan TH AN C W d F R IS T T UST OU O P RO O B O M L D M DU UY ER M CT

Sw GE

LIN BE N E G Ü ER H H, UC RIC IET O, L ZU R P AN N D TE G A PE , LU ITZ N S EL O R HA BAS T. M , S VA N, N E BE R

“2017 started quite well in comparison to last year. We have many more guests from abroad back in Lucerne. However, they are buying less than in previous years. Overall, we are still up compared to 2016 – surprisingly, especially at the higher price points. In the other boutiques the business development varies from city to city, but overall our business is up. We expect the positive trend to continue. However, there will be new challenges and developments. Customer expectations change over the years and will continue to do so. We need to listen to the customer, offer a product that is relevant, create an experience that is unique; not just scratch the surface but go deeper. Customers want to know, they want to understand, they want transparency, they want products from companies that take their social responsibility seriously. They are looking for companies and products that are doing more than just creating marketing stories. There must be substance. We see the future in providing our customers with experiences and insights, rather than just the product. Gübelin believes in the importance of a holistic experience and service, in keeping with our positioning as a retailer of top-end Swiss-made jewellery and watches. The ‘new’ customers have different expectations about luxury, about shopping, about brands. Boutiques that are not open to new ideas will find it difficult to justify their existence in the future. You must always ask yourself the question, why should a customer buy this product? Why would the customer want to buy this product from me? If the only reason is ‘best price’

then it will be hard. Everybody wants a good price, however, I think substance is also important. The real high-end customer wants and deserves more and is not just driven by the price. Service, trust, passion, expertise and an outstanding consumer experience are the keywords here. Since March 2017 we have operated our own e-boutique. We are quite proud to be the first retailer in Switzerland to go online with a selection of luxury products. We believe that the e-commerce business is opening up many opportunities for us, not just in Switzerland but worldwide. Online business is becoming a new reality and it is our ambition to be part of this world. We strongly believe in the importance of connecting offline and online, and in creating a luxury experience, even if the customer buys or informs him-/herself online. Many online suppliers (not just in our industry) are looking for retail space to get in touch with customers. We have the retail space, and we are happy to expand in the other direction. There is of course an impact from online business, especially where it concerns unauthorised platforms, who get their supplies from sources that have too much stock. The grey market is saturated with products from many different sources. The growing number of online platforms is accelerating the grey market issue. E-commerce in general is having an impact on the markets, although not yet all markets, in terms of turnover as well as price transparency. But in the end, the customer still wants to touch the watch. However, advice is available not just in our Boutiques. For our e-commerce business we have a Concierge service phone line which is open until 10 p.m. Our Boutiques close between 6:30 p.m. and 7:00 p.m. With the Concierge Service Line we can extend our business hours. We are also available when the customer is off work. We do not know about the future, but there might come a time when we are available 24h/24h. Because we sell globally, we have to give our customers a global service when they want and need it.” ABOUT

Name: Gübelin Boutiques: Geneva, Basel, Lugano, Lucerne, Bern, St. Moritz, Zurich Launch date: 1854 • Category: High-range and middle-range Brands represented: Patek Philippe, Jaeger-LeCoultre, Parmigiani Fleurier, Roger Dubuis, Cartier, Piaget, Ulysse Nardin, Zenith, Bulgari, Breitling, Hermès, Montblanc, TAG Heuer Website: www.gubelin.com

Legends of their time. Sixty years ago Junghans created a legend with the historic Bundeswehr pilot watch â&#x20AC;&#x201C; that legend is continued with the Meister Pilot. And reinvented at the same time. Because the Meister Pilot combines authentic aviation history and modern design in an unique, elegant watch of character. A watch for all those that follow their own path â&#x20AC;&#x201C; on land and in the air. www.junghans.de

H N T E Y HE ES IR ”

Ja “S pan W EEI O I T NG W

WA Z A HI TA S O K I U KO K Y GO TS TO IN MI / SH SH I O R E A ST MB IN HO MA

“2016 was a difficult year. In reaction, we increased our appeal to new customers by launching a website dedicated to watchmaking. And to strengthen the uniqueness of our shop, we increased the ratio of German watches, by adding Nomos Glashütte and Moritz Grossmann. The battle continues in 2017, but we are seeing more sales to a younger demographic. We want to focus on expanding our customer base. We need to not only sell things, but also to offer a space where customers can enjoy not only the watch they have bought, but also the time they spend there. The watch retailing industry should be more flexible, and I think that ideas such as providing social experiences are particularly important. Customers are becoming more cautious when buying watches. After repeated preliminary inspec-

tions, and comparisons with other stores, they spend time before buying. And in the field of luxury watches, I think that the importance of touching a watch and receiving advice will continue to increase. I do not believe there is a great conflict, in pricing terms, between online retailers and the products we stock in our stores. In our store, the mid-range pieces we sell are mechanical watches starting at around 10,000 US dollars. Most customers in this price range generally handle and try on the watches; they like to evaluate them with their own eyes before buying. For the same reason, I think that brand after-sales service should disclose more information. They should clearly indicate specific exchange parts and repair parts etc. That leads to a relationship of trust with customers. Breitling is amazing in this respect. In Japan, there is a tendency to emphasise the expected value of after-maintenance guarantees and the relationship of trust with store clerks when buying luxury watches. That’s why the grey market hasn’t had such a great influence. On the contrary, the resale market is enjoying sound growth.” ABOUT Name: Nihombashi Mitsukoshi Main Store Boutique: Tokyo • Launch date: 1904 Category: High-range and middle-range Brands represented: Patek Philippe, A.Lange & Söhne, Jaeger-LeCoultre, Vacheron Constantin, Breguet, Cartier, Breitling, Omega, Franck Muller, IWC, Harry Winston, Girard-Perregaux, Zenith, Moritz Grossmann, Longines, de Grisogono, Rolex, Piaget, Seiko, Citizen, Minase, Century, Backes & Strauss Website: mitsukoshi.mistore.jp

!”

Be “N lgiu TH E m C I N E M ES VE OT SIT N HERY IS TI O O F T LE S I ZE EL NO S S L A BR U I SE / Ç O ME AN T I FR L OF L HA

“We’re two associates and we launched our multi-brand boutique fairly recently, in 2009. And in the summer of 2017, we also opened the Rolex boutique in Brussels. We didn’t originally start out in the watchmaking sector; we worked in direct marketing. The idea of opening our own boutique came simply from our disappointing experiences when buying watches in Belgium… That sparked the idea that we could have been better received. We wanted to treat our future customers the way we would have liked to be treated! Of course, 2009 was the year when the last thing to do was open a boutique, since the sector was in total crisis. But as the saying goes, necessity is the mother of invention! In actual fact, our project got a very good reception: we soon got the support of Jean-Claude Biver and Hublot. There was a lack of watchmaking knowledge in Brussels; incidentally we wanted our store to have a very modern look from the start, that’s maybe also the advantage of not having inherited a boutique that’s been handed down through generations. As watch retailers, since we manufacture nothing ourselves, but sell products you can find all over the world, the only way to differentiate ourselves is through service. That’s what you call the buying ‘experience’, something that’s enjoyable. We often receive people who want to celebrate an event. So we need to create an appropriate atmosphere! We wanted to create a little haven, recognised for its quality welcome and service. That’s all the more important since our boutique is tucked away behind Avenue Louise, behind a grand hotel. It doesn’t open onto the street, so you really have to know it and appreciate it to come. In contrast, the Rolex boutique is situated on a grand boulevard, surrounded by other big names. How did we come to sell Rolex? They contacted us to launch the boutique project. We’ve been their agents since 2015. It’s a great mark of confidence and a kind of seal of approval on our approach to the watch retail trade. They’d been want-

ing to open a boutique in Brussels for some time, but they hadn’t found the right partner. We have all kinds of customer. Some see the price first and foremost, others are keen on service. Above all, we need to reassure them in relation to the information they accumulate left, right and centre. The challenge is to build a loyal customer base, primarily Belgian and French in our case. The world is no longer such that you can just sit behind a counter. Potential customers are being solicited from every direction. You need sufficient inventory, quality staff, a well-designed website that links to the brand platforms. We’ve also launched our own magazine and we’re trying to personalise relations with our customers. All this while at the same time trying to attract younger customers, for birthdays or exam results, for example. You have to think about tomorrow today! We don’t have the image of an ‘old world’ shop where a customer’s grandfather was a customer already. We try to take advantage of that to forge a really contemporary image for ourselves with our own space and a strong identity.” ABOUT Name: Hall of Time • Boutique: Brussels Launch date: 2009 Category: High-range and middle-range Brands represented: Baume & Mercier, Bell & Ross, Blancpain, Breguet, BRM, Cartier, Chanel, Hermès, Hublot, IWC, Jaeger-LeCoultre, Jaquet Droz, Parmigiani, Piaget, QlockTwo, Rolex, Swiss Kubik, Tudor Website: www.halloftime.be

Au “B stra LI RAN lia M P D C R S I O T O M A N N US PR D T D T I C S RO U IN TA L C G BI SU T ” LI P I O S E PL Y N , PE

RE G A ND NO L A LE NS AL E E A D QU DI / LY S D HE AN ATC LD W ZO N E E T EF I D

“2016 was certainly a challenging year for retail. The increase in grey market activity and the aggressive pricing stemming from product dumping resulting from oversupply has undoubtedly damaged the traditional retail market for watches. While it didn’t affect our niche sector too much, we have noticed the retailers holding big brand names are really struggling during this price war. Unfortunately, the longer-term implications of heavy price reductions are that service and support may suffer if watches are sold by short-term profiteers rather than genuine watch retailers with service and support structures in place. While customers believe they are grabbing a great deal, this may not necessarily be the case. If non-legitimate or uncommitted retailers continue releasing excessive watch stock at reduced prices without the view to building longterm relationships with customers, clients may feel ‘let down’. This ultimately reflects badly on a brand, damaging its reputation, and is very hard to reverse. In 2017, Define Watches relocated from a large city to a boutique holiday region which draws an international clientele and boasts year-round perfect weather conditions – even by Australian standards. This has evened out our sales cycle and exposes the brands to a broader cross-section of customers.

We actually added two brands to our collection, and found that other boutique Australian retailers we distribute to have also increased the number of bespoke brands they offer. Despite the tough year we found that customers were looking for something unique that represents value for money. But 2017 continues to provide challenges to the traditional retail sector. The market is beginning to expect discounts all the time, both in-store and online. If brands don’t make efforts to limit production, control supply and stabilise pricing the emerging market expectation may be impossible to reverse. We strive to hold pricing in line with the global retail price structure (i.e. no discounting) and prefer to value-add with items such as insured, overnight delivery, personalised service, a VIP club, VIP events and other relationships. Because Australia is so remote from the watchmaking HQs in Germany, Austria and Switzerland it was necessary for us to establish a service and warranty centre in Australia. In this way we can control the quality and turnaround time of repairs and minimise the cost involved with shipping and handling.

Inventor of the self-powered illumination technology trigalightÂŽ. THE ORIGINAL.

We carry the cost of our service centre, and the brands support us with international warranty parts when we repair the cases locally. In general the brands are very responsive and fair – another benefit of working with independent companies where your contact is often the watchmaker him/herself. Our strategy is to nurture a positive and open supplier/retailer relationship built on trust and respect, and pass this on through the chain to the customer – creating a uniform sales experience from manufacturer to customer. As Define Watches specialises mainly in independent German watch brands we have no direct competition in our area. Australia is also a relatively young and small market for watches so, with the exception of only a few stores in our major cities, most brands retail through a store-in-store method in our market. We do run an online boutique but are very careful to respect the sales territories of our fellow distributors, as this is the only way to ensure everyone has a chance to succeed and the customer is always receiving a fair offer. (This is simply solved by allowing sales to regionally registered IP addresses only.) But online retail is very much price-driven. The online shopper is primarily driven by best price, at least in the first purchase instance. We endeavour to represent brands we trust to uphold uniform global pricing. The retail environment is becoming more and more clouded with experience shopping, where the event or value-add is becoming more important than the product. Whether the expense of creating a product experience translates to the bottom line, remains to be seen. Big watch groups with big budgets have always supported the idea of creating a brand ‘aura’, but now the product/price dump that is happening is somewhat at odds with the image they have spent so long to create. It will be interesting to see how loyal the market base stemming from uberisation is over the long run. Because the brands we represent are niche, independent companies, our customer base has always consisted of early innovators. Over the past 3 to 5 years, we have noticed a trend towards a younger, trend-conscious male. Twenty years ago these men were after big names, but now they want something different, something unique. They are savvy consumers who know where to find products and embrace multimedia to research their product, source it and acquire it. Interactive programs and apps are becoming increasingly powerful and advanced. Simulators and configurators allow people to play with watch design and see how the end product could look on the wrist. As such, holding a watch is less of an issue than it was even 10 years ago.” ABOUT Name: Define Watches • Boutique: Noosa, Australia Category: High-range and middle-range Brands represented: Armin Strom, Benzinger, Bruno Söhnle, Dornblüth & Sohn, Habring2, Hentschel, Hanhart, Lehmann, MeisterSinger, Moritz Grossmann, Mühle-Glashütte, Sinn Website: www.definewatches.com.au

A ER RK ET ”

Sp “A ain C S N O M E RV SU OT PAN IC M P A Y, E

B PA

E OJ EL

R LO CA “Our boutique was founded back in 1879 by a German entrepreneur, Mr. Krug. My great-grandfather started working with him, then our family took up the reins of the business, and today I represent the fourth generation along with my two sisters. At that time, Mallorca was less touristy; it was first and foremost a shop for local people. We’ve represented Rolex uninterrupted for 75 years. We’ve developed well and today we have four boutiques on the island, with more than 50 employees, including six watchmakers. We also operate the Cartier boutique on the island. The type of customer depends on the geographical location of the shop. In the centre of Palma, it’s 50% locals and 50% tourists; in the seaside resorts the customer base is mainly tourists, of course. We’re growing continuously, because we don’t depend on Chinese customers; we have a well-defined territory and a good mix of nationalities among our clients (more and more Scandinavians in recent years). And more and more tourists who are turning away from countries such as Egypt and Tunisia for security reasons are coming to Mallorca. We’ve set up an internal online inventory management system. It’s for our own use only for the moment, but we’re going to be using that know-how in the next twelve months to launch our e-commerce platform. The internal system serves as a kind of ‘test’. We have yet to decide whether the watches will be sold directly online and delivered to homes

or stores. That will depend on our talks with our partners. The brands have a certain tendency to want to appropriate more and more tasks for themselves: that’s why some have opened their own boutiques. But our five main partners trust retailers like us. We deliver a retail experience and service, like consultants. We offer over 30 brands. It’s difficult to keep up to date about everything on every one of them, especially with growing numbers of references and increasingly knowledgeable customers. People’s behaviour is changing: more and more customers are coming in with a photo of the watch they want on their smartphone. But we view ourselves first and foremost as a service company, not a supermarket… We try to be as close as possible to our customers. The luxury experience springs from the highly original, futuristic architecture of our boutiques, for example, or from private events.” ABOUT Name: Relojería Alemana Boutique: Mallorca • Launch date: 1879 Category: High-range and middle-range Brands: Audemars Piguet, Baume & Mercier, Bulgari, Cartier, Chanel, Chopard, Corum, Hublot, IWC, Jaeger-LeCoultre, Longines, Omega, Panerai, Patek Philippe, Rolex, Sevenfriday, TAG Heuer, Tudor, Ulysse Nardin, Zenith Website: www.relojeriaalemana.com

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OS IR IS HE A AL S C JO C A E S ND RR A TO ON S , L I SB

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& B C RI LI C C K K JO

“The Portuguese market still outperforms the global current trend. Based on FH (Swiss Watch Federation) statistics, Portugal ranked 21st in the first five months of 2017, with a 10.6% increase compared to 2016, and an even more significant increase of 8.2% vs 2015, when the overall trend was a 10.2% decrease. Our company clearly led this trend in 2016: we successfully managed to increase our sales and margins. Two major factors explain these excellent results: international tourism is clearly discovering our small, outlying country. Moreover, our 2014 investment in a 650 m2 store in Lisbon’s premier luxury location, Avenida da Liberdade, definitely improved our market share. This year we have opened a new shop in downtown Cascais, just a few steps from the marina of this beautiful port. We believe we have to present our national and international customers with the broadest range of pieces, including exclusive and rare watches. In the last 10 years we have witnessed drastic changes in the buying process, motivated by the behaviour of today’s new consumers. Thus, we cannot view e-commerce as a threat but rather as a challenge, and one more channel and opportunity to sell. We consider online retail a crucial selling channel, which can and should coexist side by side with the traditional buying process. And we are on the verge of finalising a new digital site with an e-commerce service for our customers. This digital service will enhance the quality of our sales. It is not hard to forecast an increase in sales outside our traditional stores, which need to change to reflect the new reality. Consumers are look“SMARTWATCHES ARE A PEACEFUL REVOLUTION” “We believe smartwatches are a peaceful revolution. Proof of this is that, if we go back in history, we can see that ‘smart watchmakers’ were already around more than 70 years ago, precursors of what we know as smartwatches today. Back then, we felt no significant danger that would justify radical behaviour changes. Of course, the traditional watch industry has always maintained a certain resistance to this type of product. Nevertheless, in 2015 they realised that they had to give in and adapt to this new technology. Opinions among specialists were divided. Some believed that the partnership between watchmaking and technology companies could not work, and that mechanical watches would never lose their glamour. Others expressed the more extreme view that the history of fine watchmaking could be coming to an end. But smartwatches are here to stay, and the smartest way to tackle this new market is to join it. It was precisely the solution embraced by some of the great names in watchmaking, such as TAG Heuer, perhaps because this type of product targets a different consumer from those traditionally interested in fine watchmaking. Nevertheless, we now realise that products endorsed by the great watchmaking companies can live side by side with traditional mechanical watches.”

ing for more than buying in the broad sense; they are looking for an experience. When abdicating the experience itself, they choose to buy online. So stores have to adapt to this new reality and be open to new ideas, initiatives intended to capitalise, not only on digital consumers, but also on current and potential new clients. As “uberisation” is replacing human capital with a system that begins and ends in an application, retailers are treading a fine line between adding value and competing with their customers by offering more value services to stay relevant in today’s changing marketplace. However, for luxury brands, any change to the business model has to be supported by a consistent plan. This is a market associated with history, guarantees of quality, exclusivity and personalised contact with the client, which is incompatible with some aspects of digital retail. In this sense, it brings as many challenges as opportunities. Membership is a must, but direct and online sales strategies should ensure that the customer continues to enjoy a differentiated shopping experience. In the end, currently the majority of customers who buy luxury goods, in this case fine watchmaking or jewellery, continue to appreciate the importance of touching, trying and receiving advice.” ABOUT Name: Torres Joalheiros Boutiques: Seven points of sale in Lisbon and Cascais Launch date: 1910 • Category: High and middle-range Brands represented: Rolex, A. Lange & Söhne, Chanel, Chaumet, Chopard, Corum, Cvstos, Eternis, Franck Muller, F.P. Journe, Girard-Perregaux, Graham, JaegerLeCoultre, Louis Moinet, Messika, Mimi, Mikimoto, Monseo, Montblanc, Oris, Porsche Design, Raymond Weil, Serafino Consoli, Suunto, TAG Heuer, Torres, Tudor, Versace Website: www.torres.pt

L”

e “ W t he TH E rla O E S BE nds C M TR LIE H N EN VE A I- G I N N TH N O E

N AC

PH SE M JO A N RD BE S T E ON M AL S / A ER

“We come from the diamond sector, where our father already worked. And even today, our turnover is still fairly evenly balanced between jewellery and watchmaking. We design and produce our own jewels, and in 1998 we also took over the oldest watchmaker-jeweller’s in Amsterdam, called Spyre. Then in 2000 we opened a fashion store with brands like Guess. But we’ve closed it since, because we didn’t want to turn into a chain and because fashion, by definition, is short-lived. So we preferred concentrating on the high end of the market, specifically training our teams for that niche, for example. In 1998, we also set up our first website, launching our e-commerce in 2007. At the time, no brand wanted to go with us! So we did it on our own. IWC was the first brand to give us an official e-commerce mandate, in 2008, under George Kern. Today, our physical boutiques and our online boutique have separate divisions and teams. I’ve always believed in the strength of omni-channel watch retail. They have to fuel one another. But I’m convinced that as a watchmaking boutique, you can’t survive without a quality internet platform as a corollary. And it’s easier to do it in Europe than in the United States, even, because European Union regulations prohibit brands from preventing the creation of e-commerce platforms without their official consent. What’s more, it’s a goldmine of data on current and potential customers. But we really had to fight to launch our e-commerce platform! Today, we already make one-fifth of our sales solely online. E-commerce offers a number of advantages, especially that of being open seven days a week and available anywhere via the mobile network. We update our e-commerce platform every two to three years. The future of retail, even though it’s become a cliché to say it, is all about experience. That’s why we renovate our boutiques from top to bottom every seven years or so. You have to be able to find the same cosy, lounge atmosphere as if I

was welcoming customers to my home. But that calls for huge diplomacy, because the brands always want to impose their design and their shop-in-shop. So we’ve separated our boutiques into two areas: one mixed area and one shop-inshop area. The greatest challenge is maintaining our identity – not to end up like any other boutique by simply rolling out the brands’ design. We’re a brand in our own right! It’s also healthy – and it maximises turnover – to find a balance between independent brands and groups, as well as between Swiss, German, Japanese or French watches. We don’t have one top brand, but five. Nomos created a limited edition just for us... We want to avoid being the same boutique you find on every high street in every city. One important point that needs underlining is that all the brands we offer are available both in our physical and our virtual boutiques. The great uncertainty of the future is, what are the brands going to do in relation to retailers? When I hear Zenith’s new CEO, Julien Tornare, announcing that he doesn’t intend opening his own boutique, that’s music to my ears! I think Jean-Claude Biver knows that a mono-brand boutique could never do better than the multi-brand retailers. Customers don’t want to deal with people with tunnel vision. They like to compare and be accompanied for a long time. Today, we’re between two stools, to some extent. We want to grow and we can grow, especially as lots of smaller retailers in Amsterdam have had to shut down; but at the same time we’ve never wanted to develop into a chain. It’s the brands themselves who are asking us to open new outlets. We nearly opened one in London. Now we’re looking to Belgium and Scandinavia. Where does the right balance lie, what’s the right size? We lack space and we’re thinking hard. In any case, we’re not dependent on a tourist customer base, luckily, for example on Chinese tourists, who are volatile. Instead we have a strong European customer base: the Netherlands and neighbouring countries. The disappearance of independent brands is bad for the whole watchmaking ecosystem. Monopolies are never good for the consumer. The global environment remains complicated, between mono-brand boutiques, the grey market and high stocks... I salute the moves by brands such as Cartier, who announce that they will take back unsold stock to avoid fuelling the grey market. Basically, we want to work first and foremost with brands with whom we can build a sound relationship, free from arrogance and with respect and good values. We’ve just introduced Ulysse Nardin and we’re very satisfied. We don’t force anybody to work with us and we’re lucky enough not to depend on any brand in particular.” ABOUT Name: Ace Jewelers • Boutiques: Amsterdam Launch date: 1975 • Category: High and middle-range Brands represented: Baume & Mercier, Bell & Ross, Breitling, Breitling for Bentley, Bremont, Bulgari, Franck Muller, Frédérique Constant, IWC, Longines, Montblanc, Omega, Oris, Parmigiani Fleurier, Rado, TAG Heuer, Ulysse Nardin Website: www.acejewelers.com

US “T A D HE E S CL P TI R I M E I R EN EP - O E TS IE W F ’ O C ES N R ” E

RS LE D WE AN J E V EL R G LE BE , C OV R E , G MO RG D BE , A R OV I A Y G L PH NN DE DA I L A PH

“Founded in Philadelphia in 1916, Govberg Jewelers’ speciality was limited to jewellery. But for the last 35 years, under the direction of Danny Govberg, the name has become synonymous with horology. Today, Govberg operates from their recently inaugurated headquarters in the Philadelphia suburbs and three welcoming showrooms in the Philadelphia region and Cleveland suburbs. Danny recognised years ago that selling new timepieces was only one avenue to support the life of a watch enthusiast, and he developed expert services – such as a highly active preowned watch initiative – to support the evolving needs of the watch consumer. Since then, a dedicated pre-owned buying division has earned the trust of thousands of clients worldwide, and Govberg actively purchases luxury timepieces from private collections and individual estates each day, including many in the form of a trade-in alongside the purchase of a new timepiece. And the company answers its clients’ increasing desire to purchase pre-owned timepieces with an ever-expanding, curated inventory of luxury pre-owned watches for sale. But this model is a reflection of the trust and confidence clients have when working with an established, authorised retailer. We have put in place (and continue to expand) a sophisticated team of watch enthusiasts with an deep understanding of secondary market value, and forward-thinking computer developers and engineers. This allows us to offer services across multiple platforms (plus communication via phone/in-store), meeting the demands of tech-savvy luxury consumers and streamlining the processes of buying and selling pre-owned timepieces. These services are ultimately the driving force for year-over-year growth in sales and revenue.

In addition to watch selling and trading portals accessible on govbergwatches.com, Govberg also offers the ultimate toolbox for the enthusiast – a mobile app designed for collection management, ease of buying, selling and trading timepieces and access to the latest pre-owned inventory and news hitting the watch scene.

Sophistication, connection, influences… The modern consumer is increasingly sophisticated and connected, and digital technology affords exposure to an endless range of influences. 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. Accordingly, Govberg’s evolving business strategy maintains a focus on the end consumer, operating under the premise that time is the number one luxury. Govberg’s services are designed to save the consumer time, and we must be agile and focused as we bring new concepts and opportunities to the marketplace. This agenda is backed by extensive and reliable market data, with an ongoing emphasis on innovation and efficiency. In his personal thesis on ‘luxury commerce’, Danny Govberg sought to define the intersection of traditional bricks-andmortar retail and e-commerce, when the conditions of personalised client service, education, expert counsel and tech-aided convenience are at peak levels. One pillar of luxury commerce is the consumer engagement that takes place before one steps into a showroom, lands upon a homepage or picks up the phone. Through a product-forward video initiative, Govberg has leveraged the expertise of its media team to bring hands-on watch exploration to a global audience; communicating functions, features, provenance and context of new and pre-owned collections – at the reference number level. The digital space affords the flexibility that the consumer expects, so we bring your watch of interest to life on your iPad late at night, on your smartphone at a red light, and at any other moment that curiosity is piqued. Consumers enjoy access to Govberg’s highly-trained, concierge-style associates via phone, email, live chat, in-app communication and, of course, the traditional dialogue at the store level. We focus on environments and opportunities to engage, connect and foster an authentic rapport, and that is achieved with respect to individual communication preferences. This also comprises collector events, casual gatherings, formal brand dinners and ultra-exclusive factory tours and trips; the relationship is fluid and does not require the confines of a store.”

Name: Govberg Jewelers • Boutique: Philadelphia, Ardmore, Cleveland • Launch date: 1916 • Category: High-range and middle-range Brands represented: Audemars Piguet, Ball Watches, Baume & Mercier, Bell & Ross, Breitling, Bremont, Bulgari, Cartier, Ebel, F.P. Journe, Glashütte Original, Graham, Grand Seiko, Hamilton, Hermès, Hublot, IWC, Jaeger-LeCoultre, Longines, Maîtres du Temps, Montblanc, Movado, Nomos Glashütte, Omega, Oris, Panerai, Patek Philippe, Perrelet, Piaget, Raymond Weil, Ressence, Rolex, TAG Heuer, Tudor, Ulysse Nardin, Vacheron Constantin, Victorinox Swiss Army, Zenith • Website: www.govbergwatches.com

”

C C H E ST PT O RE

Sw “R itz YO EI er A UR NVE land W C SE NT AT ON LF IN A G S LA

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LY T T IE GU R N GE VA AI LO NE AL O R G E L’H

“We’ve been a family business for fifty years. Besides the boutique, 35 years ago we took over a vintage watch shop called Au Vieil Horloger. At that time, people bought vintage watches because they didn’t have enough money to buy a new one. It was rare to have more than one or two watches. Today, people don’t hesitate to sell their watch to buy a new one. Behaviour has completely changed, and the vintage market has seen steep growth. It used to be a rather pejorative term! Today, we offer a genuine watch concept store comprising a multi-brand boutique with new models from 15 brands, a vintage area, a service workshop, a gallery, a watchmaking bookshop and even an eatery, the Swiss Made Bar & Grill! We saw that the brands themselves were looking to focus on the higher-quality outlets and had completely revised their distribution network, gradually cutting out all the multi-brand outlets. Three fellow boutiques have already disappeared in our district. If we don’t do something, we’re dead! And there’s no point in staking everything on prices and discounts. Moreover, we want to expand some more. But transforming our sales spaces demands investments running into millions of francs. ABOUT Name: La Maison de l’Horlogerie Boutique: Geneva Launch date: 1967 Category: Middle-range, vintage Brands: Baume & Mercier, Calvin Klein, Ebel, Eberhard & Co, Hermès, Longines, Maurice Lacroix, Mido, Montblanc, Oris, Perrelet, Rado, Raymond Weil, Tissot, Vulcain Website: www.lmdh.ch

We’ve suffered from the proliferation of watch offers on the internet, especially in the vintage niche. But it’s a jungle, and people have had so many bad surprises online, with counterfeit watches or bad quality, that the trend is reversing somewhat and they want to know who they’re dealing with. Today, we’re giving the notion of service new value. If a watch hasn’t been bought from us, we charge for the service. Otherwise, it’s included in the price. We lower our margin, but we make a concession to customers who place their trust in us. Retailers have to stop whining! Of course, the iPhone has changed our lives from A to Z. But we have to adapt if we don’t want to share the fate of candle-makers or travel agents… There’s so much information around: that also makes people want to buy watches more. And digital isn’t everything: why do you think Zalando (a German e-commerce business based in Berlin specialising in sales of shoes and clothing. Created in 2008, it has a presence in 14 European countries) is now starting to open physical stores? We’re not planning to open an online store at all. The problem with vintage is that people look at the top end of the range when they want to sell and the bottom end when they want to buy. We prefer to diversify, for example by making our space available to companies for events or exhibitions. We’re trying to expand our customer base. In short, we have to give it all we’ve got to get the minimum back! As for the brands, what with vertical integration and higher prices they’ve got themselves trapped. Consequently, their margins haven’t necessarily risen… The brands have weakened their own position. We’re the brands’ fighting force, yet they’ve been rather hard on the multi-brand retailers. But they’re starting to like our concept store; five years ago, they thought we were a bit crazy.”

S”

“R T E TH RA TA SH EM NSF ILER O SEL ORMS M W VE US RO S IN T O TO

“Today, retailers are coming under enormous pressure. Consumer behaviour is changing rapidly. More and more potential clients come in to a shop to look at a watch and try it out, then go away and buy one online. Given that retailers are still carrying too much stock and inventory, these unsold watches then end up feeding the grey market. In short, the current model no longer works. What we are trying to do is embrace this new state of affairs, and encourage retailers to become showrooms. They have to embrace their new status. The only other option is to declare war on the internet, and that battle has already been lost. We now offer retailers a starter kit, as part of our launch of the CODE 41 brand. For example, they might take five watches priced at CHF 2,000 each, along with a parallel display leading to an online catalogue, which has the entire collection. When a client buys a watch through our platform, a code is generated which tells us that this sale originates from such and such a vendor, and we can pass on a percentage. Obviously, the margins are smaller than for the traditional system, but on the other hand the retailer has no inventory to deal with, and his risk is reduced. We’re aware that there is always a risk that the client will go away and buy the watch on their own, behind the retailer’s back, so to speak. To counteract this, we have devised a system whereby a retailer can give potential clients a code that entitles them to a 5% discount (deducted from the retailer’s profit margin), but which also connects them to the point of sale concerned. However, the ideal scenario would be for the retailer to order the watch directly for the client, thereby keeping their 35% margin. The aim is also to optimise the logistical side. If a retailer sees that a particular model is selling well, they can choose to keep more in stock. It all depends on how much risk the retailer is prepared to take in terms of physical stock. The obvious upside is that the buyer can take the watch they want home with them straight away. At the moment, the profit margin on stock ordered via conventional means hasn’t changed: it’s around 50% to the retailer. We have surveyed several retailers, and they are aware that they need to find a solution in terms of the growth of e-commerce. In the end, it all comes down to negotiating percentages, as always! But at bottom, what we are offering is a new approach to retail, which as a new brand we are in a particularly good position to do. Established brands are often hampered by exclusivity contracts with distributors in certain territories. Some of them are probably waiting for these contracts to expire to launch their own e-commerce initiatives. Another challenge that we face is breaking down the psychological barrier of those people who believe that it’s not possible to try a watch they have ordered online, and then return it. It will be possible to send watches back to us. The watch is delivered free of charge, anywhere in the world, with a guaranteed right of return. At the same time, the entire thrust of this new approach is to enable retailers to legitimately transform themselves into showrooms, which is what they actually now are, albeit against their will. Alongside that, we have to ensure that the logistical operation runs as smoothly as possible. That’s our response to the physical/virtual retail problem.”

C BY

RE MO 41 D’A ODE C

Read more: the article Retailers Need to Turn into Gallery Owners, by François-Xavier Mousin and Caroline Buechler, Opus Magnum, published in Europa Star Time Business 1/17, explores similar issues.

K C AN ET O D S N ?” D A RY

US “H A O O T H PE R W C M E AT AN A S E IN B R R E

D AN E ER O R DL ST IN NE Y R LI PH O N SO T / K , CE OC FA BL R U E EW , T D R AR AN AM D K

H AT

T IR

“Online watch sales are soaring and they’re not set to stop. But you find all kinds of things on the internet and we feel it’s important to offer a serious approach in the premium segment, with quality guarantees. Moreover, the market lacks transparency, especially about prices, and also quality when it comes to pre-owned and vintage watches, which is our niche. We founded TrueFacet three years ago in a growing online market and with state-of-the-art technology for pricing the watches we sell. We analyse a huge amount of data to set the right price. We offer guarantee certificates that insurance companies will accept, and we service the watches. The watchmaking industry hasn’t yet adjusted to the new digital reality, and traditional distribution is dying. Besides that, the brands have short-circuited the traditional family retailer networks, which had personal relationships with their clients and their own identity, by launching their own boutiques, accelerating their extinction. The result has been a levelling out and homogenisation of watch distribution. Without meaning to, the brands have destroyed the important, strong link between traditional retailers and their customers that had existed for generations, killing a large part of the passion that went into the business, as well as a lot of expertise. Today, the boutiques take orders, they’re no longer genuine vendors. A few brands, like Rolex or Patek Philippe, have been cleverer, preserving or even stepping up their relations with quality, local retailers. And they didn’t follow the rush on China either, and they’ve retained a large American customer base. Today, they’re benefiting from that long-term strategy. Even so, in growing many brands have lost the ability to convey their peculiarities, their capacity to communicate what made them so special, with their workshops in the Joux Valley... At the same time, the watches themselves have become more and more complicated, which has accelerated the disconnection from the baseline customer, especially the younger ones. The latter are very keen on buying preowned watches online at a low price.

The challenge facing the brands is this: how can they act on this ‘secondary’ market in order to preserve their own market? Because their perceived value is at stake via the internet. Today, we have a catalogue of 8,000 watches and we’re sending out the following message to the brands: we can help you, we’ve gathered mass data on people who are interested in your watches, whereas the traditional distribution model has broken down.

Supporting small brands Today, the smallest brands, the independent ones, are obliged to work with agents, which affords them little visibility and slim margins. We want to support these small brands as a priority in the future by introducing an e-commerce platform for new watches dedicated specifically to them, quite separate from the already extant pre-owned model. That will serve them both as a marketing and a measuring tool, gathering very useful data. And maybe even, ultimately, help get them into traditional, quality retail stores! The pathways between digital and physical stores need rethinking. Today, 90% of our customer base is American, but we want to expand beyond the United States. Our main competition comes from person-to-person sales platforms like eBay and Chrono 24. Unlike them, we offer selected watches with service, guarantees and experience. We source our watches from a variety of suppliers; they may be retailers we partner with or industry professionals in 65% of cases, but also private individuals in 35% of cases. We don’t show who is selling the watch, but we authenticate everything. We’re not like Amazon; we try to create a community with more of a ‘family’ spirit. Often, our buyers become vendors. Our sales commission varies from 8% to 20%. Delivery takes three to four days on average. The American market is rapidly becoming digitalised. We’ve noticed that we’re attracting the attention of the brands and industry professionals much more than when we started. It has to be said that the Swiss brands have for years been striving to control their distribution network and today, with the internet, they have the impression that they don’t control anything anymore. But the web has advantages too, especially when you see the proliferation of references and the way stocks are managed, which has done the multi-brand retailers so much harm. We’re a better choice than a ‘liquidator’ because we preserve a certain brand image and guarantee a fair price. We believe that, ultimately, there will be room for both multi-brand retailers and quality digital platforms.” ABOUT Name: TrueFacet Website: www.truefacet.com

“A D M IR O D S I E TO TR ST C RE U H CT R I T A U B PP R U EN E T ” NE I O ED

buyers). Also, to instil strong values in the process, to educate the next generations to be conscious of whom they are empowering by the purchases they make. We are hopeful for the future, and that’s why we exist. But changes will be harder to push through the mainstream market. Brands and distribution have been in a power struggle; whoever wins is down to who gets the customer. A paradigm shift is necessary. Good traditional retailers who add value are still important, but they need to remain relevant to the digital age. Brands need to be more in touch with the market, and consumer demand. I hear this is happening, but I hope they work together rather than against one another. Also, consumer/market demand can drive change. Meaning, education for the consumers is also key. Sourcing information from recognised bodies and media such as Europa Star can play a part. I hope fewer buyers get their ‘intel’ from dealers, grey market traders, or their collector friends who claim to know a lot about watches and the industry. The watch media can exercise more influence, beyond the reluctant industry folks... But people will always love going into shops when the experience is modern, interactive, enriching, eye-opening, problem-solving, welcoming and gratifying. When shoppers buy into the experience, they buy the products. The questions are, ‘what are the new ideas?’ and ‘do they have the budgets?’ I’ve heard about the gallery concept, which is not new – Marcus and William & Son in London have been doing that for a long time. And a lot of retailers need to shift stock, without sell-out, which funds ‘the gallery’. Perhaps a multi-experiential space, adding a drinks lounge / cigar den / augmented reality play room etc. is the type of experience that will help cross-sell watches...? We don’t agree with ‘uberisation’– Uber is not a good company. If you refer to the democratisation of service/product provision, the peer-to-peer distribution model through a platform – we believe in AirBnB, and Farfetch, which maximise use and consumption of under-utilised and under-exploited assets/capacities to provide better value for customers, while connecting people/communities in the process; and this is what Skolorr is offering. Customers are hyper-connected and increasingly mobile. Instead of asking them to visit a fixed physical location, we should bring those services to them where they are. That is the future of retail. It has already been shifting in high fashion, furniture, food, and other industries. Consumers will expect it as a matter of course sooner or later.”

OM R.C RE OR TO OL E S SK L I N IT, ON

“We set up an online shop-front for each brand on Skolorr, once they have been vetted and approved as a partner (to ensure trust, credibility, quality, ethos, etc.). We see the future of our business as running on a fair-trade marketplace model, because the next generations are more socially aware, more globally connected, more individualistic, more entrepreneurial, more digitally at ease with purchasing online (as many luxury consumer studies show). More shoppers question authenticity and provenance. The independents are a good fit for this growing profile, when we match/connect them online. Trust is there, exclusivity is there, provenance is there. When more independents come together on Skolorr, creating a bigger voice, we have a chance to gain more awareness and interest collectively, and more importantly, to inspire change. Buyers will benefit by having more knowledge of the true value derived from a timepiece, vs the perceived value from celebrity endorsements and five layers of intermediaries, and then getting a 30–40% discount. The shift to a more direct distribution (fewer middlemen) structure needs to happen, slowly but surely – it needs to start somewhere, however small. The digital realm will enable that. We employ pioneering marketplace technologies to serve this purpose, and closely follow the emerging technologies such as blockchain, for when it’s more market ready in the future. I believe business is a force for good, and it’s about people. Skolorr as a business advocates win-win along the value chain, to power the primary market where innovation occurs (hence, no pre-owned, no vintage, no buying and selling grey market stock, only direct from the makers to

Name: Skolorr • Launch date: 2017 • Category: High-end independents Brands represented: AkriviA, Antoine Tavan, ArtyA, Brellum, Claude Meylan, Clerc, Czapek, DeWitt, duManège, Fiona Krüger, GoS, Hautlence, Jaeger-Benzinger, Ludovic Ballouard, Manufacture Royale, Olivier Jonquet, Pierre DeRoche, Struthers London, Zeitwinkel • Website: www.skolorr.com 51

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N RO T HU JE C R Y RO I ER Y P T H UR BY ERC M HE

Digital media are playing an increasingly important role in the purchasing process for luxury products in general, and watchmaking and jewellery in particular. Whether by acting as a source of information, through social media, or the official websites of retailers and watchmakers, or by facilitating the act of buying itself, digital tools are playing an increasingly important role for consumers of watch and jewellery products. In view of this rapid and profound change in how decisions are taken and purchases are made in the luxury universe, how are watch retailers responding to their clients’ current expectations – particularly those of the millennial generation, who are more invested in the digital world? What role do retailers play in the multi-channel strategies developed by watch brands? And what is their approach to online sales? This latest chapter of the Mercury Project, which is based on a June 2017 survey of watch retail points of sale in Switzerland, gives a picture of the online engagement of the watch industry’s main actors. It points to a segmentation of the experiences of independent retailers and retail chains, depending on how their sales offering is pitched in terms of price. A comparison with the online activities of Swiss watchmaking companies, for whom strategic positioning continues to be a clear priority, also gives an indication of the opportunities and threats that watch retailers face. 52

CORPORATE WEBSITES GLOSSARY

Even though it is a vital communication tool within the watch industry, the use of a corporate website has not been a priority for all Swiss watch retailers. Two-thirds of watch industry corporate websites are adapted to current digital usage.

• Brand Density Score (BDS): The score takes into account the total number of watch brands displayed in watch & jewellery stores. It indicates the density of the watch brands in any segment, category or geographical area. • Chain retailer: This refers to any group of retail outlets operating 5 or more stores in Switzerland or abroad. Chain stores have similar architecture, store design and layout, and overall choice of products.

Among the 976 watch points of sale that were active in Switzerland as of 31/07/2017, more than two-thirds (68% – Figure 1) operate what are know as “responsive” websites. This means that the size and orientation of all the pages on the site is configured automatically for all types of digital browser (including smartphones and tablets). This makes it easier for visitors to find information (reviews, technical specifications, price, availability) and, for those websites that offer a selection of products for sale online, facilitates payment. As seen in Figure 2, all the points of sale belonging to chain retailers and mono-brand watch boutiques have responsive corporate websites. Website content can thus be publicised more widely by virtue of its integration into a consistent digital strategy, which includes the use of social media. Finally, it should be noted that a significant minority of watch retail websites (17%, rising to 30% for independent retailers – Figure 2) are not configured for current digital devices (including smartphones). These websites are optimised for browsing from a PC, which severely restricts their utility to the millennial generation (those born between 1980 and 2000, who are between 17 and 37 years old today), who are heavily invested in the digital world.

• Economy segment: Market segment of watch & jewellery stores or departments carrying watch brands at a median retail price below CHF 800. • Independent retailer: These are retailers that operate a maximum of 4 points of sale, regardless of location. • Mono-brand or flagship boutique: This specific type of point of sale is featured in the store locator pages of the corporate website of the brand concerned. • Numeric distribution (ND): Brand presence as % of stores in the watch retail universe handling watch brands. • Premium segment: Market segment of watch & jewellery stores carrying primarily, but not exclusively, watch brands at a median retail price higher than CHF 5,000. • Responsive website: Web pages detect the visitor’s screen size (PC or mobile) and orientation and change the layout accordingly. • Value segment: Market segment of watch & jewellery stores or departments carrying watch brands at a retail price below CHF 5,000.

15% of watch retailers have no corporate website

Figure 1 shows that 15% of watch retailers have no official website. This figure rises to more than a quarter (26% – Figure 2) where independent retailers’ points of sale are concerned. While a small percentage (4%) of these do have a substantial social media presence (e.g. a Facebook page) in place of an official website, which would be more complex to manage, these shops, which probably have a very loyal but ageing client base, are out of step with the behaviour of younger consumers, who are highly likely to search the internet for information before making a watch or jewellery purchase.

no website non responsive website responsive website

no website

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ONLINE SALES* Actors in the luxury sector are focusing on online sales as a new marketing channel. In the watch industry, the use of online shopping platforms remains highly segmented according to the retailers’ price positioning. 30% of watch points of sale have an online shop. In some cases, an online shop is included as part of the corporate website. Almost one-third of watch points of sale (30% – Figure 3) have some online sales activity, which in the majority of cases also extends to jewellery. This includes more than two-thirds of shops affiliated to watch retail chains (68% – Figure 4), which are very active in this area, while online sales remain a minority activity for independent retailers (13%), and for watchmakers’ own-brand boutiques (23%), with the exception of those in the Economy sector, offering watch brands with a median price below CHF 800. Economy segment leads online watch retail sales Generally speaking, retailers operating in the Economy sector (70% – Figure 5) are by far the most likely to engage in online sales. The Value segment comes a distant second, with 23% (watch brands with a median price of up to CHF 5,000). To date, shops working in the Premium price bracket (median price above CHF 5,000) have been reluctant to venture into online sales. They represent just 6% of points of sale operating online sales, despite comprising 26% of physical stores in Switzerland. They have developed a different approach, based on informing potential clients online, through social media or blogs, and encouraging them to make their purchase at a watch retailer or in the brand boutique, in order to guarantee exceptional customer service.

SOCIAL MEDIA The growth in the use of digital devices has driven the expanding influence of social media. These new communication channels play an increasingly important role for people seeking information, particularly millennials and younger clients. The approach of Swiss retailers is currently evenly balanced between independent retailers on the one hand and retail chains and watch brands** on the other. 51% of watch points of sale have a presence on several social media platforms. A survey of watch retailers with a social media presence shows that 51% are active on several social media platforms (Figure 6), with Facebook top of the list, followed by Instagram. Looking at Figure 7, which shows this information by distribution network, it is clear that chain retailers (95%) and watch brands** (98%) are the most advanced in terms of social media penetration. By working with experts

and using well-researched procedures, they are increasingly able to benefit from their presence on digital communication networks to dialogue with potential clients and place them front and centre of their commercial and marketing strategies. For many of them, their social media presence has become a core element of their marketing strategy. Independent retailers on the back foot More than a quarter of watch points of sale (28% – Figure 6) have no social media presence, and 21% have a limited presence on a single site (mainly Facebook, which in 2% of cases is used as a substitute for a corporate website). These figures correlate directly with the lower activity levels of independent retailers, as highlighted in Figure 7: 48% have no social media presence, and 36% are active on just one platform (generally Facebook). Low priority for independent retailers While social media activity tends to increase in line with the price segment in which the shop operates, it nevertheless remains poor across all price segments, as Figure 8 (next page) shows: 57% for the Economy segment (median price up to CHF 800), 47% for the Value segment (median price up to CHF 5,000) and 31% for the Premium segment (median price over CHF 5,000). Up to now, the use of social media seems not to have been a priority for this segment (contrary to the strategies of watch brands* and chain retailers), which represents 52% of the retail offering in Switzerland (source: Brand Density Score – 2017 Watch Retail Market), particularly for points of sale operating in the Economy and Value segments. Looking at those independent retailers who are most heavily engaged in this form of communication, which means mainly those in the Premium segment (69% of whom have a social media presence, 27% on more than two platforms), a detailed analysis of the content they share nevertheless reveals their role as a vehicle for the multi-channel strategies deployed by the watch brands they carry, as well as for the promotion of their own stock, particularly jewellery lines.

* The websites and online sales pages surveyed by the Mercury Project are connected to retailers’ corporate websites. ** The watch brands represented in this distribution survey are only those with mono-brand boutiques.

POS without onlines sales activity POS with onlines sales activity

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M E RA M O F BL E ER C E

Sc TH ena JU E I rios E- N M P C G EN O L ET P BY

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I decided to play Candide, acting as if I knew absolutely nothing about watches. I put myself in the shoes of all those people who decide to buy a watch online, scouring the web for the best and cheapest deal. Be warned: it’s a jungle out there.

AR D While I was strolling around the centre of Geneva I spotted a Tissot T-Touch, and I really liked it. When I got back to my home, out in the sticks, I typed “Tissot T-Touch” into my browser’s search bar. The first site that came up was the official Tissot site, which now has the entire collection available in a new online shop. Thirty-seven different T-Touches were all neatly laid out for me to choose from, with a detailed description of each watch, a spec sheet and a video. They all looked pretty good to me. I finally settled on a Tissot T-Touch Expert Solar, advertised at CHF 995. But before clicking on the checkout button, I decided to see whether I could find it cheaper elsewhere. I landed on the website of a major retailer, and found the exact same watch, with the same titanium case, but this time at CHF 1,125! The description was unhelpfully brief, there was no reference number, and in fact I couldn’t even tell if it was the same model or not. Never mind. I retraced my steps and had another go. I visited ricardo.ch (the Swiss equivalent of eBay) and found a brand new watch in its original packaging, with guarantee, for CHF 599. The reference wasn’t quite the same (Reference T091.420.47.057.01) but it looked good, it was also in titanium, had all the same functions and was nearly half the price. But I hesitated. Could I really trust it? Who was the seller? He was offering two other similar models. Was he a retailer trying to move surplus stock? Was this what’s known as the “grey market”? And what about after-sales service? I returned to the official Tissot site, and looked for this new reference number. Yes, it was there, with an official price tag of CHF 995. I dug deeper, this time searching explicitly for this reference. Amazon was offering it for USD 1,195, with free delivery to Switzerland. I chuckled to myself and moved on. Ebay had one for USD 774.99, also with free delivery. Better, but not

Reference T091.420.46.051.00

B Scenario: Beset by doubt

better than the one I’d found on ricardo.ch. I persevered, and eventually ended up on Tissot’s US site, which was offering the watch for USD 1,195 which, at the exchange rate on that day, worked out at CHF 1,156, or more than CHF 150 more than the official Swiss price. I scratched my head. Should I keep on looking? Or was I just wasting my time? I got up and went to fetch a beer from the fridge. CHF 599, eBay... It looked like a good deal... should I take the plunge?

C Scenario: The ignorant millionaire I’m an extremely busy man. I’m constantly travelling. I have plenty of money, but one of my business associates mentioned to me that the watch I usually wear is a heap of junk. He persuaded me that what I really needed was a proper chunky Swiss watch, the complicated mechanical kind. Not to tell the time, obviously. What I need it for is to show people that I know a thing or two about watches (which I don’t) and that I’m a person of consequence. It’s an important status symbol, he told me. My friend gave me a few brand names to look out for but I can’t remember what they were – they were too complicated. I have a little free time, so I’ll have a look on the internet. I do remember one name my friend mentioned: tourbillon. So I type in: “buy online tourbillon watch”.

The first site that comes up is Chrono24. There are 45 pages, and 2306 watches. Good grief. Eye-catching watches – at eye-watering prices. The first one on the page, flagged with a special “TOP” label, is an Audemars Piguet Royal Oak Offshore Tourbillon Chronograph Rose Gold (I told you they were difficult to remember) with a price tag of USD 150,000. A mere bagatelle! But I have to say that it does look the part. I look a little further, and my head starts to spin. There’s a Patek Philippe Grand Complications Minute Repeater for USD 625,000, but it looks pretty plain, and I can’t even tell if it has a tourbillon. There are loads more, some that look like space capsules, some decorated with tiny paintings. I don’t even know where to start. Oh, but here’s one that catches my eye. It’s a Greubel Forsey 97805 GMT Tourbillon 43.5 mm in Rose Gold – on Black Alligator Strap with Anthracite Dial. It costs USD 330,000. You can tell it’s a complicated bit of kit, and I really like the little round planet earth, which I think is supposed to tell the time in all the different time zones. It looks great, it stands out, and it might be useful on my travels. I’ll have a look and see if I can find a similar one, but a bit cheaper. I come across a site called “Gemnation”, which is asking double the price: USD 605,000! But they do throw in delivery and offer to adjust the strap. Which is cool. But wait – does that mean that the other one, the one for USD 330,000, is in fact second-hand? I go back. I was right. According to the seller, EssentialWatches Inc., it is “Certified Preowned” with “box and papers”. And the advert states: “As it is sold as a used watch, in that case you will receive a 1 year warranty. You CAN NOT expect and WILL NOT receive the factory Greubel Forsey warranty on any watch we advertise. We are the sole warrantor of ALL Brands sold on our website.” But that’s still quite a lot of money. Can I trust the site? And if all that complicated mechanical machinery stops working, what am I supposed to do? I need to talk to my friend. It might be better to try it on before I make up my mind, see what it looks like on my wrist. But... what the hell, life’s too short. I’ll take a punt. My gold card can take it. And, if the worst comes to the worst, I have a good lawyer.

D Scenario: When the Boy Friend catches your eye

I came across it when I was leafing through a magazine. The Boy.Friend by Chanel caught my eye immediately. I’m not particularly into watches, but there’s something about this one that appealed to me straight away. It’s quite discreet but very stylish, and you can wear it day or night. Also, I can’t stand girly watches covered in flowers and butterflies. I started searching on the internet. I typed in “Chanel Boy Friend” and found myself on the Chanel website. There were 27 models available, from €4,000 to €87,000, although at the top end they had rubies and diamonds. I don’t really need precious stones (I can’t afford them, in any case!) so I went back to the first page. €4,000 is already quite a lot of money. But I deserve to treat myself once in a while!

On reading a little further, I realised it was a quartz watch. I think I remember someone telling me that quartz was practical but mechanical was better. A mechanical watch might even

be a good investment, I’ve been told. It will keep on working, and I can pass it on to my daughter one day. I looked all through the site but I couldn’t find a mechanical version. Oh well, never mind. But I will see if I can get a better price. After spending a whole afternoon surfing the web, I found one for €3,790 from Fabel GmbH in Berlin, but after adding €76 for delivery it wasn’t really worth it. At that price, I might as well go to a shop and try one on. I looked further and found a whole load more, guaranteed brand new and unworn: €2989 from Prestige Time LLC in the US; €2662 from Jomashop in Brooklyn; €2472 from Tsim Sha Tsui in Kowloon with free delivery... Could I do any better? I had a look on eBay, but all the Boy.Friend watches appeared to have sold out. Pity. So I typed in “Chanel Boy Friend used” but after a good rummage around I didn’t find a single one. Maybe that’s a good sign? Who knows. So what should I do? Order from Kowloon? I dug a little deeper into this Tsim Sha Tsui. The watch was new and unworn; it came with box and papers, plus two years’ in-

E Scenario: Vintage value I’m young, 22 years old, and I have some friends who are mad about vintage watches. I started to take an interest too, and picked up a few things from looking on the internet, Instagram, and browsing the forums. I’m not an expert by any means, but I do have a few ideas. I decided to buy myself a watch. It had to be a watch with a history: a mechanical watch, a 1970s chrono, for example, in an original colour and with a square case, something cool, a bit of a conversation piece.

ternational guarantee. Although they advertised free delivery, in fact delivery to Switzerland cost €98, making a total of €2570. Would I need to pay customs charges on top of that? And what about VAT? I had no clue. Is there anyone I can ask? Well, this evening I’m going to a Chinese restaurant with some friends. Maybe someone there can give me a few pointers...

I typed “vintage 1970s chronograph” into my search box. The first site to come up was eBay. I immediately spotted a chronograph that had everything I was looking for: shape, colour, everything. Also, it was a Valjoux 7734. I’ve read a lot about Valjoux and it’s all good. But €450 is quite a commitment for me. I was hoping to shell out no more than €200. I took a closer look, to see if it was really worth it. But to my surprise, the watch was unbranded. There was no description. It didn’t smell quite right. My friends had warned me to be careful. You find all sorts of stuff on eBay, some good and some utter rubbish – watches cobbled together from spare parts, fakes, junk movements... I backed off. But a little further on I found another one, and this time it looked pukka. It was a Lorenz Valjoux 7734 Chronographe Funky 1970s Racing Panda with tachymeter scale, for €268. It had a very detailed description, and the seller was clearly a pro. He called himself “fullywound”, and he was based in Folkestone in Kent. The ad even gave a telephone number, and the buyer had two weeks to send it back if not satisfied. I think this might be the one. But first, I see what I can find out about Lorenz. I go onto the Chronomania forums, and type in Lorenz. It doesn’t take me long to learn that Lorenz’s must-have watch is the Aquastar, and prices are going through the roof. I even find an Aquastar on Hodinkee (that’s a serious website, according to my mates), but the price is €5,000! Way out of my league. But I’m reassured, and I return to my funky chronograph on eBay. €268! It’s looking better and better. I should really Skype my friend, who’s an expert on 1970s chronographs, and find out what he thinks. But in the meantime I’ll add it to my Watch List. You never know. I might have sniffed out a bargain, and I’d hate for someone else to beat me to it!

Have you had an interesting e-commerce experience – whether positive or negative? Perhaps you’d like to share it with Europa Star’s readers. Write to us at contact@europastar.com 58

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CLAUDIO D’AMORE designer and founder of the brand Code 41 “The ‘Swiss-made’ label does not defend Swiss values and expertise. Even less does it protect Swiss subcontractors and their employees, since it can be applied to watches for which the majority of components are sourced abroad. A consumer buys a Swiss watch believing that it’s manufactured entirely in Switzerland: that’s downright deception. Are those the values we’re defending? Swiss-made watches are of high quality and appreciated the world over for their excellence. Not because they’re manufactured entirely in Switzerland, but because our real expertise resides in the extremely meticulous technical and aesthetic design, high quality standards, and extraordinarily skilled coordination of Swiss and foreign manufacturers. The ‘Swiss made’ label does not represent reality. It can be applied equally well to entry-level watches made mostly with foreign components as to high-end watches produced entirely in Switzerland. To be absolutely logical, you’d have to add a percentage before the ‘Swiss made’ to indicate the truly Helvetic share...

But it might be more judicious to step back a little and realise that today, the value of a watch is not represented by its origin. Quality is no longer exclusive to Switzerland: there are good and less good subcontractors both in Switzerland and elsewhere. We have genuine expertise, genuine values and real value added: that’s what we have to promote through our product, while explaining our design and manufacturing choices. It would be more accurate (and amusing) to speak of ‘Swiss brain’ rather than ‘Swiss made’. We believe that the only alternative is transparency. Consumers want authenticity, they want the real story, without the gloss. That’s why we created Label TTO, standing for ‘Total Transparency about Origin’. Every one of our timepieces comes with a kind of ID card, which is available online. It shows the precise origin of every component and every operation. Of course, the label is open to other brands. Our watches are made up of Chinese components, Italian leather and Swiss and Japanese movements that we chose for their special features and excellent value for money, not to meet the ‘Swiss made’ criteria.”

More on the question of “Swiss made” from another opinion leader in the next issue of Europa Star!

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It is a textbook example of the watch industry revolution that began in the early 2000s. Maurice Lacroix, the epitome of the successful independent brand – the brand of your first ‘luxury’ watch, decided to move upmarket and go for vertical integration – a strategy that met with initial success, then went awry. Today, Maurice Lacroix is getting back to its grassroots and playing on the quality-price ratio to charm primarily the middle class – two themes we dealt with in great detail in our first two features this year. As the old adage says, when you cut yourself off from your roots, you risking losing your soul – and your customers... The time has come to do something about it!

“

This is our plan: to stay exactly where we are! The objective: consistency and continuity!” David Sanchez, product manager at Maurice Lacroix, now has a clear roadmap that he intends to stick to: to be the champion of ‘perceived value’ in the CHF 1,000-3,000 segment. Originally positioned at the entry level, the brand wanted to move upmarket and is now coming back to much more affordable products. The manager is stoical in the face of misfortune: “We learned a lot from our brief stay at the top end of the market, and we’re applying it to our current products. We’re concentrating on our flagship models, Aikon and Pontos. We’re also reducing the number of products we made: we’ve come down from 380 to 250 and our long-term objective is a collection of around 180 watches.” A grand exercise in strategic repositioning to reboot its commercial success. Lessons have been learned: Maurice Lacroix is a high-volume brand that should be playing in the value-for-money arena. So, surprise – yes, but a different kind of surprise: “We want customers to pick up an Aikon and say ‘what, is that all?’ when the retailer says its costs CHF 850 francs.”

An original success story Founded at Saignelégier in the canton of Jura, in 1975, right in the middle of the quartz revolution, Maurice Lacroix was the brainchild of Desco von Schulthess, a Zurich-based company that produced private-label watches for the watchmaking industry. Since 1989 and the buyout of Queloz, the brand has been independent where its watch cases are concerned. Maurice Lacroix gradually established itself as an independent brand of repute that did some production in-house, enjoying healthy growth and conquering international markets. Germany is its traditional stronghold. “What made Maurice Lacroix so successful in the 1990s and the early 2000s was that it made a good product for the price,” underscores its managing director Stéphane Waser. “We had to fight hard, because we weren’t a marketing heavyweight; instead we often represented the retailers’ insider tip for their customers.” Between 1990 and 2003, the Calypso (which was the inspiration for the Aikon model) turned out to be the greatest success in the brand’s history in terms of volumes sold.

brand, which it announced in the summer of 2015 but has not yet succeeded in doing. “Maurice Lacroix is a business of great value and – above all – a valuable brand. DKSH won’t sell it below value,” Stéphane Waser points out. The ideal scenario for the brand would be a purchase by an investor whose principal line of business is watches. In the meantime, DKSH has sold its other watch brand, Glycine, to Invicta Watch Group. It has also terminated its involvement in a joint venture with Zino Davidoff. Watch case manufacturer Queloz is also up for sale. As for Manufacture des Franches-Montagnes, another cog in the little watchmaking cluster created by DKSH, it will be shutting down this year...

A return to former glory? Like a tree after the storm, Maurice Lacroix is now counting on its remaining roots to put out new shoots. With more modest ambitions, the company now faces a challenge of no minor proportions: will it achieve its former glory? Because Stéphane Waser, in the meantime, other companies have jumped into the managing director of Maurice Lacroix breach left by this historical champion of In the early 2000s, there was a sudden affordable watches. Longines, TAG Heuer, “The Aikon must change of direction: in a lucrative market, Frédérique Constant and Raymond Weil the decision was made to position Maurice are some of the names that have put down be 15-20% cheaper Lacroix in a more upmarket niche as well. certain roots in the terrain deserted by the than comparative That meant investing huge amounts, which brand from Saignelégier. models. Since we culminated in the launch of their first inBut Maurice Lacroix is making an ordered house movement in 2006. The brand kept comeback, underlines Stéphane Waser: “All don’t have the same on innovating, producing watches that those strategic changes have helped us acmarketing budget were striking both aesthetically and techquire enormous experience in the dynamics nically. The pinnacle of its achievement of the different price segments in the watchas our competitors, was the launch of the square movement, making sector.” It has been developing one we have to be ultrathe Powerlite alloy and a silicon escapekey skill in particular for the past two years: competitive to stand ment. By that time, the Masterpiece colbranding, with the aim of raising perceived lection had become the cornerstone of value. “We still have our key assets: we’ve deout above the rest.” Maurice Lacroix. The stars seemed to be veloped 14 in-house movements, we’re the shining favourably on Maurice Lacroix. Swiss-made brand with the greatest number of Red Dot Awards for design and we’re present in 2,200 sales outlets in 65 countries…” DKSH and ambitions in Asia The brand is already rethinking its quartz collections that it had neglected: they accounted for only 40% of sales three years In 2008, Maurice Lacroix sold its distribution rights in Asia to ago, but the objective is to attain 50% this year. “Even in Asia the Zurich-based international giant DKSH (turnover in ex- we oblige our retailers to offer the Aikon and quartz is selling cess of CHF 10bn). DKSH bought the brand three years later well, although we thought it was more a market for mechanat the time when all the watchmakers were making a rush for ical watches. Our customers are looking for classic, versatile, China. “It was a marriage of convenience,” Stéphane Waser wear-everywhere watches. casual watches in other words.” recalls. “DKSH is the grand specialist of distribution in Asia, The accent is on the network of retailers. As for their sponsoring and Maurice Lacroix wanted to develop into the Far East.” contract with FC Barcelona, it has not been renewed. But in 2014, storm clouds gathered over the luxury brands in “Our ambition now, whether for quartz or mechanical watchthe Asian skies. That marked the end of the golden years for es, is always to be among the first-choice brands when it the watchmaking industry in China; in fact only since early comes to price. The Aikon must be 15-20% cheaper than comthis year do Swiss exports seem have found the way back to parative models. Since we don’t have the same marketing (much more moderate) growth. DKSH, whose core business budget as our competitors, we have to be ultra-competitive is not watchmaking, rapidly took the decision to sell the to stand out above the rest.”

The Aikon, a new interpretation of Maurice Lacroixâ&#x20AC;&#x2122;s bestselling Calypso of the 1990s.

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couple of months ago I attended a society wedding in London where most of the men looked like extras from the movie Four Weddings and a Funeral in their morning dress, and the ladies wore large floral hats that gave the impression they’d been created from leftover exhibits at the Chelsea Flower Show. Unless you are a permanent part of this smart set and receive regular invitations to their betrothal rituals and own your own morning suit, a visit to Moss Bros. is essential in order to rent a white stiff-collared double-cuffed shirt and a morning suit comprising dark grey striped trousers, light grey waistcoat and a black jacket with tails that hang down to just above the back of the knee, thus giving it the sobriquet of a ‘penguin suit’.

In the horological wedding world, outside the U.K., it’s more mix and match and the only accessories that are de rigueur are wristwatches – at least they were at the couple of ceremonies to which I’ve been invited. As soon as the first welcome glass of bubbly is consumed, and everyone has oohed and aahed in appreciation of the bride’s dress, it’s down to who’s wearing what on their wrist. Timepieces are taken off to better appreciate the design, workmanship and movement (if it’s visible), and if not you are usually regaled with the impressive technical details by the owner. Sometimes the pros and cons of these watches have already been admired at some other event, since the watch community is relatively small, but for true aficionados it’s usually a non-consumable feast. So the thought struck me: why doesn’t someone create a Moss Brothers- style watch rental boutique, an Avis or Hertz rent-awatch outlet for the discerning watch wearer, for these special occasions? I know there have been efforts to offer renting services, but as I recall it was for a much lengthier period, with the purchase option at the end of the rental period. Instead of unbuckling one’s all too familiar Omega Speedmaster, TAG Heuer Monaco or Breitling Chronomat B01, you could rent a Patek Philippe Nautilus in white gold, or a rose gold Perpetual Calendar, an F.P. Journe Tourbillon Souverain Remontoir ‘dead seconds’ in platinum, or even a Richard Mille RM11-03 Automatic Flyback Chrono Titanium if that’s your style. The ladies could try Patek Philippe’s diamond-set Twenty-4 in rose or white gold, or one of Van Cleef & Arpels’ Poetic Complications with butterflies or their Pont des Amoureux, or La D de Dior Précieuse with emeralds, sapphires or rubies. You pays your money and you takes your choice. There would be a wondrous buzz of excitement at the wedding reception and guests could break the monotony of the never-ending platitudinous speeches and sobbing mothers and daughters and concentrate on the more important pleasures of watching time pass. As weddings continue to be popular this may be a means for over-stocked retailers to supplement revenue with the eventual possibility of it being a stepping-stone for wedding guests to eventually upgrade their wrists and help the impoverished retailers in today’s ultra-competitive market. Glad to be of help.

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A TC LF Rembrandt, Slaughtered Ox, 1655

he English word “retail” has come a long way from its first recorded use, sometime in the 14th century. It comes from the Old French verb retaillier which means “to cut, trim”; thus, a retail was a “piece cut off, shred, scrap” and the word gradually acquired the sense of “selling in small quantities or parcels”. Back in the 14th century, however, this “selling in small quantities” did not take place in shops as we would recognise them today. Tradesmen would sell their wares to customers directly from their workshops, or from a stall at a weekly market. It’s easy to imagine that the more successful among them might decide that business would be better served by sparing their customers the noise, smells and dirt of the workshop, and choose to conduct their transactions elsewhere – in an adjoining porch or lean-to, for example (German Schuppen = shed, French échoppe = booth or stall). And that is, possibly, how our shops evolved. Of course, in American English the word “shop” more frequently designates a workshop, while “store” is preferred for the traditional retail outlet. This one’s easy: it comes from the Latin instaurare, to renew, in the sense of keeping goods fresh while in storage. The term “boutique”, now understood to be a rather fancy kind of shop, has a similar history, though it comes through Greek rather than Latin – apotheke: storehouse. These days, the route by which goods are transferred from the person who makes them to the person who will ultimately use them is generally less direct and more intangible, particularly where manufactured goods are concerned. It’s not simply a matter of stepping into a leather-worker’s workshop and asking for a belt. And the experience of shopping doesn’t necessarily involve any shops. This was already the case in the mid-20th century, when the concepts of “telemarketing” and “telesales” began to take off. The tele- part (from Ancient Greek tele: at a distance, far from) was perhaps originally intended to gloss over the more unglamorous aspects

of the sales role by association with the excitingly modern telephone. However, it probably didn’t take anyone long to realise that sales were still sales. Towards the end of the 20th century, the magical letter “e” (for “electronic” – which now sounds almost endearingly old-fashioned) was pressed into service to rebrand the supposedly obsolescent concepts of sending letters (email), reading books (ebooks and e-readers), stashing your money (e-banking) and selling stuff (e-commerce and etail). The fact is that books are still books, and money is still money; all that has changed is the medium by which they are delivered and exchanged, and even that is, in most cases, just an additional option, rather than a replacement. The “tele-” and the “e-” (and, for Apple, the “i-”) are like little lexical helium balloons designed to self-consciously lift words out of the material and onto a more ethereal plane. The fact that we often feel obliged to add the qualifiers “brick-and-mortar” or “dead trees” or “snail (mail)” shows that those little balloons are already unnecessary. Retail is still “the sale of goods to the public in relatively small quantities for use or consumption”, regardless of whether the customer is in a wood-panelled boutique in the Place Vendôme or on their iPad, in their pyjamas.

A last word to start

THE LAST OF THE MOHICANS THE OUTRAGE OF A SMALL RETAILER BY PIERRE MAILLARD

s part of our wide-ranging survey on the state of watch retail worldwide, we spoke with many retailers, both multi-brand and independent, as well as consultants, experts and e-commerce specialists, but we didn’t really touch upon the plight of small local watchmakers, a species rapidly approaching extinction. One small watchmaker, who has operated a tiny 20m2 shop in the centre of prosperous Geneva for more than forty years, alerted us to this omission with a salutary (metaphorical) slap in the face. He represents three mid-range Swiss brands, one of them for four decades, as well as selling second-hand watches and jewellery. He also buys gold for scrap – “That’s my lifeline,” he readily admits. He is already past retirement age, but continues to open up his small shop every day. “Oh, it’s not for the money. I don’t really make money these days, but I love my work as a watchmaker. If I wasn’t doing that I would get bored.” But the one thing that really bothers him is “the contempt with which the brands have treated us, the little people. It hasn’t always been like this. We may be small, but they used to treat us with respect. We were considered partners. Small streams make big rivers. Today, not only are we ignored, but they’d actually prefer it if we disappeared.” In his opinion, things have got significantly worse over the last four or five years. “In the past, the brands were scrupulously fair. I’ll give you an example. A client saw a watch in my shop, tried it on and liked it, but he didn’t buy it. He telephoned the watch company, told them he’d seen such-and-such a watch in my shop, and said he wanted to buy it from them direct. The company sold him the watch and spontaneously sent me my retail commission! Everything was done on trust.” To hear him talk about it, this spirit of fair play is long gone. “They began by chipping away at our margins, then they opened their own shops which offered every possible watch, then came the internet. Deliveries got slower and slower, and more than once I missed a sale because the watch was never delivered, or it was delivered too late for the anniversary that the watch had been ordered to commemorate. They knew what they were doing; they did it deliberately because they knew the client would go to their own shop or their website, and they could keep all the profits for themselves.” The same goes for after-sales service. “It has become more difficult to get hold of parts. Sometimes it’s impossible. It’s not a ‘service’ any more, it’s become a ‘profit centre’, as they call it. For clients, the cost has doubled or tripled. And don’t get me started on turnaround times. Clients wait weeks and pay ridiculous prices, when I can do the same thing in a day. And I’ll even make you a coffee while you wait!” Will he ever sell his shop? “Mission impossible. We’re the last of the Mohicans.”

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SUBSCRIBE TO EUROPA STAR MAGAZINE www.europastar.com/subscribe | 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 PUBLISHING / MARKETING / CIRCULATION Nathalie Glattfelder, Marianne Bechtel/Bab-Consulting, Jocelyne Bailly, Véronique Zorzi BUSINESS MANAGER Catherine Giloux MAGAZINES Europa Star Global (Europe & International) | 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 2017 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. Subscription service |Europa Star Time.Business & Time.Keeper | 5 issues | Worldwide airmail delivery CHF 90 | Subscription orders via: europastar.com/subscribe | Enquiries: contact@europastar.com ISSN 2504-4591 | www.europastar.com |

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Tambour Horizon Your journey, connected.

Editorial

AUTOMATION

AND CALCULATION BY SERGE MAILLARD

P.S.: In the meantime, what is Richemont up to? The luxury behemoth, more committed to the top end of the watch market, has opted to bring together several areas of expertise – most notably the artistic crafts – under one roof at its new Geneva campus. The group is also pushing through its digital revolution, a move that has encountered some internal opposition, which George Kern’s hasty departure has done little to ease. The group should take care that this focus on externals doesn’t allow its rivals to outflank it in terms of pure mechanical innovation.

Zenith Defy Lab

ll the marketing hype that seems to preoccupy the narrow little world of watchmaking more and more has helped to bury news of two upheavals that are changing the face of mechanical watchmaking in 2017: its ever-closer fusion with machines, on the one hand, and with science on the other. Or, to put it another way, automation and calculation. This has nothing to do with the smartwatch revolution, which some people believe will be the next big watchmaking shift, forty years after quartz turned everything on its head. No, we’re talking about a revolution of the mechanical watch itself. In a year dominated so far by financial troubles, the mechanical watch is undergoing a profound transformation. The changes are perfectly illustrated by two ground-breaking watches launched this autumn by the Swatch Group and LVMH: Tissot’s Swissmatic and the Zenith Defy Lab. Le Locle may not be Silicon Valley, but the sleepy Swiss backwater has nothing to be ashamed of! The watch industry’s marketing campaigns continue to bang on about craftsmanship (with justification, in some instances), but does anyone really believe that, ten or twenty years hence, there will still be any human input in mechanical watches under CHF 3,000? The Swatch Group, with its democratic and industrial roots, is pushing automation even further, particularly in its two highest-volume brands, Swatch and Tissot (which between them produce around 15 million watches per year – half of all Swiss-made output). Swatch’s innovative Sistem 51 has been adapted into Tissot’s new Swissmatic, made on an entirely automatic production line (see p. 68 for a look under the hood). The result is an attractive price, a single screw and a laser-adjusted escapement. The other hightech breakthrough comes from LVMH, a group hoping to reconcile watchmaking and science through its highly ambitious R&D division, under the leadership of the fiendishly talented Guy Sémon, whom we had the pleasure to meet (see p. 20). The heart of the watch, the Huygens escapement, whose theoretical premises owe more to intuition than to science, has been completely redesigned with the aid of advanced mechanics. In this issue we provide an in-depth look at the “Sémon oscillator”, made from a single piece of monocrystalline silicon, found inside the Zenith Defy Lab. This new technology will also make the group less dependent on the Swatch Group and its Nivarox balance springs. So, on the strength of these two examples – and leaving aside the element of craftsmanship which, with its freight of human imperfections, will always play a part in fine watchmaking – the mechanical watch of the 21st century will be “simplified in both complexity and assembly”; it will be high-tech and made by robots on the one end, and fully playing the “human card” on the other.

Twenty years ago, watchmaker FĂŠlix Baumgartner and artist Martin Frei launched URWERK. With the UR 101, they introduced the concept of satellite mechanisms and launched a new wave of watchmaking. Their secret was absolute consistency in their approach, the coherence of their unique style, and an obsession with chronometric rigour.

UR 101 & 102

1997

UR 103T

2007

UR 202

2009

UR 110

2009

UR CC1

2011

UR 1001

UR 210

2012

UR 106

2013

UR 105M

2015

2016

EMC2

2017

105CT

They also radically changed the way that time was read, designed a new orbiting satellite mechanism and explored the possibilities of cubes and retractable hands. Plus, they broke down the stylistic codes of watchmaking: their watches could be worn with jeans, tweeds or ultraurban attire; they might look like spacecraft or some kind of mechanical jewellery from goodness knows where...

For 20 years, Urwerkâ&#x20AC;&#x2122;s two creators have been osmotically imagining, dreaming, travelling, meeting, designing, calculating, building, testing, machining, assembling and refining watches that have already left an indelible mark on 21st century horology. Happy birthday. (PM)

THE OBJECT: Spyglass “This spyglass is a good luck charm – and a reminder that you should try to take the long-term view. My wife always tells to me ‘step back a little’, especially at difficult times! She’s the one who gave me this antique object. When I left Hong Kong to come back to Europe this year and take up the reins at Zenith, I added it to the things I needed to take back to Switzerland with me for my new assignment!”

Turning point

JULIEN TORNARE

THE TWELVE LABOURS OF ZENITH

BY SERGE MAILLARD

Le Locle-based Zenith did not jump on the Chinese bandwagon in the course of the past ten golden years, and did not enjoy the same growth as its peers. Now, the new CEO intends to cash in on this ‘moderation’, which defined the manufacture while others succumbed to delusions of grandeur, and start afresh on a sound basis. Wishful thinking? Europa Star interviewed him. Geneva-born Julien Tornare has spent his entire career developing sales and markets for watch brands, firstly with Raymond Weil, then for seventeen years with Vacheron Constantin, initially in the US where the brand was on the brink of extinction, and then in Hong Kong where he had the opposite task of taking an already strong brand to yet greater heights. In other words, Zenith’s new CEO experienced the rise and then rapid fall of Chinese demand from the inside. And that’s no small advantage for 45-year-old Tornare, the new protégé of Jean-Claude Biver, who for the first time is entering the boardroom of a watchmaking brand and the greatest challenge of his career: that of turning Zenith around. For the initiated, there’s not a shadow of a doubt: the brand is a little watchmaking gem. But in recent years the wider public has had eyes rather for megabrands Omega and Rolex, which are in more or less the same price bracket. How to compete?

Photograph: Fabien Scotti | Arcade Europa Star

According to Le Temps, last year 30 million francs were wiped off the brand’s previous annual sales of 80 million francs. So it’s back to square one. At the same time, the brand is possibly the most talked about this year in the watchmaking sector, having found itself in Jean-Claude Biver’s crosshairs. He sees it as the third instalment in his LVMH trilogy, following his close and careful management of Hublot and TAG Heuer – especially since the launch of the Defy 21 at Baselworld and the DefyLab this autumn, both intended to relaunch the El Primero ‘legend’. We talked with Julien Tornare about two topics: business and their new watch products.

BUSINESS What’s your diagnosis of Zenith, a few months into your new post? I’ve presented a status report to the LVMH Group. For me, it’s a magnificent brand that’s been a part of the watchmaking landscape for 152 years, a brand for which I – like many other industry insiders – have enormous affection. But behind all that, you still have the impression that it’s never really taken off in terms of sales, marketing and desirability in relation to the end customer... It’s crucial to find a way to remedy that. We seem to have been hearing this kind of discourse from Zenith forever. Yet it’s a brand that has so much going for it, a history and products that other brands dream of having and, despite everything, top-calibre managers – but the take-off announced for so long has never happened, despite a golden ten years for the industry! Why? It’s difficult to say. One thing did not work in the brand’s favour – lots of instability and changes at the top. That was reassuring neither for the retailers nor the end customer. It’s vital today to rationalise the brand structure: far too many models, references and calibres have been launched. In short, there’s been too much dispersion. The watchword today is concentration, on four lines of products. We have a vision for the next five years. And we’ll stick to it, I give you my word! Everybody wants stability at Zenith. And then there’s a second aspect. There was period when the watch brands with the longest history found themselves entrapped in that heritage. Heritage can be reassuring, but a bit boring and dusty... In reality, few brands have been able to prevent their history from becoming a ball and chain, a gilded cage. But during the golden “Chinese” decade the dust was swept under the carpet, because Chinese customers were discovering quality watchmaking and bought everything at any price without asking too many questions. Many classic brands, whether part of the Swatch Group or Richemont, played on that – their heritage – with their new Chinese customers, so much so that they neglected their local customers. In the meantime, the tastes of those customers had moved on and become more contemporary, and they also demanded prices in line with the product’s real value. The Chinese customers were a bad benchmark, because they could afford to pay crazy prices. Those brands lost ground with their local customer base. The dramatic fall in the Chinese market put an end to that system. Inversely, other brands, less geared to China, had to stay strong with their local customers. They got more contemporary, gained more punch, became more competitive and today, they’re the ones who came off best. I’m thinking especially of Audemars Piguet.

But Zenith doesn’t figure in any of your case studies: it isn’t one of the brands who jumped on the Chinese bandwagon, and it isn’t one of those that developed a much more contemporary image either. No, we didn’t take advantage of that, it’s true. If Zenith had jumped on the Chinese bandwagon, it would no doubt be making five or six times the turnover it’s currently making in China. But the good thing is that we’ve kept prices at a reasonable level and are not, like others, having to cut prices in China by around 40%. We’ve missed the first wave of Chinese customers, but we’re not captive to them. So we’re going to concentrate on the new generations of buyers. Our priorities in the years ahead will be China, the United States and Japan. In Europe, most brands sell huge quantities to Asian tourists. So if you’re strong in Asia, you’re bound to sell well in Europe...

But there you go again – China! Precisely where the others fell down, like you explained… We can’t afford to ignore Chinese customers. They’re still a driving force for the Swiss watchmaking industry!

You’ve opened a few of your own boutiques – though far fewer than other brands. Today, the multi-brand retailers are having a hard time of it (editor’s note: read our feature on this in our folio, Time.Business), caught between the competition from mono-brands and online sales. What’s your distribution strategy, and what message do you want to convey to them? The message is clear: we’ve developed the proprietary boutique model in very moderate fashion, we’ve never had more than twelve worldwide. Today, we’ve kept the seven most successful. Many brands rushed into the proprietary boutique paradigm on the crest of the Chinese wave, hoping to double their margins. That’s not my strategy, because they left out the multi-brand retailers, who still play a key role for customers who want choice, a selection and advice from more neutral interlocutors. So I think that those retailers, who were snubbed by brands that used to work a lot with them but then pulled the plug on them, ought to return to centre stage. As I did with Vacheron Constantin in the United States, I’m going to re-direct Zenith to the best multi-brand retailers who will be our priority for distribution. I’m going to present our five-year strategy to them and go ahead with those who want to, offering decent margins and enabling them to gain market share with us. I think that’s what these retailers really want – the best have been seeking to strengthen their ties with top-quality brands for years but were faced with group strategies in which they no longer had any say.

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Today, you have more than 800 outlets worldwide. How are you going to implement your approach, in concrete terms? We’re going to concentrate on the best, so overall there’ll be fewer outlets in every country. I think we’ll soon be down to 600 outlets. The launch of the Defy 21 is a key moment to set this change in motion. In any case, we won’t have the capacity to deliver this model to everybody. And then we really want to give priority to those who have continued to support us these past few years and who believe in our brand. We’ll gradually distance ourselves from the ‘semi-dormant’ sales outlets who only kept Zenith because it was an extra name or manufacturer in their catalogue, but did not really support sales. It’s fair game. They have to have some results if we’re going to work together. What is your stance going to be on the internet and ecommerce, a subject that’s getting the LVMH Group and Jean-Claude Biver – and the entire watchmaking industry – buzzing with excitement? It’s inevitable: we have to move into e-commerce. The question is how, and at what pace. For a long time, the watchmaking industry thought it was impossible to sell luxury products online. Figures today prove the contrary. We’re still just debuting, everything has to be built from scratch. We already work with pure players like Mr. Porter and Hodinkee for online sales. The second aspect is the retailers. Some are more dynamic than others online. Today, we are at the stage where we need to officialise the sale of watches on the internet with those who have an e-commerce platform. The third aspect is the launch of our own e-commerce platform. We’re working on the project. Basically, there are two ways of going about it: either very conventionally, by putting your entire watch collection online; but with that approach a brand isn’t going to sell much, with no discount or the service you find in a boutique. We have to work on another approach, with limited editions and a special online experience. But we’re really only just beginning. Will that profoundly transform your brand, ultimately? ‘E-commerce’ is a very loaded term, but sometimes we already practise it without realising it. When it comes down to it, what difference is there today, for a retailer, between selling directly online and doing what they already do for customers who phone the shop to order a watch and have it delivered to their home? Another fundamental issue for the industry is pricing. The internet has made prices much more transparent and consumers more demanding and challenging. Our advantage is that we haven’t abused pricing because of the Chinese market. Our average price is around 7,000 francs. Our direct competitors in

the same price category are mass-product brands, whereas we produce just 22,000 watches a year with a notion of exclusivity. We have to work on getting this quality recognised. My problem isn’t the connoisseurs, but those who aren’t aware yet of Zenith’s potential, because it isn’t ‘glamorous’ enough.

PRODUCTS What’s your assessment so far of the Defy 21 presented at Baselworld (editor’s note: read our detailed presentation of it in Chapter 3/17)? I’m going to reveal a rather confidential piece of information: nearly half those we sold to retailers in Basel were already presold to end customers, even though the watch wasn’t even in the shops yet. That hadn’t happened at Zenith for a long time!

Your emblematic product is the El Primero, which can also be regarded as a ‘gilded cage’. What place will it occupy in your future collections? Globally, we’ve reduced our offering to four clearly distinct collections. Two – the Elite and the Chronomaster – represent the more classic, heritage side of the brand. But since we aim to be innovative and not simply repeat history, we take inspiration from what we’ve done before to enter contemporary territory. One example of this is Pilot, which we produce in limited numbers but which posts the best results, despite the fact that it’s vintage – because paradoxically, vintage is fashionable and contemporary! And the other contemporary line is Defy, a systematic reinvention of El Primero to enter the 21st century.

After the Defy 21, with its hand displaying hundredths of a second, the Defy Lab is the second chapter in this remake of an iconic watch (editor’s note: read a detailed presentation of it in our next article)… A completely new oscillator: we’ve revolutionised the escapement system and the Christiaan Huygens balance spring of 1675 to create the world’s most accurate mechanical watch, with a variation of one second over 24 hours, a 60-hour power reserve and, above all, no loss in amplitude. We guarantee the constancy of this second variation per 24 hours. Thanks to its new silicon wheel, there’s no more friction, no more oil. We’ve eradicated the watchmaker’s worst enemies without leaving mechanical territory! No fewer than 31 parts have been replaced by one single part. Incidentally, with the LVMH Group’s new R&D department we’ve developed a new, ultralight aluminium, a composite of aluminium and polymer, on the principle of a sponge but with holes filled with polymer...

Revolution

MECHANICAL WATCHMAKING

Christiaan Huygens (1629 - 1695)

LEAVES HUYGENS BEHIND

BY PIERRE MAILLARD, BASED ON AN INTERVIEW WITH GUY SÉMON

The oscillator of the new Zenith Defy Lab, perfected by Guy Sémon, CEO of TAG Heuer and of the LVMH Watch Division’s R&D Institute, and his team of scientists, represents a major development. For the first time, watchmaking has reaped the benefits of an unintuitive, scientific, theoretical, multidisciplinary approach, calling upon mathematics, physics, materials science and the most advanced theoretical mechanics. The spectacular result means that we have now entered a new post-Huygens era. It’s a revolution. When, on 25 February 1675 in Paris, Christiaan Huygens presented his revolutionary regulator, based on the principle of a balance spring connected to a balance wheel, he had no idea that his invention would dominate watchmaking for the next three centuries. As a scientist, he was uniquely qualified to establish the theoretical foundations for his regulator, which was more precise than any previous systems, but it was not until he teamed up with the royal clockmaker that he was able to put the theory into practice. The 17th century was in many respects an abominable time to live, punctuated as it was by wars, famines and epidemics, but it was, paradoxically, a scientific golden age. Many technical and theoretical advances were made, including

Photograph: Fabien Scotti | Arcade Europa Star

the “calculating clock”, the first embryonic computer, which was invented and designed in 1623 by the German pastor and academic Wilhelm Schickard. It was also in the 17th century that the foundations of modern mathematics were laid. Nevertheless, back in 1675, while Huygens was able to observe the isochronism of his balance spring, he was unable to provide a theoretical explanation. That would not be possible until differential equations were developed, in the following century.

A largely intuitive development The paradox of precision watchmaking, which arose out of Huygens’ observations, is that it developed in a largely intuitive manner. Over the ensuing centuries, Huygens’ principle was gradually improved upon and optimised, thanks mainly to advances in metallurgy. However, its theoretical foundations were never really challenged. And that could be because... there were no theoretical foundations. For generations, watchmaking has remained at a remove from scientific and mathematical theory. Any calculations that watchmakers undertook would generally be focused on the movements of the cosmos, which are essential for telling the time – not on mechanics. Mechanics is an integral part of mathematics and theoretical physics, but it was not until the end of the 19th century that mechanical theories began to be developed. The watchmaking community, tucked away in their mountain retreats, with their eyes turned either up to the stars or down to their minuscule cogs and pinions, rarely encountered any mechanical theorists, who in any case were busy at the time with the extraordinary machines that would power the industrial revolution. Huygens’ principle was constantly improved upon and gradually perfected by successive generations of watchmakers, and it continued to work flawlessly. There was no reason to give it a second thought. What is more, the trade secrets of watchmaking continued to be passed down from master to disciple, in the privacy of their workshops. And this meant that finishing and decoration came to be the “public face” of the watchmaker’s art. It was not until the 1970s and ’80s that engineers were first admitted through the manufactory doors. Even then, they were only there to design and install increasingly sophisticated production lines, to adjust the CNC machines and to operate the CAD tools that began to appear in the technical offices. No engineer ever set foot in the workshops where the Huygensian complications were discreetly assembled. That is why, even today, the theoretical underpinnings of mechanical watchmaking have never been fully explored.

Eleven types of mechanical connection Mechanism design theory, a branch of physics, has identified eleven types of connections that, in combination, can accomplish everything. In order to reach this conclusion, theoreticians had to understand and tame the complex interactions between tightness, weight, dimensions and materials. When he first made landfall in the watch industry at TAG Heuer, Guy Sémon, a former aerospace consultant and lecturer in theoretical physics (see sidebar), began by looking at the watch from a purely mathematical point of view. First, he tried to take the Huygens regulator to its ultimate expression. In 2011 he unveiled the Heuer Carrera Mikrograph, capable of displaying time in 100ths of a second thanks to

GUY SÉMON TAG HEUER, GENERAL DIRECTOR He was born in 1963, in the French administrative department of Doubs, a few kilometres from the Swiss border. He is descended from a very old family known to have lived in the same place since the 12th century. After completing his technical higher education, he joined the French Navy where he trained as a jet pilot. He then left the navy to work for the French Ministry for Research as a lecturer and researcher at the University of Franche-Comté. He completed a doctorate in physics and engineering science. Starting in 1992, he published the results of his mathematical work on the application of formal calculus to fluid mechanics (modelling of strange attractors and bifurcation theory) and to optics (laser flow visualisation by light scattering by small particles) mainly in Japan and the US. The University of FrancheComté then gave him the task of setting up and managing a new Physics of Energy Laboratory. He specialised mainly in linear algebra and differential topology. Many of the horological inventions to come were inspired by this period of intense research… In July 1994, he left institutional life to begin a freelance career and joined Technicréa, a private engineering design practice (150 top engineers) where he was Scientific Director and Deputy Managing Director. He worked on the following projects: ITER (Tokomak), LHV (CERN Geneva), a new generation high-speed train - TGV (Alstom), the 9000F gas turbine (General Electric), the Lafayette frigate (DGA), and a hybrid armoured vehicle. In August 1995, he set up his own company, employing 5 highly qualified engineers and specialising in flight simulation and UAV vehicles. In 1996, the company’s main partners and contractors were Dassault electronics and Aerospatiale (EADS). But it was Lockheed-Martin SSI (USA) that made by far the greatest contribution to Guy Sémon’s company. The business won the two biggest simulation contracts (for fighter helicopters and test planes) put out to tender by the French air force. That same year, at the request of the French government, the company took over Telmat, a group (of 250 engineers) specialising in massively parallel computers and very high speed telecommunications systems. The group was split into separate units and went on to develop further in the USA (high speed networks and information interoperability, military simulators & massively parallel computers). At the start of 1999, Guy Sémon began working as an independent expert with some of the biggest players in the aeronautical and aerospace industry. At the time, he was exploring new technological fields, especially new materials. By chance, in Switzerland, in 2004, Guy Sémon encountered the TAG Heuer company, which was interested in manufacturing the smallest belts in the world (!). This was the beginning of an intensive and fruitful cooperation that led to the production of the Monaco V4 watch, and more generally to the establishment of the TAG Heuer R&D Centre which Guy Sémon has led since January 2008.

THE PENDULUM

A detour into magnetism and the “vibrating beam” two separate escapements, vibrating at 28,800 vph (for the hour, minute and seconds display) and 360,000 vph (50 Hz) for the chronograph hundredths. Later that same year he took the dual chain concept even further, and introduced the Mikrotimer Flying 1000, vibrating at 500 Hz, which represented the stratospheric frequency of 3.6 million vph. At this level, the watch was able to calculate and display time to one-thousandth of a second! But at this new frequency of 500 Hz, which requires the seconds hand to perform 10 complete rotations each second, Huygensian watchmaking starts to reach its limits. The escapement no longer needs a balance wheel because, at these high speeds, the spring would need to be so stiff (requiring only four coils – that’s ten times stiffer than a normal spring) that the balance is no longer needed for the return. But with this balance-less movement, we reach physical limits: the lever starts to have trouble keeping up, the regulating organ suffocates, the transmission between barrel and escape wheel gets out of sync, and there is no longer sufficient energy to power each impulse. The result is an imbalance in dynamics and energy. For Guy Sémon, this impasse was the starting point for his explion of new mechanical regulation technologies.

On the strength of his mastery of arcane scientific theory, he began exploring new, unorthodox (for watchmaking) connections between energy and how it is regulated. His first venture outside the Huygens galaxy was the Concept Watch Pendulum. The escape wheel and lever are still there, but the heart of the system, the sprung balance, is replaced by a magnetic stator and rotor. The device consists of four magnets. Two of these magnets (one positive and one negative – magnetised in only one direction) are arranged face-to-face around the circumference and held in place by a fixed soft-iron support that forms a kind of Faraday cage. At the centre, on the same axis as the balance wheel and held in place by a traditional bridge, two magnets are arranged on a rotating mobile and thus alternate their positive and negative poles, which creates a magnetic field alternately on either side of the device. This system achieves levels of performance comparable with those of a balance spring, yet it falls short of COSC temperature sensitivity requirements. It was an interesting experiment, but difficult to implement on an industrial scale. Guy Sémon and the multidisciplinary scientific teams with which he surrounded himself therefore turned their attention to a different mechanical avenue, one that had not yet been explored in watchmaking. The principle from which they drew their inspiration, the theory of “vibrating strings” or beams, was discovered by French mathematician d’Alembert

THE MIKROGIRDER

In search of a new “universal” regulator

a few years before Huygens. Essentially, in place of the oscillation of a traditional concentric balance spring, this principle involves inducing vibration in a thin blade at very high frequency. In theory, the “perfect vibrating string” posited by d’Alembert, with infinite flexibility, constant tension, perfect elasticity and insensitivity to gravity, transmits a wave uniformly along its entire length. The wave therefore has an isochronous oscillation. The challenge was to find the closest practical approximation to this theoretical perfect wave. The principle settled upon by Guy Sémon and his team was conceptually simple, combining three “vibrating beams”. An exciter beam attached to the lever and an oscillator consisting of a thin “beam” are united by a “coupler” that is itself also a “beam”. By exciting the oscillator so that it gets as close as possible to the “perfect wave” of the theory, it begins to vibrate at perfectly defined frequencies. It can be adjusted using an eccentric that lengthens or shortens the vibrating beam, a little like tuning a guitar. This new type of “non-Huygensian” oscillator is therefore linear – like a string. There is very little inertia and practically no amplitude (it vibrates very quickly, but the oscillations are very low), which means that the system consumes less energy than a sprung balance – another benefit of high frequencies, since the power reserve can be a lot higher. Regulated in this way, the TAG Heuer Mikrogirder concept watch “vibrates” at the mind-boggling frequency of 7,200,000 vph, or 1,000Hz, which gives it the ability to measure 1/2000th of a second (TAG Heuer prefers to talk of 5/10,000ths). Thanks to the dual escapement system, the “normal” Huygensian chain for the time indications and the “vibratory” chain for the chronograph at 1/2000th do not affect each other at all. It’s an impressive exercise, but given that this “beam” can only oscillate at very high frequencies, its industrial and commercial applications are limited. (To find out more, read our article from 2013, “TAG Heuer: Waves and magnetism in the service of regulation”, available on europastar.com)

Guy Sémon was appointed CEO of TAG Heuer at the end of 2014. He decided to renew his quest for a new type of “universal” regulator, like Huygens’ principle but far more precise. He had been thinking about it for some time, but in order to succeed, he had to bring several different universes together: the field of compliant mechanisms, which had emerged in the 1990s, along with theoretical physics and materials science. The new theory of compliant mechanisms is based on new premises, and creates new connections based not on the interaction between separate components, but on the deformation of their materials. This concept of compliance is particularly relevant to robotics, where it is used to perform tasks that require subtle applications of strength, acting on “stiffness” and transforming into “flexibility”. This includes, for example, tasks such as grasping fragile or highly deformable objects, assembling tightly fitting components, or deburring. In the case of watches, this new theory provides a means of replacing an element made up of several fixed or mobile parts – an oscillator, for example – with a one-piece “compliant” structure. Theoretical physics comes to the rescue with the theoretical underpinnings of this new kind of oscillator, called a “parametric oscillator”, which is used in physical optics, and for resonators in laser instruments. As Guy Sémon readily admits, this theoretical field is “extremely modern and very complex.” The third field of exploration is materials science. This new type of oscillator requires a material that is insensitive to both magnetism and temperature, while at the same time being highly flexible. These requirements rule out all known metals. After drawing a blank at Delft University in the Netherlands, which is in the vanguard of this new mechanical theory, Guy Sémon expanded his search to the University of Arizona at Albuquerque. No luck. He then went to the University of Utah, which takes a keen interest in nanotechnology. There, Guy Sémon says he “lucked out”, and found a nano-structured material that was highly flexible. This material would enable him to create balance springs out of carbon nanotubes, which would be used in the El Primero 21 unveiled by Zenith in Basel this year (see Europa Star Chapter 3/17), but would not make it to the Defy Lab.

CARBON NANOTUBE BALANCE SPRINGS: STRATEGIC INDEPENDENCE The story of how Guy Sémon’s team came to make balance springs out of carbon nanotubes is quite a saga in itself. They had to design from scratch and build a vast and extraordinary machine to produce them in industrial quantities, as a result of which they can now make 500 balance springs every 50 minutes. A layer of aluminium oxide is deposited onto a silicon wafer, onto which the 500 balance springs are etched with iron atoms. The wafer is placed inside a chemical reactor under a vacuum, and hydrogen and ethylene are introduced. The carbon atoms react with the iron and begin to grow (“a little like ears of wheat”, Guy Sémon explains) and change into a type of graphene. Each “ear” is a nanotube (measuring 10 nanometres). Taken individually, each of these nanotubes is infinitely elastic. Carbon atoms are interspersed between these “shoots”, “a bit like concrete between the rebar”. The wafer is then placed in an oxygen plasma chamber, after which the carbon nanotube balance springs can be removed. “This is the first time ever that a three-dimensional component has been made out of carbon nanotubes,” notes Guy Sémon. In addition to the technological implications, this brand-new procedure will eventually make the LVMH group autonomous in the strategic domain of balance springs.

This experience with carbon nanotubes indirectly contributed to Guy Sémon’s development of the new oscillator. By combining the first two ingredients – theoretical physics and its “parametric” oscillators, with mechanical compliance theory – to optimise the shape of the oscillator, and by using silicon, which can be chemically etched (as we have seen with microprocessors for years), Guy Sémon and his team could move on to defining and making their oscillator. In physics, an oscillator is a flexible beam with a given stiffness. In order to produce an oscillation, a mass is introduced. In order to achieve linear oscillation, the various parameters have to be filtered. The final product is a single monocrystalline silicon component measuring 0.5 mm thick (compared with around 5 mm for a standard regulator), in place of the 31 or so parts of a Huygens regulator, as shown in the diagram below. The energy supply for this oscillator is a fairly classic barrel and gear train. But, once the escape wheel has supplied energy to the oscillator, we leave the traditional watchmaking chain behind. The escape wheel comes into contact with two small teeth (see diagram) which set the monobloc oscillator and its components in motion. The oscillator starts to beat – or breathe – with a very small amplitude of +/- 6° (compared with around 300°) at an extraordinary frequency of 15 Hz, three times greater than that of the El Primero. But even with this high frequency, the power reserve is around 60 hours, 10% more than the El Primero. (Guy Sémon has no intention of leaving matters there, and is targeting power reserves of 100 hours, even as much as 150 hours.)

El Primero 21

Fine tuning fork (equivalent to the â&#x20AC;&#x153;raquetterieâ&#x20AC;?)

1st mobile mass in rotation (equivalent to balance wheel)

2nd mobile mass in rotation (equivalent to balance wheel) Anti-shock hole (x6)

+/- 6 degree amplitude oscillation

Escapement transmission (equivalent palette stones)

Central attached area

Anchor 3rd mobile mass in rotation (equivalent to balance wheel)

Location of the escapement wheel 20 microns beam (x3) (equivalent hairspring)

Multiple benefits The advantages of this revolutionary oscillator are manifold. There is no need for assembly or adjustment. No more contact and friction means no need for lubrication. Not only is energy consumption reduced, the device is largely impervious to incidental energy variations and changes of position. Not only is it extraordinarily precise, varying by around 0.3 seconds per day (the COSC standard is -4 to +6 seconds per day, or a total maximum of 10 seconds per day), but it also maintains the same degree of precision for 95% of its power reserve. Insensitive to gravity, magnetism and temperature (thanks to a layer of silicon oxide), this double-patented oscillator is also triple-certified: for chronometry by the Besançon Observatory; for thermal resistance by ISO-3159, which it comfortably exceeds; and for magnetism by ISO-764, which it exceeds by 18 times, given that it can withstand 1,100 Gauss. Zenith was chosen for the public debut of the “Sémon oscillator” in a watch named the Zenith Defy Lab – “Defy” was the name of a case from the 1960s, which has been completely revamped for the occasion. Beyond its debut appearance, the oscillator is destined to equip the majority of watches produced by LVMH or, as a minimum, the more “horological” brands in the group – Hublot, TAG Heuer and Zenith. The operation resembles Omega’s approach to the co-axial escapement developed by George Daniels. But, strategically, this operation is even more important for LVMH, because it will help the group to attain even greater autonomy. Combined with its self-sufficiency in balance spring development thanks to carbon nanotubes (see sidebar), it will ensure the group is insulated from any strategic dependency. Guy Sémon and his scientific teams have now been promoted to head up a major research centre. But that’s a different story (one that you will be able to read very soon.)

THE ZENITH DEFY LAB AND ITS ULTRA-LIGHT CASE As if this major technical innovation were not enough, Zenith, under the initiative of Jean-Claude Biver, decided to bring out the new oscillator in equally revolutionary packaging: a 44 mm case made of Aeronith, the world’s lightest aluminium composite. This “open-pore metal foam, stiffened with a special ultra-light polymer, resistant to UV rays” is 1.7 times lighter than aluminium and 10% lighter than carbon fibre. It was originally developed by Hublot’s R&D department. On the face of it (and in our humble opinion), the decision to double down on innovative developments is perhaps not the best strategy, since it dilutes the impact of the revolutionary new oscillator, which is destined to usher in a new era for mechanical watchmaking. You can read more about Zenith’s new strategy on page 14, where we feature an interview with Julien Tornare, the brand’s recently appointed CEO.

Portfolio

THE HOROLOGICAL NOAH’S ARK BY PIERRE MAILLARD

“By imagining tomorrow, which apparently no other animal is capable of doing, we have given value to the present.” Albert Jacquard

HANSRUEDI by Søren Henrichsen Design Studio is a Swiss cuckoo clock handmade in Geneva. Its sober design and name challenge the traditional codes of the cuckoo clocks. It uses a light sensor to mute the sound during the night so as not to disturb you during your sleep. A perfect union between tradition and modernity. All HANSRUEDIs are numbered pieces.

Mechanical Entomology by Gaby Wormann, Christopher Conte, Paul Swan Topen and Christopher Locke Courtesy M.A.D. Gallery Geneva 29

PIERRE JAQUET-DROZ AND NATURE’S ARISTOCRACY

hy is horology so attached to the animal world? Why this love of butterflies, birds, horses and tigers? Not to mention snakes, monkeys and scorpions. Is it a simple question of logic – horology being the result of observation of the heavens – that the animals of the zodiac and those metronomes of cosmic time, the constellations, should take pride of place in it? Is it because the peasant watchmakers of Switzerland, immersed in nature, indulged their passion for timepieces with one eye on the cattle? Or is it – as for Marie-Antoinette – solely a matter of decoration: birds, flowers and sheep composing idyllic and colourful landscapes that the enamellists loved – and still love – to reproduce? Is it because of the Emperor of China, with his great fondness for mechanical birds? Or because one day, a carpenter in the Black Forest invented the cuckoo clock? It is no doubt for all these reasons at once. And it cannot be denied that animals are still inspiring watchmakers of every ilk. Even today, the act is decorative more than anything, and animals of every shape and form account for the vast majority of art and craft production (a privilege animals share with flowers). Animals even constitute a central symbol for certain brands. One brand stands out in particular in this respect: Cartier, which has made the Panther its icon, ubiquitously present or suggested. Cartier is not alone, but the brand has produced variants of its animal in every possible genre – painting, enamel, engraving, wood marquetry, stone micro-mosaic and Etruscan granulation, to cite just some examples, right through to actual items of jewellery. And Bulgari is busy doing the same with its famous Serpenti.

The Pierre Jaquet-Droz mechanism of a singing-bird pendulum clock Under restoration. It is likely that Napoleon himself commissioned this piece to give to the Princess of Würtenberg.

There is a delicious passage in Jean-Christophe Nothias’ biography of the Enlightenment horologer Pierre Jaquet-Droz*. JaquetDroz had an exchange of views with his clockmaking contemporary Ferdinand Berthoud about their differing approaches to horology. Faced with his friend’s “Spartan rigour” in his dedication to the pursuit of absolute precision, Pierre Jaquet-Droz could not deny his “singular attraction to beauty, grace and delicacy, and all their spectacular and breathtaking qualities.” To this end, the horologer drew upon “nature and its marvels, with singing birds and their improbable colours, and the spectacle of the flora and fruits of Paradise.” Pierre opted for wonder. To reach these heights of elegance, he needed the resources of the aristocrats with whom he consorted, and their taste for ostentation. Nature, and particularly birds, formed a constant backdrop to the life of Pierre Jaquet-Droz, a seasoned traveller who remained “attached to landscapes of peace, tranquility and freedom.” Like his contemporary Rousseau, his long, meditative walks supplied the inspiration for his future creations and restored the equilibrium he needed to accomplish his feats of technical mastery. It was this fusion of the natural and the mechanical, as well as his humanist curiosity, that gave rise to the many automata with which he charmed the courts of Europe, particularly the King of Spain, and which were exported as far as China, as well as inspiring the motifs with which his timepieces were decorated, and of course the famous “singing bird” music boxes for which the company is still celebrated today. * The Génie Jaquet-Droz: The fascinating life of a watchmaker in the Age of Enlightenment, Jean-Christophe Nothias, Editions Montres Jaquet Droz, 2013

Petite Heure Minute Relief Seasons by Jaquet-Droz Hand-engraved and hand-painted white mother-of-pearl dial. Hand-engraved, hand-painted and rhodium-plated 18-karat red gold bird appliques. 18-karat white gold case set with 272 diamonds, buckle set with 24 diamonds, total of 1.16 carats. Self-winding mechanical movement. Power reserve of 68 hours. Diameter 41 mm. Numerus Clausus of 88 pieces. 31

Presented in 2013, the De Bethune DB25 Imperial Fountain is a set of 12 watches, each featuring an animal head of the Chinese Zodiac engraved in relief. The De Bethune DB25 Imperial Fountain is inspired by the animal heads of the water clock at Beijingâ&#x20AC;&#x2122;s Yuan Ming Yuan (Old Summer Palace). The rest of the dial is also hand engraved, with peripheral hands so as not to obscure the engraving.

The animal world is no longer neutral ground The advantage of animals is that they are a subject on which everyone agrees, they’re nice to look at and are in a weak position when it comes to protesting about rights of personal portrayal. But in these environmentally challenging times, animals have become a major global issue, which has nothing to do with their inherent beauty. Many of the favourite species of decorative illustrators are now endangered, from bears to pandas, big cats, reptiles, elephants and dolphins. Consequently, more and more watchmakers have awoken to the issue and are backing the protectors of nature by funding programmes to protect such species. The most recent example is the manta ray, an endangered species that adorns the latest Patravi ScubaTec by Carl F. Bucherer. This magnificent beast now “sponsors” a special series to support the Manta Trust (see ES Time.Keeper 3/17). Once a neutral, pleasant theme, animal illustrations are no longer innocuous, but charged with hidden meaning. But they sell well. And Swiss watchmakers spotted the commercial potential of the totemic animals of the Chinese New Year long ago. Cock, pig, monkey, horse or serpent – for each year in the Chinese zodiac there are special watch series that reproduce like rabbits and sell like hot cakes.

Proclaimed a “Living National Treasure” by the Japanese authorities, artist Kiichiro Masumura has created this unique dial for the Chopard L.U.C XP Urushi – Year of the Rooster (2017) based on the time-honoured lacquering techniques of Urushi and Maki-e. Showcased within the understated lines of the ultra-thin L.U.C XP in 18-karat rose gold, this timepiece is equipped with the mechanical self-winding L.U.C Calibre 96.17-L.

Vacheron Constantin Métiers d’Art The legend of the Chinese Zodiac Year of the Rooster. The foliage motif on the dial, based on classic Chinese iconography, is etched directly into the metal. The pattern remains semi-embedded and stands out from its gold base by a subtle stagesetting of variously accentuating reliefs creating a depth effect. The rooster, made of platinum or pink gold, is hand engraved and delicately applied to the dial centre.

The Classico Rooster Watch by Ulysse Nardin comes in a 40mm 18k rose gold case and has an intricately crafted dial featuring an enamel rooster. The rooster is worked using the champlevé technique, in which the dial is carved to form pits where enamel can be added. The watch is limited to 88 pieces and is powered by Ulysse Nardin’s COSCcertified self-winding Calibre UN-81.

The slow aesthetic revolution Having long remained resolutely conventional, watchmaking decoration has gradually – very gradually – evolved. For a long time, it remained anchored in the idealised, bucolic animal iconography of centuries past. But eventually, certain brands ventured away from this passé, traditional, now somewhat kitsch image to get closer to painting and the graphic arts – think the Escher birds, fish and lizards that inspired Vacheron Constantin.

Animals at the service of watchmakers But watchmakers are not content simply to get inspiration from animals: they also use them as a source of numerous items. They take the wings from butterflies or feathers from birds to make filigree dials; they have a longstanding predilection for the mother-of-pearl that is found in shellfish, and use, or have in the past used, horn, tortoiseshell and ivory. And they make wrist straps from every possible and imaginable animal breed. Fish, stingrays, alligators, caimans and other crocodiles; land animals such as cows, calves, ostriches, lizards and snakes, not to mention kangaroos, toads, and even beaver tails, go into making watch straps. As for neatsfoot oil, lard and fish, they were used to extract mechanical oils “which are unctuous and make excellent lubricants, but have the great disadvantage of rapidly deteriorating in contact with air and of thickening over time,” as the handbook states. And old decal specialists still use a squirrel tail for fine-brushing the dial.

Vacheron Constantin

This stylistic evolution is unfortunately still somewhat timid, but we are starting to see timepieces that go beyond the simply decorative and look to the animal world for inspiration for form and ergonomics. In this respect, the latest Aquapod from MB&F is a textbook example of a perfectly consistent approach. The designers of this diving watch explain it best: “HM7 Aquapod began its gestation as a horological jellyfish, and the architecture of its engine is appropriately biomorphic. Jellyfish are radially symmetric, Aquapod is radially symmetric. Where a jellyfish generates power from food caught in its tentacles, HM7 generates power from its tentacle-like automatic winding rotor. Where jellyfish have a radially symmetrical ring of neurons for a brain, Aquapod has radially symmetrical rings displaying hours and minutes. Where jellyfish have a hood or bell on top, HM7 Aquapod has an imposing flying tourbillon regulating the power generated by the rotor, and transforming it into the display of time.”

THE 5,000 SPECIES REGULATED BY CITES CITES is the international convention that regulates trade in animals and products of animal origin, and sets up special taxes on or even prohibits trade in certain endangered species. The list of the 5,000 species concerned is dizzying. Here is a brief extract. The following are subject to regulation: Certain species or populations of antelope, cattle, gazelle, goat, sheep; guanacos, vicunas, deer, muntjacs, pudus, hippos, babirusas, dwarf boars, peccaries, red pandas, common jackals, wolves, dholes, foxes, fennecs, fossas, falanoucs, Malagasy civets, felines, mongooses, aardwolves, skunks, badgers, martens, weasels, otters, grisons, tayras, honey badgers, walruses, fur seals, olingos, cacomistles, coatis, pottos, bears, giant pandas, binturongs, civets, including the palm and otter civet, linsangs, whales, including the Greenland whale and Cuvier’s beaked whale, porpoises, hyperoodons, broad-nosed bats, fruit bats, flying foxes, armadillos, dunnarts, kangaroos, wallabies, kangaroo rats, wombats, echidnas, bandicoots, wild asses, zebras, onagers, Przewalski’s horse, rhinoceroses, tapirs, pangolins, three-toed sloths, Hoffmann’s two-toed sloths, anteaters, primates including the howler monkey, spider monkey, new-world monkeys, old-world monkeys, chimpanzees, gorillas, orangutans, gibbons... The list goes on…and on.

MB&F plunges into the water with HM7 Aquapod. The organic jellyfish-inspired design of HM7 Aquapod is counter-balanced by the very mechanical horology within: a central flying tourbillion tops the concentric vertical movement architecture, with indications radiating out from the centre like ripples in a pond. HM7 Aquapod began its gestation as a horological jellyfish, and the architecture of its Engine is appropriately biomorphic. Jellyfish are radially symmetrical, Aquapod is radially symmetrical. Where a jellyfish generates power from food caught in its tentacles, HM7 generates power from its tentacle-like automatic winding rotor. 35

Baume & Mercier Petite Promesse doesn’t feature an animal face on its dial but is mounted on a Banka leather strap. Banka leather is made in France and comes from the skin of the rainbow trout, initially celebrated and enjoyed in prestigious restaurants. The fish are farmed in an environment that perfectly suits their needs, where animal welfare ranks above productivity. Each strap is different: the trout scales form contrasting patterns that are accentuated by the tanning process. A trio of eye-catching colours: a luminous red, a bold green, and a vibrant blue.

Bulgari Serpenti Misteriosi High Jewellery is a one-of-a-kind, white gold, quartz-driven, “secret” bangle-watch introducing for the first time a doubleheaded snake design that celebrates the dangerously beautiful part of the serpent - the Maison’s trademark symbol. The first head presents a gemstone flower made of a central round faceted emerald of over 2 carats encircled by nine marquise-cut diamonds culminating in a jaw opening to reveal the dial. The Animal World timepiece collection has been created to commemorate the 150th anniversary of Chopard. These timepieces feature various designs of animals on the dial including a polar bear on an ice floe, a monkey swinging through lush jungle branches, a penguin amidst his companions, etc. Presented in 18-karat gold, these unique animal-themed models feature diamondset bezels, specially decorated mother-of-pearl dial backgrounds that function as “habitat” for the various creatures, and the famous mobile diamonds. A combination of black and white diamonds has been used to dress the penguin. 37

Altiplano Art & Excellence Feather Marquetry by Piaget. Rigorously selected for its exact shade, its density and its texture, each feather is meticulously recut by hand, and then smoothed ready to be carefully arranged in its appointed place according to cleverly alternating contrasts and geometrical patterns. The miniature feather art technique is very similar to that of marquetry but composed of a mixture of duck, peacock and rooster feathers, partially covered with silver leaf.

Bulgari Diva’s Dream draws its inspiration from the fan-shaped mosaics of the Caracalla thermal baths, which also portray peacocks. The dial reveals the splendour of the bird against a delicate motherof-pearl background, beneath diamond stars. It displays the peacock, delicately hand-painted with meticulous partitions in blue shades echoing the dial.

The Fabergé Lady Compliquée Peacock Black offers a new and spectacular time display, which won the prestigious 2015 Grand Prix d’Horlogerie de Genève (GPHG)– in the 'Ladies' High-Mech' category. With a retrograde time display at its time-telling centre, there are fanned blades that spread the peacock’s feathers gradually over the course of an hour, indicating the minutes on a scale and the hours via a rotating ring, with the four moving blades flying back to their original position with the passing of an hour.

No other animal figure is more emblematic of a jewellery brand than Cartier’s panther. The iconic cat pounced its way into the French Maison’s designs in the early 20th century, at a time when animal skins were all the rage. As the rest of the fashionable world followed suit in incorporating panther skins into their work, designers at Cartier found the panther skin ripe with inspiration, its modish print re-imagined in onyx and diamond. The first panther pattern appeared on a wristwatch in 1914, with its second appearance seen just a year later on a pendant watch. Today, the panther remains one of Cartier’s favourite designs.

Panthère Arctique White gold, one 39.28-karat cushion-shaped faceted bluish green aquamarine, sapphires, emerald eyes, onyx, brilliant-cut diamonds, mechanical movement with manual winding, calibre 101.

Panthère Royale Case: 18-karat white gold, set with brilliant-cut diamonds - Dimensions: 36 mm - Dial: satin finish - Hands: sword-shaped hands in rhodium-finished steel - Strap: grey alligator skin - Buckle: folding buckle in 18-karat white gold set with brilliant-cut diamonds - Crystal and case back: sapphire - Waterresistance: 3 bar (~30 metres). Quartz movement.

Ronde Louis Cartier XL flamed gold watch Case: 18-karat white gold, bezel set with baguettecut diamonds - Dimensions: 42 mm - Crown: beaded crown set with a diamond - Dial: flamed gold - Hands: apple-shaped hands in rhodium-finished steel - Strap: black alligator skin - Buckle: folding buckle in 18-karat white gold set with baguette-cut diamonds - Crystal and case back: sapphire - Case thickness: 7.24 mm - Water-resistance: 3 bar (~30 metres) - Numbered limited series of 30 pieces. Calibre 430 MC Manufacture mechanical movement with manual winding.

Gucci Le Marché Des Merveilles watches, with Alessandro Michele’s embroidered golden tiger or snake at its centre. Detailed with a navy and red dial and wrist strap, the strap also features the slogan L’Aveugle Par Amour and fastens with a branded buckle. Encased in stainless steel hardware, this Swiss made Le Marché Des Merveilles watch is finished with ETA quartz movement, a sapphire crystal glass face with an anti-reflective coating and a water resistant feature of up to 50 metres.

Momento Fendi Bugs Cushion features the signature white or yellow eyes set with two diamonds on a silver-white or a black dial. Once a minute, when the minutes and the seconds hands align, the iconic FENDI signature appears. The black dial of the stainless-steel version matches the black calfskin leather strap emphasising the appeal of the timepiece with the yellow eyes. Swiss Ronda quartz movement.

Slim d’Hermès “Grrrrr”. An unusual encounter between a gruff bear and the delicate technique of miniature enamel painting. Once the introductions are made, the design originating from a Hermès silk scarf created by the artist Alice Shirley is tamed by the brush. Mechanical self-winding, Swiss made Manufacture Hermès ultra-thin H1950 movement.

Blancpain Shakudo Coelacanth is a homage to a fascinating and endangered fish. Japanese in origin, Shakudo is an alloy principally composed of copper and gold, which acquires a dark patina between blue and black, according to variations in its composition and texture. This technique allows a rich level of detail as well as a lot of visual contrast. Mechanically, these Villeret watches are equipped with the in-house manually-wound calibre 15B.

With this 25-piece limited edition, Romain Jerome introduces a truly marine and highly crafted timepiece, the Octopus Lume, incorporating all the characteristics and aesthetical features of the animal with a meticulous care devoted to each detail. In line with its underwater inspiration, the new Octopus Lume sports an all-black stealth look to echo the darkness of the ocean. The 47mm case with all elements in black PVD-coated steel reproduces the bilateral symmetry typical of the octopus, with the two crowns at 3 and 9 o’clock. The new model is equipped with an exclusive internal unidirectional rotating sapphire bezel featuring engraved five-minute graduation and a luminescent time indicator at 12 o'clock, which is activated by the 3 o’clock crown for the elapsed time controller, while the 9 o’clock crown sets the time.

TRIBUTE Koi by Delaneau depicts three koi carp captured in swirling Grand Feu enamel on a guilloché dial. The 42mm red gold case is set with 36 baguettecut diamonds, 288 diamonds and a diamondencrusted crown. It also features an automatic movement, and a mat alligator strap with a red gold deploying buckle set with 56 diamonds. This creation totals 6.01ct diamonds. Unfortunately, at the end of August 2017, Delaneau closed its doors.

Van Cleef & Arpels, Lady Arpels Papillon Automate. As the hours and minutes flow discreetly by on the right, the butterfly beats its wings randomly – one to four times in a row, depending on the power reserve. The frequency of the movements is also irregular, since they take place every two to four minutes when the watch is not being worn and more often when it is on the wrist. The butterfly’s liveliness echoes that of its wearer, with alternating periods of calm and activity. The spectacle on the dial can also be triggered at the push of a button: the butterfly then beats its wings on demand. 40mm white gold case, diamonds in sertineige style setting, diamond-set bezel, diamond-set crown. Self-winding mechanical movement with a random automaton and on-demand animation module, developed exclusively for Van Cleef & Arpels.

Paying tribute to the Métiers d’Art, the De Witt Golden Afternoon “Japanese Spring” watch, with its hand-painted dial, is an ode to nature. The dots of powdered diamond, platinum, gold, pearl, lapis-lazuli, agate and other gemstones are combined with Indian ink to create the decoration. This edition is limited to 10 pieces. Mechanical self-winding movement.

In a starry night sky, two doves fly to the rhythm of a ballet. They hold a ring in their beaks, as a symbol of promise. Every hour, the birds meet, and join their rings together to form an 8, synonym of eternity. On a guilloché background, the sky is represented by night-blue enamel, sparkling with gold-spangled stars. Opalescent enamelled clouds cluster with delicacy. The sculpted, engraved and diamond-set doves are the stars of the show: in the centre, the first represents the hours, pointing at them with its ring; the second bird revolves around it to indicate the minutes. Self-winding calibre CP12V-XII executed in the purest tradition of Swiss watchmaking excellence and know-how. The Chaumet Creative Complication Colombes is a limited edition of 12 pieces.

The Vacheron Constantin Métiers d’Art Savoirs Enluminés collection draws its inspiration from the Aberdeen Bestiary, a rare 12th century manuscript, preciously conserved in the library of Aberdeen University, Scotland. Marrying original watchmaking techniques and skilled artistic crafts, the Manufacture pays tribute to the art of the miniature and offers an original reading of time. The Aberdeen “Caper” creature is linked to the Earth. This night blue caprine animal with its piercing gaze symbolises exceptionally sound judgment. The Aberdeen “Vultures” are linked to the skies. These two back-to-back birds cast a knowing glance at each other, symbolising longevity. The Aberdeen “Altion” is linked to water. The seabird, which builds its nest on the seas no matter the weather, symbolises serenity.

www.viennatime.at

Am Hof 2, Vienna

B7E .R N

Watch Exhibition at the ancient Beletage of the Hotel

Alpina

Benzinger

Carl Suchy & Söhne

Frédérique Constant

Up-to-date List of all exhibitors participating: www.viennatime.at

Mediapartner

Laco

2200 1167

1 SM N 1 1O. VBEI

Park Hyatt Vienna

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November 10th to 12th 2017

5R 10VthE tM O oB1E

Exhibition

PATEK PHILIPPE

GRABS THE BIG APPLE BY JOE THOMPSON

t’s been 163 years since Patek Philippe co-founder Antoine Norbert de Patek made a harrowing trip to the U.S., where he faced a blizzard, attempted theft, fire, a riverboat marooning, skyhigh hotel bills and petulant customers. But for all his travails, Patek won the day: the New York retailer Tiffany soon placed a huge order with Patek Philippe. It was the birth of the watch firm’s very fruitful bond with the U.S. In July, Patek Phillipe staged a lavish, 10-day exhibition in New York to celebrate that bond. It was called “The Art of Watches Grand Exhibition New York 2017,” and took place in the Cipriani event hall in Manhattan. Along with a plethora of displays and live demonstrations focused on the brand’s history, watchmaking prowess and artisanship, the show also included the largest gathering of Patek Philippe timepieces ever displayed outside of the company’s hometown of Geneva. The entire current collection was on display, along with important historical Patek Philippe timepieces and, perhaps most notably, a new group of special-edition watches created specifically for the exhibition. More than 27,000 people attended the exhibition (attendance would have been even higher but fire codes limited the number of people allowed into the venue, Patek Philippe said). “The Art of Watches” kicked off with a gala press event on July 12. Patek Philippe CEO Thierry Stern took the podium to talk about his family’s long history with the brand. (His great grandfather Charles Stern, along with Charles’s brother Jean, bought Patek Philippe in 1932; the Stern family still owns it.) Meeting with the press earlier that day, he stressed the importance of the U.S. market to Patek Philippe. He noted that his grandfather, his father and he had all lived and worked in the U.S. early in their careers with the company. “It’s part of our family tradition to come to the States to learn the business,” he said.

Detail verso 993.101G Patek Philippe constructed a two-story, 13,218-square-foot space specifically for exhibition. There were 10 rooms, including those for the current collection, historical pieces from the Patek Philippe Museum, grand complications and handcraft demonstrations. Among the Patek Philippe notables from Geneva on hand for the event were design director Sandrine Stern (who is also Thierry Stern’s wife) and well-known enameller Anita Porchet. They led a delegation of Patek Philippe craftsmen and women who gave live demonstrations of their expertise in engraving, marquetry and enamelling. One room was dedicated to vintage and antique Pateks owned by prominent Americans: Duke Ellington, John F. Kennedy, George Patton, Joe DiMaggio, Jack Daniels and others. Eleven timepieces commissioned by banker Henry Graves Jr. and automobile magnate James Ward Packard were also displayed in this room. Both men were prominent collectors of ultra-complicated timepieces.

Reference 5531 New York 2017

Other historical pieces on view includa patent for the movement’s design. ed the yellow-gold version of the grapeThe watch has a cloisonné enamel dial, fruit-sized Calibre 89, which, when it a signature of Patek Philippe world was completed in 1989, was the most time watches. The dial depicts the New complicated watch ever made. (Patek York skyline at night or during the Philippe also made pink-gold, whiteday (five pieces will be made of each gold and platinum versions of the version). The watch comes with interwatch.) A blue enamel pendant watch changeable casebacks in sapphire or that Queen Victoria bought in 1851 was solid gold. Both bear the inscription shown next to a portrait of the queen. “Patek Philippe New York 2017.” The Exhibition attendees couldn’t take any price: $561,341. of these treasures home, but they will Patek Philippe also used the New York be able to buy one of the exhibition’s skyline motif for special-edition world nine special-edition pieces decorated timers (without repeaters) for men Calibre R 27 HU with American motifs and manufac(Ref. 5230G New York 2017, $47,000) tured in limited series. and women (Ref. 7130G New York 2017, The most important of these is Reference 5531 New York 2017, $56,702). There are also special editions of Calatrava models which is the first of the company’s watches to combine a for men and women and a women’s diamond-studded minminute repeater and a world time function. Patek Philippe ute repeater which, at $447,939, is the second most expensive points out that the watch is unique in that the time sounded of the new references. Three pieces will be made. Lastly, the by the repeater is not home time, as on other repeater/world- special-edition pieces include one-of-a-kind pocketwatches time watches, but local time, i.e., the time shown on the dial decorated with themes including man’s first steps on the and represented by the city in the 12 o’clock position on the moon, bald eagles and Napa Valley, and table clocks with world-time ring. To make that possible, Patek Philippe de- enamelled scenes of the Brooklyn Bridge by night, a baseball veloped a new movement, the self-winding Calibre R 27 HU, game (incorporating portraits of actual players of yore), and which has 462 components. Patek Philippe has applied for 19th-century gold prospectors.

Ref. 5230G

Ref. 7130R

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Exhibition

CARTIER

A CENTURY OF DESIGN Pocket Watch Cartier Paris, 1914

BY CHRISTOPHE ROULET, FHH

The Cartier in Motion exhibition, curated by Lord Norman Foster at the London Design Museum, demonstrated how Cartier watches are objects of engineering and design that mirror the changing styles of the twentieth century.

n the face of it, Lord Norman Foster, the internationally renowned architect whose work includes The Gherkin in London, the Millau Viaduct and the future Apple Campus, had no reason to show more of an interest in Cartier than anyone else. Until, that is, a phone call from the French firm in early 2016, proposing that he curate an exhibition on Cartier watchmaking. The venue would be London’s Design Museum, which was in the process of moving to an iconic 1960s modernist building on Kensington High Street, remodelled by another leading architect, John Pawson. Not something Lord Foster had been expecting, but the almost two years he spent bringing the project to fruition plus repeated visits to Cartier’s manufacturing site in Switzerland suggest the idea struck a chord. Speaking at the preview of Cartier in Motion, which opened end May, he confessed to wondering why Cartier had thought of him for the project, explaining how “they went on to describe the connections that existed, at the turn of the twentieth century, between Cartier and aviation, one of my passions, and the parallels that could be made with the architecture and engineering of that period. It was a point of view that would show the watch from an entirely different perspective, as a product of engineering and design.”

Invitation for the «Santos Night» party, in New York City, 1979.

Three figures It was this vision that Norman Foster set out to materialise in Cartier in Motion, taking advantage of the carte blanche he was given to orchestrate every last detail, down to the design of the display cases. Visitors are plunged into the French capital at one of its most exciting periods, marked by transformations in lifestyles, travel and artistic expression. Norman Foster has chosen three personalities as symbols of this era, a prelude to the modern age. First, Baron Georges-Eugène Haussmann (1809-1891), who was instructed by Napoleon III to bring space and light, beauty and unity to Paris. Haussmann’s vast programme of works is said to have transformed 60% of the city. His obsession with straight lines produced a landscape built around symmetry, rationality and precision; this new Paris was home to the Cartier brothers, the third generation at the head of the business that was now located on Rue de la Paix, just minutes from the Ritz, frequented by Louis Cartier (1875-1942). This was also the Paris of Gustave Eiffel (1832-1923) and the Tower he built for the 1889 Exposition Universelle. Eiffel’s monument Alberto Santos-Dumont aboard his airplane No. 15, in 1907. took a little over two years to complete; at 324 metres high it was, for four decades, the tallest building in the world and a symbol of French engineering. Its popularity was such that the original plan to dismantle it after the exhibition was quickly shelved. The Tower was built to last. It was fitted out with a laboratory, a weather station and private apartments for Gustave Eiffel, from where he could well have watched Alberto Santos-Dumont (1873-1932), the exhibition’s third “figure”, fly his airship around the Tower to win the

100,000 francs which Henri Deutsch de la Meurthe had offered as a prize to the first machine that could complete the round trip between Parc de Saint-Cloud and the Eiffel Tower in less than 30 minutes. Whether Eiffel did witness the dapper Brazilian’s exploits isn’t known; we can, however, be certain that the aviator’s achievements made an impression on his friend and admirer Louis Cartier, in these early days of flight.

Timeless design With the cast now assembled, the visitor can enter the exhibition, which will travel to other cities, and navigate between maps of late-nineteenth-century Paris, a giant scale model of the Eiffel Tower circled by Santos-Dumont’s airship, and a lifesize replica of a Demoiselle, one of the bamboo, canvas and cable monoplanes built by the Brazilian pilot and which contributed to his renown. They cast an entirely new dimension over the timepieces that come further into the exhibition sequence. The Haussmannian sobriety of Cartier’s wristwatches leaps out. Wristwatches, it should be noted, that radically broke with the prevailing fashion to carry a watch in a waistcoat pocket. Like the daredevil Santos de Cartier wristwatch with self-winding movement. Cartier, model created in 1978. Gold, steel, one blue faceted spinel.

Tank wristwatch. Cartier Paris, 1920. This particularly rare timepiece is one of the very first Tanks created by Cartier. aviators of his day, Louis Cartier showed a pioneering spirit when in 1904 he imagined the Santos, made specially for his high-flying friend who needed an instrument he could wear on his wrist. Other similarly-inspired pieces would follow, including the Tank in 1917, the only wristwatch that can boast an uninterrupted century of history, and whose design hasn’t aged a day. Not forgetting the “engines” inside these watches, no less a piece of first-class engineering. Indeed, from his very first wristwatches, Louis Cartier worked closely with Edmond Jaeger in Paris, who was himself in contact with Jacques-David LeCoultre’s manufacturing plant in Switzerland; a triple alliance that matched creative design with mechanical tours de force. These were the foundations on which Cartier watchmaking grew throughout the twentieth century, and the exhibition brings to the fore, with immense clarity, the evolution in forms and techniques that came as new styles and collections were introduced. Celebrities too were won over by the charm of a Cartier watch, among them Catherine Deneuve and Andy Warhol whose portraits hang in the exhibition. This journey through time continues right up to the present day and the expertise that produced Cartier Haute Horlogerie. It too stands out for its immediately recognisable style and for breathtaking complications, made possible by avant-garde techniques. Engineering and design, aesthetics and mechanics: twin themes at Cartier deserving of an exhibition which illustrates how a successful design will last for ever.

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