Europa Star - EUROPE 5/14 by Europa Star HBM

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THE WORLD’S MOST INFLUENTIAL WATCH MAGAZINE EUROPE

HERMÈS Time Veiled

7 WATCH BUSINESS MAGAZINE EUROPEAN EDITION N°327 5/2014 OCT./NOV. 10

770014 260004

CHF12 / €10 / US$12

LUXURY, ART & FASHION In this issue: Accessories for Retailers • Bespoke Métiers d’Art • Ladies & Fashion Watches • Russian Market Connected Watches: The Debate • Mid-Sized Group Strategies

1958 THEY SAILED BENEATH THE NORTH POLE. THEIR WATCH HAS SAILED ACROSS TIME.

THE FIRST CROSSING UNDER THE NORTH POLE On August 3rd 1958, the United States Admiralty received the following message: “ Nautilus 90° North ”. The Nautilus submarine and its crew had achieved the feat of crossing the North Pole by sailing under the ice floe. This unprecedented challenge was taken up within the context of the International Geophysical Year (IGY), during which the global scientific community united in a common purpose: the advancement of research and of universal scientific knowledge.

THE GEOPHYSIC®, A WATCH TO MATCH THE ACHIEVEMENT As a reward, Captain Anderson received a watch worthy of such an impressive accomplishment: the Geophysic® Chronometer by Jaeger-LeCoultre, a paragon of reliability and precision that has now become a legend. Its innovative mechanism along with its resistance to magnetic fields, made it the natural Le choice to award such an accomplishment. Through the new Geophysic® 1958 watch, Jaeger-LeCoultre pays tribute to the inventive spirit that defined the year of 1958.

THE SPIRIT OF THE MANUFACTURE E JAEGER-LECOULTRE Mirroring the unparalleled scientific enthusiasm shown by the nations particip participating in the International Geophysical Year, the men and women of Jaeger-LeCoultre thrive ve on the unique spirit of invention and quest for excellence. United under the same roof since 1833, th the full range of watchmaking skills converge in a shared mission to push the limits of watchmaking savoir-faire. It is this inner force that empowers Jaeger-LeCoultre to rise, today more than ever, to the greatest horological challenges.

Geophysic® 1958. Jaeger-LeCoultre Calibre 898/1. Limited series of 800. YOU DESERVE A LEGENDARY WATCH.

www.jaeger-lecoultre.com

EDITORIAL

WHICH WATCH IN 2050? Serge Maillard Managing Editor*

“Be not suspicious towards all, but be cautious and firm.” Democritus The influx of smartwatches from Apple and other international electronics giants is forcing the watchmaking industry to undertake an uncomfortable but no doubt salutary exercise in perspective. By encroaching on what we have always regarded as ‘our’ turf, Silicon Valley is sowing discord in Watch Valley. And in the background, a bigger question about the future of the watch looms: what will watches be like in the future, in 2050 and beyond? Will new communication technologies feature in their design? Will some sort of ‘hybridisation’ eventually take place? Or will luxury mechanical timepieces continue to coexist with cheaper ‘connected’ watches, as they do today? After all, streaming has not killed off cinema (although it has decimated video rental stores), any more than the internet signalled the demise of paper – as we at Europa Star well know! In launching its watch, Apple barely attempted to hide its indifference to the venerable mechanical watchmaking industry. According to the New York Times, its senior designer, Jonathan Ive, did not mince his words when speaking about Switzerland’s future as the centre of watchmaking. It appears that, through an ‘unfortunate’ combination of circumstances, many high-tech gurus have come to view the wrist as the new El Dorado for the latest wearable technology. But while arch-rival Samsung modestly christened its new wrist-mounted gadget the ‘Gear’, Apple bypassed the simple ‘wearable’ to glorify its offering with the title ‘Watch’. How presumptuous…!

4 EDITORIAL / europa star

Marty McFly in the movie ‘Back to the future’

Some time ago now, Swatch Group decided to join forces with a prestigious industrial player to launch an innovative new product. You may remember it: they called it the ‘Smart’…

*A note to our faithful readers: the Editor-in-Chief Pierre Maillard will also be back in the future, for the next issue.

The Californian giant clearly has one particular niche – that of the sub-500 franc fashion watch – in its sights. It would be foolish to meet disdain with denial. Swatch will be bringing out its fitness watch next year; groups such as Festina have announced in our pages that they are developing smartwatch capabilities. Fossil is joining forces with Intel and Google. The next Baselworld will be a barometer. Behind the facade of studied insouciance, a flurry of initiatives are taking shape backstage. Some false starts and dead ends are inevitable but necessary. As the Swiss Centre for Electronics and Microtechnology recently noted, many technologies that facilitate connectivity were invented and patented in Switzerland. A little like quartz, back in the day... But let’s not reawaken those memories!

Over the centuries the watchmaking world has continually reinvented itself by absorbing new technologies and new materials, albeit unwillingly. It must not let itself down this time. Perhaps it has made the right choice by refusing to be rushed into anything, or at least by giving that appearance... These devices with their faintly gimmicky air have a short lifespan. Do we really want to be permanently connected, at the mercy of peremptory alerts from our wrists? Given the short horizon of the smartwatch, what we really need – aside from the knee-jerk reactions we can expect to see next spring – is a thorough and level-headed evaluation of the issues. The real question is this: will the quality watchmaking sector, the beating heart of ‘mechanical value’, which is not directly impacted by Apple today, dare one day to ally itself with the new technology for digital connectivity, to create more subtle and elegant functions than merely counting calories (which could be distracting during a business lunch...)? Some time ago now, Swatch Group decided to join forces with a prestigious industrial player to launch an innovative new product, the result of ‘thinking outside the box’. This diminutive newcomer successfully put the bigger boys on the back foot. You may remember it: they called it the ‘Smart’… p

CONTENTS

DRESSAGE L’HEURE MASQUÉE A NEW CHAPTER IN TIME TO DREAM by Hermès A Hermès Manufacture Time Veiled mechanism and H1925 mechanical selfwinding movement affording a permanent opportunity to make the Great Escape and to seize only the moments that truly count at a deliberate press on the crown. Rose-gold cushion-shaped case. Hours, minutes, GMT and Time Veiled functions. Water-resistant to 30 metres. Matt havana alligator strap.

La Montre Hermès SA Erlenstrasse 31a 2555 Brügg Switzerland Phone: +41 32 366 71 00 Fax: +41 32 366 71 01 www.hermes.com

EDITORIAL Which Watch in 2050?

8 10

SIGNALS Data Market

COVER STORY Hermès, Time Veiled

THE DEBATE Watchmaking will Metamorphose

MANUFACTURE Métiers d’Art: has the Industry gone too far?

GENDER Brands get in Touch with their Feminine Side

WORLD WATCH WEB Women’s Fashion Watches, a World of Opportunity

BESPOKE The Present and Future for Customised Timepieces

ACCESSORIES Should you offer more than just Watches?

STRATEGY Mid-Sized Groups: Punch above their Weight

MARKET FOCUS Russia: Sanctions and a New Wave of Consumers

LETTER FROM CHINA Sino-Swiss Free Trade Agreement: Consequences for Hong Kong 33rd Hong Kong Watch & Clock Fair: The Baselworld for Fashion Watches Smartwatches: Watchmaking Federation Presidents air their Views

SERVICE, PLEASE! Talking Service with Graff

63 64

RETAILER PROFILE A Look Inside the Newest M.A.D. Gallery in Taipei LAKIN@LARGE What’s in a Name?

37 48

SPOTLIGHTS Casio Edifice Orient

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

22 MÉTIERS D’ART

35 WORLD WATCH WEB: WOMEN’S FASHION WATCHES 28 GENDER

40 BESPOKE 44 ACCESSORIES

70 M.A.D.

50 STRATEGY

www.worldwatchreport.com / www.digital-luxury.com

www.europastar.com

6 CONTENTS / europa star

THE WORLD’S MOST INFLUENTIAL WATCH MAGAZINE

DIGITAL PARTNER

www.europastar.com

The master watchmakers of ‘La Fabrique du Temps Louis Vuitton’ have captured the 24 time zones on a hand-painted dial whose color palette draws inspiration from legendary cities around the world. The hours move around the dial while at the center, the yellow arrow remains motionless.

ESCALE WORLDTIME. EXPLORE A WORLD OF COLOR.

SIGNALS

DATA

“Today internet sales represent just 2% of our total sales. It is more about being involved in the process. I’m convinced that we should retain our mono-brand boutiques and our presence in multi-brand stores, but also in some countries it’s important to be on the internet.” Daniel Riedo, CEO Jaeger-Lecoultre (Monochrome)

TheSLOWand OPEN SOURCE movements are starting to gain a foothold in watchmaking! www.europastar.biz/slow-watches www.europastar.biz/open-movement

11,000

According to Global Blue, a Chinese tourist spends an average of 11,000€ on luxury goods during an overseas trip.

MEN OR WOMEN?

“When I speak with friends at IWC they say that women want to buy men’s timepieces. They want the bigger sizes and they want the technology, because often women’s watches are only quartz.” Sara Sandmeier, senior designer at Baume & Mercier (Forbes)

27%

In 2000, mechanical watches accounted for 8% of the watches leaving Switzerland; in 2013 they represented 27%.

20,600,000,000 The Swiss watchmaking industry reported that exports in 2013 represented a turnover of $23.3 billion. During the second half of 2013, Apple announced a net profit of $20.6 billion.

2015

“Beginning in 2015, we will integrate fitness functions into the Swatch Touch. It will remain a watch, but it will have all today’s usual functions for monitoring physical fitness.” Nick Hayek, Swatch Group Chief Executive (NZZ am Sonntag)

CONTRARY “When mobile phones and devices came on the market, we were asked about their impact on our industry. The media were already anticipating the end of watches; however, it was just the contrary.” Nick Hayek, Swatch Group Chief Executive (Bloomberg BusinessWeek)

FACES

What do you think of the faces of today’s most popular smartwatches? Have your say about their design.

44%

Some 44% of watch executives see smartwatches as the “next big thing” for the watch industry, according to Deloitte. “While relatively few view smartwatches as a threat, their introduction has been gaining momentum, leading a significant number of participants to start to take this emerging category more seriously.”

FOSSIL + GOOGLE + INTEL = ?

Google has partnered with American watchmaking group Fossil as part of its Android Wear project. The aim: to adapt its mobile operating system to the “internet of things”, beginning with smartwatches. Intel has also announced a new collaboration with Fossil to develop wearable technologies.

Sony Smartwatch 3

Motorola Moto 360

Qualcomm Toq

Pebble

LG G Watch

349

15% of Swatch Group’s annual sales come from watches that sell for less than 500 Swiss francs ($527), according to Exane BNP Paribas. The Apple Watch goes on sale in 2015: prices will start at $349.

Samsung Gear S

Apple Watch

8 SIGNALS / europa star

HEALTH VS. TIME For 29% of potential smartwatch clients, the number one function of connected watches will be to track sports activity or provide health monitoring. Making calls comes in only second place (13%), ahead of telling the time (11%), basic applications and GPS (10%), call and messaging alerts (9%) and internet search capability (7%). These are the conclusions of an online survey conducted by GfK among 5000 smartphone users based in the United States, the United Kingdom and China.

GLOBAL LUXURY WATCH INDEX The Global Luxury Watch Index established by Digital Luxury Group (DLG) is based on 600,000 queries made every single day on search engines, for 62 luxury watch brands and over 1,500 models. It gives an indication of the desirability of the watch industry over time. Here are the exclusive latest results:

GLOBAL LUXURY WATCH INDEX

+4% Y/Y May-Jun-Jul

COPY?

2014 vs. May-Jun-Jul 2013

“We want to launch a smartwatch at TAG Heuer but it must not copy the Apple Watch.” Jean-Claude Biver, head of LMVH watch division (NZZ am Sonntag)

TROUBLE? “According to a designer who works at Apple, Jonathan Ive, Apple’s design chief, in bragging about how cool he thought the iWatch was shaping up to be, gleefully said Switzerland is in trouble — though he chose a much bolder term for ‘trouble’ to express how he thought the watchmaking nation might be in a tough predicament when Apple’s watch comes out.” New York Times

“This period we’ve seen a worldwide growth of interest for the luxury watch segment of +4% (Y/Y). This growth is mostly driven by more and more interest for Rolex.” David Sadigh, Digital Luxury Group Van Cleef & Arpels +54% Vacheron Constantin +49% Richard Mille +43% Hublot +33% Audemars Piguet +31% Patek Philippe +28% Rado +20% Ulysse Nardin +16%

LETTER

“We are part of an old and proud industry. Every year we’ve experienced change in some way. We have seen the introduction of quartz movements, the rise and fall of calculator watches, digitals, analogue-digitals and many brands, both big and small. It seems that the test of time has shown that the wrist is an obvious place for both function and fashion.” Read the letter sent by Cindy Livingston, President and CEO of SEQUEL AG (GUESS Watches), to Apple CEO Tim Cook: www.europastar.biz/Letter.to.CEO.of.Apple.pdf

Cartier +13% IWC +10% Global

+4%

-6% Sinn -7% TAG Heuer

-7% Bell & Ross -7% Tiffany & Co.

TOP FASTEST & SLOWEST GROWING LUXURY WATCH BRANDS

-8% Longines -8% Chopard

-9% Breitling -10% Chanel -10% A. Lange & Söhne -22% Tudor

The brands that have seen the biggest rise in interest over the last year are Van Cleef & Arpels, Vacheron Constantin and Richard Mille. europa star / SIGNALS

SIGNALS

MARKET Latest sales figures: Hong Kong, France, Japan, China and South Korea

FRANCE -6%

Sales figures have decreased for the third year running, losing a total of 6% in both value and volume for 2012/2013. During the first half of 2014, sales volume dropped by 5.2% and value by 4.2%, in a market estimated at around 14 million watch sales annually. According to the Federation of the Swiss Watch Industry (FH), imports of Swiss watches over the first seven months of 2014 were down 7.2%, which is a whopping 17.1% compared with the same period of 2012. Shops and boutiques are feeling the sting of the recession, particularly where sales of sub100 and 3000-plus euro watches are concerned. But as a top tourist destination, France can take comfort from its luxury shoppers who, although they represent just 1% of sales volume, account for 25-30% of value. So, are there any positives? Yes, internet sales continue to grow, recording an increase of 7% in volume and 4% in value over the first half of 2014, despite the fact that e-commerce still represents just 5-8% of total watch sales in France.

CHINA -40%

Although the Chinese economy is under pressure, Swiss watch exports increased in value by 3.6% in the first seven months of 2014, although this represents a decrease of 14.6% over the same period of 2012 (FH figures). In the first half of 2014, according to the Chinese national statistics office, sales of watches costing over 30,000 yuan (approx. CHF 4,500) dropped by 40%, while the mid-range sector performed surprisingly well. The 218 companies that make up the fabric of the Chinese watchmaking industry posted collective earnings for the first half of the year of 15.3 billion yuan (CHF 2.3 billion), an increase of 9.3%. Chinese brands finally appear to be gaining ground: a welcome effect, according to the China Horology Association, of Chinese consumers’ growing interest in and understanding of watchmaking products. 10 SIGNALS / europa star

HONG KONG -28.2%

In value terms, Hong Kong remains the most important market for imports of finished watches in 2014, and number two for the export of finished watches (its main markets are Switzerland and the United States, with a 16% share each). Over the first seven months of the year, exports of finished watches increased by 3% compared with the same period last year, and component exports grew by 12%. Swiss watch imports increased by 3.4%, although this represents a drop of 6.4% compared with the same period of 2012. Over the first five months of this year, local retail sales dropped by a worrying 28.2%; this probably reflects caution on the part of Chinese consumers, who make up 90% of customers.

JAPAN +15%

Judging by export statistics for the first half of 2014, “Made in Japan” watches are going upmarket; although volume has risen by a scant 2% (29.3 million units), its value has leapt 15%. Sales volumes on the domestic market have increased by 9% (3.8 million units) with a corresponding increase in value of 24%, a success due partly to the boom in sales of mechanical watches (up 52%, to 135,000 units), although they still represent just 3.5% of the Japanese market. As far as Swiss watch imports are concerned, the first seven months saw the greatest increase across all markets, reaching 24.4% (FH). However, May saw a rise in consumption tax which checked the surge recorded in the first four months of the year. On a positive note, tourism in Japan is experiencing strong growth, helping to stimulate the market.

SOUTH KOREA +23.4%

South Korea recorded the second highest growth in Swiss watch imports (after Japan) for the first seven months of 2014, with an increase of 23.4% (FH figures). Over the last ten full years (2004 to 2013) the Land of the Morning Calm has tripled its watch imports (across all countries, including 95% finished watches), with sales figures rising from 197 to 625 million dollars. One explanation for this is the free trade agreement that was negotiated with Switzerland in 2006. However, South Korea’s new president, Park Geun-hye, is not well disposed towards Swiss watch imports, pointing in particular to serious problems with after-sales service. The government is also considering new laws to increase consumption tax on luxury goods (including watches) to 30%, with a view to breaking up monopolies. Exports of Korean watches and clocks have decreased by 32% over the last ten years. However, the Korea Watch & Clock Industry Cooperative does not (yet) categorise smartwatches in the watch category. It is worth noting that Credit Suisse predicts the market will grow to 50 billion dollars by 2017, with Korean giants Samsung and LG leading the charge.

COVER STORY

HERMÈS, TIME VEILED Serge Maillard

With its Dressage L’Heure Masquée, the Parisian house continues its exploration of the imaginary. With wit and elegance, it toys with the conventions of minutes and hours as few watchmakers have dared to do before.

“In the train recently, another passenger came up to me and asked, curiously, why my watch had only one hand!” Surprise has been a perennial theme of La Montre Hermès. Philippe Delhotal, director of creation and development, could have wished for no better proof of its success than this random encounter ‘in the field’. It is true: the Dressage L’Heure Masquée, in its default state, shows only the minutes hand. A watch with no hours? What is that all about? But as its name suggests, this is just an illusion, a stratagem, all the better to reveal the time when the wearer deigns to press the push-button.

To paraphrase an old proverb, ‘Look after the minutes, and the hours will take care of themselves.’ Like an eel lying in wait under its rock, the hours hand then darts out of its hiding place and delivers its message, before going back to ground behind the minutes hand once the button is released. The waters are muddied; ambiguity reigns once more. But do we really need to be told the hour at all? Is our biological clock not up to the task? Minutes, after all, have a much more important function than hours. To paraphrase an old proverb, ‘Look after the minutes, and the hours will take care of themselves.’ It is notions such as these that the latest creation of La Montre Hermès invites us to explore, with its trademark humour and elegance. It was unveiled at the last Baselworld and will be available from November in a limited edition: 500 pieces in rose gold and 1000 in steel. The watch is both whimsical and egotistical - it allows the wearer to decide when and with whom he will share his time; it swims against the tide of flashy complications, and subverts the secular code of the watch with two visible hands. Philippe Delhotal drew his inspiration for the Dressage L’Heure Masquée from that venerable contraption: the regulator. This ‘mother-

clock’, found in the watchmaking workshops of yesteryear, was what the artisans used to set all their timepieces. They had a particularly unusual feature: a very big minutes hand and a very small hours. “I built on this idea, reducing the size of the hours hand to the point where it disappeared behind the minutes hand, which then pulls the hours hand along in its wake,” explains Philippe Delhotal.

I The H 1925 movement

NEW EPISODE OF A WATCH SAGA This is by no means the first such creation from the Parisian firm, which has emerged out of its watchmaking centre in Biel since 1978. L’Heure Masquée is the third opus in a saga entitled ‘Le Temps de l’imaginaire’ (Time to Dream), which began in 2009. Like an addictive American TV series, promising ever more thrilling episodes to come, La Montre Hermès brings out its haute horlogerie creations with metronomic regularity. Every two years we get to see another dreamlike, mischievous and thought-provoking instalment, which never fails to surprise and unbalance. The company patiently weaves a fabric on which to embroider new motifs. The first episode in the saga, for those who may have missed it, was the Cape Cod Grandes Heures, which placed the usual numbers in unusual places. It provided a way of expressing time as we experience it: those agonisingly endless afternoons, and the frenzy of the early evening. Already, we see Hermès’ desire to break with convention. This critical success nevertheless failed to win over the public - a feeling with which many art house film directors are familiar. However, it was clear from its launch in 2011 that the sequel would be a blockbuster. As its name suggests, L’Arceau Le Temps Suspendu (Suspended Time) offered a way to step out of time for a minute, an hour or a day. But behind the frozen hands, the heart continued to beat; with a single press, time returned to its ‘normal’ position, and reality was restored. Another striking feature (of the 38 mm version, presented in 2013) was the small seconds hand counting down from 24 (a symbolic number for the institution headquartered at 24, Faubourg Saint-Honoré). An impressive complication, concealed behind a simple appearance. The technical wizardry was accomplished by JeanMarc Wiederrecht of Agenhor. His successful transformation of concept into a mechanical watch was rewarded by the Grand Prix d’Horlogerie de Genève (Men’s Watch Prize). After

Philippe Delhotal drew his inspiration for the Dressage L’Heure Masquée from the regulator, the ‘mother-clock’.

u europa star / COVER STORY

Hermès created a watch that doesn’t tell the time. Deliberately.

all the buzz (plus a ladies’ version that appeared in 2013), the bar had been set extremely high. So much for the bestseller, now for writer’s block... “Our concept had turned into something of a runaway train. It was exciting but frightening at the same time. We had no margin for error. Bringing out a banal watch was not an option,” says Philippe Delhotal. So in the end, they came up with a ‘mirror’ watch of Le Temps Suspendu, although that was not precisely the original intention. Where the 2011 vintage ‘loses’ information by stepping outside of time, in the 2014 model the inverse logic applies. The wearer can choose at any time to ‘gain’ information, by calling up the real time. Put simply, Hermès created a watch that doesn’t tell the time. Deliberately. As with Le Temps Suspendu, the dial has another subtle touch: a second time zone. At rest, the aperture displays only the legend ‘GMT’, revealing the time in the chosen zone, and that of the current location, when the button is pressed.

POETIC AND CHALLENGING

I L’ARCEAU LE TEMPS SUSPENDU, the previous episode of Hermès watch saga.

14 COVER STORY / europa star

For Dressage L’Heure Masquée, Hermès called upon Vaucher Manufacture (in which it has a 25% share) to design the movement. It was Takahiro Hamaguchi, head of movement development for the Fleurier-based company, who had the honour, and the daunting task, of designing it. While Hermès’ creative ideas might be very poetic, they can be challenging to execute. How, in fact, do you hide the hours hand under-

neath the minutes hand, and make it reappear on demand? This was the brief handed to the Japanese-born watchmaker from Neuchâtel, who arrived in the Jura at the age of 19. He began with a blank page. “We tried a dozen different approaches, but none of them worked out,” explains Takahiro Hamaguchi. The key to the mystery lay in separating the two functions: one mechanism hides the hand, and another displays it. “After that, it was a logical progression.” There are two feeler-spindles on a single rack. The hours hand is driven by the rack, which continues to collect information from the hours cam, while the friction of the first feeler-spindle allows the hours hand to follow the minutes hand. When the button is depressed, the first feeler-spindle is released, and the second takes over and adjusts for the real hour on the hours cam. It took around 36 months to develop the Dressage L’Heure Masquée, which is equipped with an H1925 movement. One interesting feature is the small number of components in the module (95, compared with 174 for Le Temps Suspendu). This is a way of reducing wear in a mechanism that relies on an unusual amount of button-pushing, not to trigger a complication but simply to display the correct time! “We tested its endurance with thousands of shocks,” says Takahiro Hamaguchi. Another noteworthy feature is the slimness of the mechanism - 2.7 mm width is a remarkable achievement for a complication of this type.

“Today we have internal production capacity for more than 90% of components, if we include Vaucher.” Luc Perramond INTERNAL CAPACITIES ON THE RAISE The Dressage L’Heure Masquée also embodies the efforts Hermès is making to integrate production. For reference, in 2012 the company bought dial manufacturer Natéber SA, adding case maker Joseph Erard SA in 2013. Its workforce has doubled in size over the last five years, growing from fewer than 150 to 320 employees. In the basement in Biel, the leather workshops handle alligator, calf, ostrich and kid. The ground floor is set aside for hand stitching. Hermès began its foray into the watchmaking industry as a manufacturer of straps, in keeping with its origins as a harness maker. Little by little, it expanded into other areas of the business. Its rise has been slow but sure, earning it a credibility within the industry that is the envy of other luxury players. “Today we have internal production capacity for more than 90% of components, if we include Vaucher,” notes CEO Luc Perramond. “It’s just the hands we have to outsource.” The ultimate aim is to build a proper manufacture to produce movements and everything else, which will bring with it an increase in quality. In the last five years alone, the average retail price has jumped from 2,000 to 4,000 euros. Overall, the number of mechanical movements in the Hermès catalogue has doubled, along with the workforce; a third of its timepieces are now mechanical. Over the same period, the proportion of men’s watches has increased from 20% to 40% of the Hermès range. Perceptions do not change overnight, however. In addition, because of the creative rhythm it has set itself, the brand finds itself constantly battling against the relatively short shelf-life of its unique concept watches in the hearts and minds of the public. Love lasts three years, so they say... Which is why it has decided to satisfy its novelty-seeking audiences’ desires at regular intervals, with products that have a strong emotional component. Modernisation is on the agenda, particularly at newcomers Natéber SA and Joseph Erard SA. This means more robotisation and revamping workflows for just-in-time delivery rather than organising by métier. “For a long time, case making has been something of a bottleneck for watchmaking. We are trying to bring down order lead times from nine months to just one. This will give us greater flexibility: we will no longer be obliged to exhaust our stocks, and we will be able to adjust production immediately, according to fluctuations in demand,” says Luc Perramond.

A NEW STRATEGY IN THE UNITED STATES And, as many other brands have experienced, demand in 2014 is proving erratic. The main culprit seems to be the ‘correction’ in the Chinese market after years of spectacular growth, caused largely by restrictions on business gifts. “We are looking for new outlets. Japan is experiencing a resurgence: abenomics, coupled with the weakness of the yen, have given watch consumers greater confidence. Our sales there grew 30% last year. We are also looking at South-East Asia, from Singapore to Vietnam, and of course Europe. We remain the market leader in France, which is still our biggest market, but Italy is also growing, as are Switzerland and the United Kingdom.” La Montre Hermès, whose mother company’s share battle with LVMH has just reached a conclusion, will also be turning its attention to North America, where development is strong. The company as a whole is doing very well there, and the watchmaking division intends to make the most of it. “The United States also has the most dynamic e-commerce platform. Sales from our online store are comparable to those of a decent-sized boutique. We made the most of Chinese euphoria; next stop America,” explains Luc Perramond. In order to accomplish this, La Montre Hermès will be relying on a finelytuned catalogue, a “more feminine, more precious” strategy, “which will also include some exceptional pieces.” With all its internal resources, Hermès is not short of ideas: the Cristalleries de Saint-Louis, for instance, were used to create the magnificent dial of the Arceau Millefiori, a series limited to 24 pieces in each model. And humour is never far away, as in the Médor watch, inspired by a dog collar. “For the Dressage L’Heure Masquée we are targeting a more mature audience,” notes Philippe Delhotal. “Some of our clients are also collectors. Therein lies the difficulty: how do we avoid disappointing collectors, while continuing to delight our regular customers? We are the House of Paradox!” p Discover more at www.europastar.BIZ/Hermes

europa star / COVER STORY

THE DEBATE

“WATCHMAKING WILL METAMORPHOSE” Serge Maillard

Elmar Mock

Xavier Comtesse

Jacques Hainard

Jean-Daniel Dubois

A group of people got together to found Watch Thinking, the first think tank devoted to watchmaking. Among other things, they discuss the link between watches and new technologies. A wide-ranging, no-holds-barred interview.

They are unruly, outspoken and rebellious. Your correspondent sometimes has trouble keeping his subjects under control. This group of mavericks meets up regularly in the mountains above Neuchâtel, to talk informally about watchmaking, the philosophy and anthropology of the wristwatch, and its past, present and future. The first is one of the progenitors of Swatch, who set up the Creaholic innovation centre; another is an iconoclastic mathematician who, among other achievements, was Switzerland’s first Scientific Consul in Boston; the third is a well-known industrialist and watchmaking entrepreneur, and manager of Vaucher Manufacture; and the fourth is an argumentative ethnologist who revolutionised his domain. They are Elmar Mock, Xavier Comtesse, Jean-Daniel Dubois and Jacques Hainard. With their vast experience and critical eye, these impressively knowledgeable men, and a few others, recently decided to launch the world’s first “watchmaking think tank”, which they christened Watch Thinking. They share a love for Switzerland’s Watch Valley, the world watchmaking centre, with its 60,000 jobs in the industry. If their attitude sometimes seem harsh, it’s because they want to shake things up. And the reason they want to do that – and this is another point they have in common – is that they believe we are at a turning point. At a time when everyone is talking about the Apple Watch and the “dematerialisation” of timekeeping, they are flying the flag of resistance. Their mission is to keep the fires of Swiss horological creation burning, and ensure that it is not overtaken by events. Since they’re so difficult to control, I finally decide I might as well just let them speak. It’s like watching a play. These larger-than-life characters constantly interrupt, sometimes arguing, often agreeing. They bounce off each other. Is this how a think tank is supposed to work? Lyrical flights of fancy and animal metaphors are followed by politically incorrect statements. “You’d better not print that,” they regularly caution. What follows is a snapshot of an ordinary, slightly unhinged session of Watch Thinking, one September afternoon in Neuchâtel. The group begins its discussion. Good manners are entirely optional. They’re outspoken and argumentative, but that’s fine. We’ll patch the pieces together later. 16 THE DEBATE / europa star

What are your thoughts about the advent of so-called ‘connected’ watches? Mock: People talk about ‘connectivity’ as if it only applied to smartwatches! But telling the time is meaningless without some connection to others. A watch, even a traditional one, is a symbol of connection between human beings. If I’m

“Telling the time is meaningless without some connection to others.” alone in the desert or the jungle, I don’t care what time it is. Modern watchmaking was introduced to give us the ability to manage our relationships with others. It’s inevitable that watches should seek wider levels of connection through new technologies. Comtesse: In a way, we’re going back to our roots. The connected watch harks back to the primordial function of a timepiece, which is to bring people together. Mock: It’s fundamental. Recently we’ve focused heavily on functions other than the time: complications. It’s admirable, but it’s just ‘modern Tinguely*’. Will the future continue in the same vein? Comtesse: In the last five years, time has evaporated. It’s started to escape from the watch. Today, many people have got used to checking the time on their mobile phones. You might say that’s not important, because what we’re really selling in a traditional watch is luxury, an idea and an emotion. But it’s problematic all the same. It takes great skill to build a well-balanced watch movement. You can’t sweep it all away with the back of your hand, saying that accuracy no longer matters. Dubois: What I find interesting about connected watches is that at least they are putting devices back on wrists! Many young people don’t wear watches any more. The wrist has been reclaimed. Mock: Unfortunately, Switzerland lost the battle for the wrist a long time ago! We succeeded in winning the fashion battle, which is part of the wrist war. Today, out of every 200 watches produced around the world, just one is Swiss. Comtesse: It’s not as simple as that. Out of the one billion watches produced every year, maybe 90% cost less than ten francs. And everyone who buys a ten-franc watch dreams of owning a Swiss watch!

So will the connected watch attack the Swiss watch? Mock: Not directly. It’s true that with the connected watch, you’re not going after the sub-ten franc watches, you’re aiming for those that cost 100 to 800 francs. Nevertheless, the market won’t get any smaller, the cards will just be dealt out differently. The market will grow, it will bring in new clients. Let’s assume a 10% increase; that will mean additional production of 100 million units per year, which translates into 50 billion francs in sales. And that means that turnover in the connected watch sector will overtake that of the luxury watch sector. Swiss watchmaking will no longer be number one in value terms. And that will be a major blow. Are we prepared for that? An extraordinary new market is opening up, and it’s a great shame that the Swiss watchmaking industry does not have any part in it, at least not yet. Comtesse: In fact, a connected watch is not really a watch. It’s part of a much bigger phenomenon known as the ‘internet of things’. And it also tells the time. It will be bought by users who are mainly young people, many of whom might never have worn a watch before.

“A connected watch is not really a watch. It’s part of a much bigger phenomenon known as the ‘internet of things’. And it also tells the time.” So, will the prestige of Swiss watches remain intact? Hainard: The luxury watch remains an object with very strong recognition. At a dinner or a reception, the first thing you look at is people’s watches. With the watch I wear, I have to compensate with my witty conversation (laughter). I think that niche will be with us a lot longer than some people think. Comtesse: But we have to be careful not to stay holed up in the ‘rich niche’, and steer well clear of ‘bling-bling’. In the 1970s, the Swiss watchmaking industry produced 100 million mechanical watches. Last year we produced 28 million watches, just 5 million of which were mechanical. For the time being we are holding our own in terms of value, but we’ve already lost the masses. Apple, Samsung and Google want to win them back, with products that are far more expensive than ten-franc watches.

u *Jean Tinguely (1925-1991) was a Swiss painter and sculptor known for his kinetic art. europa star / THE DEBATE

Mock: All the same, this ‘rich niche’ as you call it has continued to grow, and Swiss watches are far more appealing than they were 20 years ago. That’s a good thing. But the problem is that we have put all our efforts into that, to the detriment of other potential avenues. What’s interesting about the new market for connected watches is that it is also targeting the middle and upper classes. It’s targeting everyone, whereas before, when we went for quantity, we were looking mainly to the base of the social pyramid, the mass market. Nevertheless, smartwatches don’t appear to have a very long lifespan. People tire of them quickly. None of them has really broken through yet. Mock: You’re right. I bought a Pebble watch. I tried it but I didn’t really get on with it... Comtesse: Nevertheless, around two million smartwatches were sold last year, and those produced by Samsung and Google are getting better all the time. Personally, I think the design of the Apple Watch is a bit of failure. They only innovative function, its one crazy touch, is that it is programmable. All smartwatches will have that feature in the future. It means that I can change the screen to display any image I want, such as the dial of Swiss watch, for example. Until now

the watchmaking world has never given anyone the possibility to programme a watch. That is a big departure. Dubois: You can change your watch to suit your mood. Mock: For me, a traditional watch movement is an industrial corpse. It stays in the same form until it dies. It’s frozen. A programmable watch, on the other hand, has incredible potential for constant regeneration. I’m not saying that it will kill off traditional watchmaking; it won’t. But it does meet the demands

“We’ll see the birth of a new profession: that of watchmaker-programmer.” of part of the population. The key question now is whether we want to be part of this new market, or not. I think we are entirely capable. Not by copying others, but by finding a ‘Swiss way’, which will be more flexible and less tribal than Apple or Samsung. That’s where I think the real potential lies. Dubois: It’s an extraordinary opportunity. Comtesse: We’ll see the birth of a new profession: that of watchmaker-programmer. Tomorrow, 100,000 people will be writing smartwatch apps. There will be ‘killer apps’. We don’t yet know where they will come from or what they will do. But to have a chance of being part of it we need to start setting up

WATCH THINKING

“OUR AIM IS NOT TO CRITICISE BUT TO REFLECT” Why set up a watchmaking think tank now? The founders of Watch Thinking explain their reasons. Launched as part of the Swiss Creative Centre in Neuchâtel, in partnership with Vaucher Manufacture, the aim of Watch Thinking is to give the watchmaking world a new forum for debate, by leading discussions and organising conferences on relevant topics such as the future of luxury, the internet of things, smartwatches and manufacturing. In order to be able to conduct its debates and try to gain some influence, the think tank is financially supported by businesses and institutions including banks, watchmaking companies and multinationals.

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“We started out with similar ideas, it was a meeting of minds.” How did Watch Thinking come about? Dubois: We started out with similar ideas, it was a meeting of minds. Comtesse: Forty percent of the residents of the Jura Arc work in watchmaking. However, we felt we lacked a forum for discussing watches. It’s important not to rest on your laurels! Dubois: There was no industrial think tank of this type. In the watchmaking world we have something of a cult of secrecy. Everyone likes to work on their own, in their own little corner.

What is the point of departure for your discussions? Mock: Will tomorrow be an extrapolation of yesterday? Does Swiss watchmaking need to undergo a transformation, or can we continue to do what we have always done? That is the great unknown. For 200 years, luxury watchmaking has based its future on a projection of the past. Will any of this be called into question? Our aim is not to criticise but to reflect. Comtesse: We know where we come from, we’re all locals who recognise the value of the watchmaking industry. However, there are two ways of celebrating this: you can look to the past with nostalgia, or to the future with enthusiasm. Dubois: In this region, watchmaking is practically all we know how to do...

training courses for watchmaker-programmers right now and right here, in the heart of Watch Valley! Hainard: We are living in fascinating, exciting times. After 12,000 years, we’re finally emerging from the stone age! Everywhere, in all fields, we are seeing fundamental change. In the future, will all watches be connected? Comtesse: Not everyone in Watch Thinking agrees on this point. I think that, one way or another, all watches will eventually have some sort of connectivity, even at the very top end. Look at the car industry: Ferrari makes plenty of ‘connected’ cars, which have security modules in case of theft. Even just for monitoring purposes, people with a watch worth more than 100,000 francs might well want their timepiece to be fitted with a discreet chip. And maybe also a chip that can be used to make payments. This kind of system will become more and more common in years to come. Dubois: In fact it’s already possible to fit watches with tracking chips, to guard against illegal resale.

“The real challenge is not the electronics per se, it’s making the product easy to use.”

How do you work? Mock: We have spontaneous, completely unstructured discussions. The main thing for a discussion group is to find inspiration. But we never know where that will come from. That’s why it’s important that we include people with varied horizons. Something is happening, and that is exciting. But perhaps in six months, other people will come along and take over. We must not be so arrogant as to think we are better than others, or that we are the only ones who know anything. Dubois: It must not become an elitist club. What influence do you have? Mock: Personally, the experience has already been extremely rewarding for me. I hope the same

Mock: The real challenge is not the electronics per se, it’s making the product easy to use. If the experience is sufficiently userfriendly, new technologies will also be integrated into top-ofthe-range models. But for the time being, customer satisfaction with smartwatches has not yet reached the hoped-for levels. Comtesse: What we need to understand is that high-tech and luxury are not mutually exclusive. The most well-off people are often comfortable with both. They’re geeks! And it can be done discreetly, for example by fitting a classic watch with a connected bracelet. Mock: So will luxury move towards high-tech, or will hightech move towards luxury? Comtesse: Both! Dubois: They’ll meet in the middle. u

is true for others. Our objective is not to find the ultimate answer, but to suggest possible ways forward. We’re trying to stimulate some brain cells! Will anyone listen to us? As things stand, we have no clear signs that the matriarchs are really interested in childbearing, to extend my metaphor... Comtesse: I think our voice is starting to be heard, despite the fact that it may make uncomfortable listening. What advantages does Watch Valley have that could safeguard its future? Hainard: As Einstein said: “To move forward, you have to think sideways.” What unites us, here in Watch Valley, is thinking sideways. On the one hand, you have scientific thought, and on the other you have ‘magical’, creative

“Innovation happens when the engineer meets the sorcerer.” thought. Innovation happens when the engineer meets the sorcerer. Mock: The strength of Watch Valley is “System D.”* (Laughter) Comtesse: The people here are very cultured. The discussions we have in Le Locle are far more interesting than the ones we have in Geneva. People around here read a lot. Hainard: That’s not surprising, given all the snow they get in the winter. Dubois: And during those long winters they can also do a bit of watchmaking on the side! p

*A French expression that translates roughly as “flying by the seat of your pants.”

looking for a mother. Its mother is the industry, the brands. American matriarchs have no problem buying a baby. But over here in Europe, we make our own babies. So we need to widen our gene pool, bring in creatives from the outside, if we are to give birth to innovation. Are there those creative types in Watch Valley?

Who will bring these two universes together? Comtesse: In my opinion, it will be the mega-rich in the first instance who will bring high-tech and luxury together. Apple invited Bono from U2 to give its keynote speech. He’s the epitome of that. People like him, who act as social markers, are often early adopters of new technology. They’re not necessarily only interested in wooden boats... At the moment, they will buy both smartwatches and more traditional Swiss watches. You can’t wear all your jewellery at once! Mock: We should stop looking to the past when we discuss what watches should become. Look at the superb woodcuts by Dutch artist Maurits Cornelis Escher, where fish morph into birds. You can’t really tell if the birds are turning into fish, or the fish are turning into birds. Watchmaking won’t disappear, it will metamorphose. Who will trigger the change? I don’t know. What will these watches look like? I don’t know that either. What I do know is that there are bound to be a few false starts, and a process of hybridisation. And that the crucial factor will be customer experience. This hybridisation will take place naturally: watchmakers didn’t wait for the arrival of smartwatches to adapt to the modern world, even if we’re just talking about the new materials now being used. But has the watchmaking world fully grasped the impact of new technologies? Mock: We are too close to judge. It would be nice to have a wizard, a god, a magician, to tell us where we’re headed. We are so scared. But there is no great helmsman, no genie, just people looking for a solution and having a go. We’re like that Brueghel painting: the blind leading the blind! An open mind is nevertheless essential. I’m convinced that we need the core watchmaking industry to take the risk and start moving in the right direction. I often use the metaphor of the ‘polyandrous matriarch’. A startup is a test-tube baby

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Mock: We’re trying, through this think tank, to be one of those external genes! But the mother still has to want the child... Often, when it comes down to it, there are just three outcomes: adoption of external genes, mass immigration, or annihilation. Dubois: We have to be open to the opportunity for new technologies to come to us. Mock: Yes, Watch Valley has always welcomed outsiders. Watchmaking wasn’t invented here, it came from England. The Huguenots also made an essential contribution. The watchmaking industry has always benefited from welcoming outsiders and absorbing their skills. We must welcome communications technology. In the past, micro-mechanical skills brought in experts from the medical and micro-electronics fields. This ecosystem depends on outsiders, and we must nurture it. Comtesse: After all, it’s the only international industry that has its heart here in French-speaking Switzerland!

“We have to be open to the opportunity for new technologies to come to us.” Mock: But we must accept the ‘overspill’; that has always been our strength. And the mechanical watch has reached the limits of what is physically possible. The new telecommunications tools are infinitely more precise. They are regulated by atomic clocks, as is GPS. These days, as far as keeping time is concerned, we can do a lot better than a mechanical watch. If I were to make a rather brutal comparison, I’d say that the Kalashnikov didn’t kill the Samurai sword. In the same way, the mechanical watch is a symbol, it represents one’s culture and what one believes in. But can we be happy with a Samurai sword that just sits on the mantelpiece? It’s lost some of its former splendour... Comtesse: In the courts of kings, Abraham-Louis Breguet did exactly the same thing as you: he told fascinating stories to sell his watches. (Laughter) Dubois: He was a genius, in every sense of the word. Comtesse: Perhaps that’s the solution: we need to tell a good story, add some drama. We need to find out how Breguet did it, what stories did he tell those kings? p

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MANUFACTURE

MÉTIERS D’ART: HAS THE INDUSTRY GONE TOO FAR? Keith W. Strandberg

Métiers d’art has never been more popular. Is it over-exposed and what does the future hold?

Métiers d’art literally means art and crafts. In watchmaking however, it has come to mean arts that have been resurrected and reintroduced, via limited edition or bespoke timepieces. For some time, métiers d’art had been missing from watchmaking and Vacheron Constantin is generally credited with its reintroduction when it debuted its ‘Masks’ series of limited edition timepieces. Ulysse Nardin also was instrumental in recapturing artisanal enamel production early in its re-launch by the late Rolf Schnyder. To date, there have been some truly incredible métiers d’art timepieces, from enamel to scrimshaw, from feathers to wood marquetry, and many companies have become involved in métiers d’art as its popularity has risen.

But have we gone too far? Are there too many métiers d’art timepieces on the market? Europa Star decided to go to the leaders of métiers d’art and find out.

IMMENSE POPULARITY Christian Selmoni, Vacheron Constantin’s Artistic Director, believes that the rediscovery and interest for métiers d’art is a natural evolution of watchmaking. “Since the nineties and the come-back of mechanical watchmaking, many brands have concentrated their efforts on ‘technical’ watchmaking, i.e. watches with complications and additional functions. Then, some eight or ten years ago, the traditional decorative crafts

“Some eight or ten years ago, the traditional decorative crafts used in the watchmaking field have been re-discovered.” Christian Selmoni used in the watchmaking field have been re-discovered, since the métiers d’art are representing a very exciting challenge, not on the technical side of things, but rather on the decorative side. Some creations are truly spectacular and this is one of the reasons for this success. Needless to say that Vacheron Constantin has used decorative crafts since the very beginning in 1755.” The rise in popularity of métiers d’art coincides with the desire of customers to have something that no one else has. “Today, people are looking for handmade timepieces and also uniqueness,” says Christian Lattmann, Vice-President, Jaquet Droz. “It’s important for customers to know that only a few people will be able to get that timepiece. It became popular in terms of communication, but very few manufactures actually integrate artisanship and hand finishing in their collections, as Jaquet Droz has done.”

I LES UNIVERS INFINIS - CAVALIER and FLORILÈGE Collection by Vacheron Constantin

Modern times, eternal elegance.

Ernest Borel S.A. +41 32 926 17 26 / info@ernestborel.ch www.ernestborel.ch

Favourite Métiers d'Art Christian Selmoni, Vacheron Constantin: “It's truly difficult to choose only one craft... however, I would say that engraving is particularly fascinating, as it seems that there is no limit for creativity in dimensions, shapes and figures. Vacheron Constantin’s open-worked novelties presented at the SIHH 2014 such as the Métiers d’Art Mécaniques Ajourées are watches that I particularly admire, where the engraving highlights the sculptural work on the movement. The engraver’s technique is reinvented to resemble that of the sculptor, revealing fascinating light effects conveyed through a threedimensional architecture.”

The tradition of métiers d’art in watchmaking is quite strong and its rediscovery makes complete sense, according to Sebastien Chaulmontet, Head of Development, Arnold & Son. “Historically, métiers d’art and fine watchmaking have always been closely linked,” he elaborates. “Haute Horlogerie is about complicated and refined movements but also about refined, hand-crafted dials, cases and more. Therefore it is quite natural that as Haute Horlogerie is popular, métiers d’art are also en vogue. In addition, while important markets like the Middle East have always been attracted by métiers d’art pieces, some markets, like China, have rediscovered them - in the 18th and 19th centuries, China was one of the biggest markets for decorated watches.” Classicism and tradition is a strong trend today, with customers looking for value and long-lasting appeal. “Today, there is a general tendency to go back to the origins of watchmaking because of its authenticity,” says Pascal Raffy, owner and chairman, Bovet. “Collectors are seeking traditionally unique timepieces where craftsmanship is present. The 20th century industrial era unfortunately brought a decline in the decorative arts, to the point where the expertise of enamellists and miniature paintings almost vanished forever. Only a very few exponents proved able to safeguard these

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Pascal Raffy, Bovet: "The height of luxury is to own a bespoke timepiece that combines together several métiers d’art and therefore I would say that one of my favourite timepieces illustrating the métiers d’art is a uniquely customized Amadeo Virtuoso III Tourbillon in white gold with Retrograde Perpetual Calendar with personalized engravings and a miniature painting on the reverse side of a 19th century Bovet pocket watch painting reproduction of ‘The Madonna and child’. This exceptional timepiece is a symbol of Bovet's heritage in unique traditional arts."

I AMERIGO VESPUCCI by Ulysse Nardin

Patrik Hoffman, Ulysse Nardin: "For me, it’s cloisonné work. When I see the people working on it, for me "For me, it’s cloisonné work. When I see the people working on it, for me métiers d’art means real material and craftsmanship and that really comes together there." Sebastien Chaulmontet, Arnold & Son: "We especially like, and use a lot, hand-engraving and miniature painting. But we are also open to all kinds of other techniques. We always choose the best technique to achieve the aesthetic goal we have in mind. It is never about the technique itself but about the aesthetical result and final product." Christian Lattmann, Jaquet Droz: "I particularly appreciate the paillons (thin gold flakes used to decorate in enamelling) but probably because it is a mix of two methods and also because it is directly linked to Jaquet Droz’ heritage. It is absolutely fascinating that we actually produce contemporary timepieces using original paillons that were hand crafted in the 18th century. And the method is quite complicated. The craftsman has to master the enamel technique and has to be very precise when placing the gold leaf on the liquid enamel. It has to be perfectly symmetrical."

crafts that had so greatly contributed to gaining Switzerland international recognition for the infinitely meticulous discipline of its artisans. Bovet belongs to this rare breed.”

HAVE WE GONE TOO FAR? With so many companies practicing métiers d’art, has it lost its cachet? Patrik Hoffman, president, Ulysse Nardin, thinks it has. “I compare it to a decade ago with the term manufacture,” he says. “The word is not the same as it used to be, and the same is happening with métiers d’art. It’s popular, but I don’t think that is a great word. There are hundreds of different kinds of

“There are hundreds of different kinds of métiers d’art and there is a danger that the consumer will discount the value of métiers d’art.” Patrik Hoffman

T The ‘paillonnage’ craft by Jaquet Droz

métiers d’art and there is a danger that the consumer will discount the value of métiers d’art.” True métiers d’art timepieces are works of art and require so much work that not many can be made. “It is true that the métiers d’art has become more and more popular but in the case of Vacheron Constantin, our métiers d’art timepieces will definitely not lose their specialness. The main reason is that the specific crafts require handwork, so this implies not only limited production, but in reality each watch is a unique piece,” says Selmoni. Métiers d’art represents the pinnacle of watchmaking, and is so difficult to do well; there is little danger of customers becoming tired of it. “Companies are trying to give their best,” says Jaquet Droz’s Lattman. “At Jaquet Droz we talk about the ‘Art of Astonishment’. It is not just about the métiers d’art but also about the emotion these pieces can give you. Traditionally the métiers d’art is organized in three categories: métiers d’art linked to the creation, métiers d’art linked to the restoration and the métiers d’art called métiers of tradition. Métiers d’art could be defined by the unicity of the work, by the craftsman himself and also by the method.”

CHOOSING THE TECHNIQUES Every year, companies bring to market watches that astound and surprise, including métiers d’art timepieces featuring techniques heretofore undiscovered. “At Jaquet Droz we truly believe in our craftsmen,” explains Lattman. “They work very closely with the design department. Both teams bring their ideas and suggestions about what kind of métiers d’art they could use. Then we come to a consensus on which métiers d’art to use.” It seems that métiers d’art techniques are only limited by the imagination of the artisans. “There is no limit to creativity,” says Arnold & Son’s Chaulmontet. “On the contrary, the more brands developing new techniques or new designs, the better and more interesting métiers d’art will become. It is a bit like a competition of who will do the most beautiful métiers d’art watches. Like with any other art, you can never have too many painters or engravers. Every new technique should be welcomed as long as it adds something beautiful. The decorative arts are a never ending quest for new techniques and patterns.” As new techniques and materials are re-discovered or created, it only deepens the appeal and the challenge for watch brands. “For Vacheron Constantin, the métiers d’art are a le-

u “Every new technique should be welcomed as long as it adds something beautiful.” Sebastien Chaulmontet

I AMADEO VIRTUOSO III TOURBILLON by Bovet

T TE8 MÉTIERS D’ART II by Arnold & Son

26 MANUFACTURE / europa star

gitimate expression of the brand,” says Selmoni. “They allow us to present stunning watches that embody creativity, the finest craftsmanship, and of course such watches also testify Vacheron Constantin’s watchmaking art. We always have in mind our four historical crafts that are traditional, yet still offering the possibility to open new horizons and design expressions. The choice of using one specific craft rather than another one is often driven by design aspects and sometimes technical considerations – such as the maximal thickness of a case or dial, for example.”

THE FUTURE FOR MÉTIERS D’ART “The métiers d’art are the safeguard of our heritage, it is therefore our duty to maintain craftsmanship alive and to pass on our passion for the watchmaking arts to future generations, persevering and nurturing skills and traditions that were threatened in the past by industrialization and over which today the shadow of globalization still looms,” says Bovet’s Raffy. “Métiers d’art is worth doing because it’s about protecting the heritage of traditional craftsmen’s skills such as engraving and miniature painting. Today, Bovet is preserving the future of watchmaking’s decorative arts, a field in which many skills were otherwise destined to disappear forever.” Keeping the decorative arts alive requires investment in the artisans, whether they be in-house or independent. “Métiers d’art watches are a true opportunity to demonstrate exceptional creativity,” says Selmoni. “Each series presented by Vacheron Constantin has a story to tell - for example, in 2014, métiers d’art ‘Fabuleux Ornements’ invites us to a journey in the world of ornaments through 4 different cultures. The métiers d’art also reinforce our global image - we are not only watchmakers, but also gem-setters, enamellers, guillocheurs and engravers. Vacheron Constantin’s métiers d’art watches will remain rare, exclusive, and incorporate the highest level of craftsmanship. Our clients, worldwide, appreciate this product philosophy.” Given the commitment and the investment in métiers d’art by many of today’s best brands, don’t expect its use to decline. The bottom line is that when the métiers d’art are expertly produced, the results are spectacular and worthy of admiration. p

GENDER

BRANDS GET IN TOUCH WITH THEIR FEMININE SIDE Isabelle Guignet and Serge Maillard

A number of watchmaking houses have decided recently to invest in expanding their catalogue of women’s watches. It’s a strategic decision.

“These days, when we present our new men’s collections to retailers, some of them will give a little sigh and say, ‘don’t you have anything new for women?’” For Alain Zimmermann, managing director of Baume & Mercier, this little anecdote just about sums up the current state of the market: the watchmaking industry has set the dial too far over to the men’s side.

00 BRANDS / europa star

“When we present our new men’s collections to retailers, some of them will give a little sigh and say, ‘don’t you have anything new for women?’” Alain Zimmermann “Over the last twenty years we’ve seen a strong movement towards masculine designs. In terms of innovation and product choice the watchmaking industry has tended to rather overlook women.” With his new ‘Promesse’ collection, Alain Zimmermann is hoping to reverse this trend and redress the gender balance. And he believes he is not the only brand manager looking for a new direction. “I think we’re seeing a groundswell of renewed interest in ladies’ watches, as this year’s Baselworld showed. Women are the new big thing!”

Baume & Mercier’s own history is illustrative of the ‘masculinisation’ of watchmaking, an episode it now hopes to leave behind. In the past, parity between men’s and ladies’ watches was a given, but that was before the inexorable rise of the gents’ watch. “Because of our heritage many people still spontaneously think of Baume & Mercier as a women’s brand,” notes Sylvain Verdon, head of the Swiss market. The house’s history is marked by several iconic ladies’ models: the ‘Marquise’ in 1946, the ‘Galaxie’ in 1972, the ‘Catwalk’ in 1997 and the ‘Linea’, which was relaunched in 2011 and, prior to the advent of ‘Promesse’, remained the latest emblematic iteration of Baume & Mercier’s feminine DNA.

‘REAL’ WOMEN’S WATCHES While welcoming the market’s endorsement of the ‘affordable luxury’ brand’s strategy, Sylvain Verdon stresses an important point: “The Promesse collection isn’t just a man’s watch that has been altered to fit women!” These days, watchmakers are obliged to satisfy an increasingly demanding clientèle, customers who may not be content with a watch designed originally for men, that has been adapted to make it more ‘ladylike’. Drawing inspiration from its almost hundred-year history, the Promesse collection, which was launched at the beginning of September in fourteen models and two sizes (30 mm and 34 mm), features an oval bezel in a round case, with a drapé guilloché dial. There is also a space on the back of the watch for an engraved message: “More and more clients want to personalise the watches they give as gifts.”

Luc Perramond notes a growing interest in mechanical movements among women. The collection includes both automatic and quartz models. Alain Zimmerman points to a growing interest in automatic calibres: “In Asia in particular, there is strong demand for automatic movements. But at the same time - and this is very interesting - women are less reluctant to opt for quartz if the brand also offers automatic models.” For these reasons, Baume & Mercier decided to postpone the launch of the collection in order to be able to offer both quartz and automatic movements, thereby leaving nothing to chance. Luc Perramond, CEO of La Montre Hermès - a brand with a distinguished pedigree when it comes to catering for women - also notes a growing interest in mechanical movements among women. “But women are not turning to mechanical

watches for the same reasons as men. Where men are primarily interested in performance, what women go for is a sense of authenticity, particularly in comparison with quartz, which is not specifically Swiss. This is what we are seeing, particularly with our Asian clients.” The brand is also preparing to pursue a ladies’-led strategy across the pond (see our cover story on p.12): “In the United States, where the majority of watchmakers are fighting it out in the men’s sector, there is far less competition in ladies’ watches.” In recent years, some of the more traditional masculine brands have also been seen fleshing out their women’s catalogues. A telling example is TAG Heuer, which launched its ‘Link Lady’, as modelled by Cameron Diaz, two years ago now. In a similar vein, Omega gave its ‘Ladymatic’ a facelift in 2010, and promoted it with the help of an equally charming brand ambassador, Nicole Kidman.

I LVCEA by Bvlgari and Naomi Watts, another famous feminine watch ambassador

A MAJOR COMPLICATION FOR LADIES The rarefied worlds of haute horlogerie and major complications also appear to be joining the fray. A pioneer in the field, Christopher Claret’s stunning ‘Margot’, which has been available since the end of September, builds on the timeless theme of a lovelorn lady picking the petals off a daisy, hoping to be told that ‘he loves me... madly’. Until now, the catalogue of the Le Locle-based independent watchmaker has been exclusively masculine. So why this venture into the world of ladies’ watches, with a new complication for women? “I pitched my innovative projects for women around the watchmaking houses for a long time, but the men who ran the

O PROMESSE by Baume & Mercier

u europa star / GENDER

I MARGOT by Christophe Claret

30 GENDER / europa star

brands were never convinced by my ideas... my vision is to create complications designed specifically for women. I promised myself that once I had my own watchmaking brand I would see this project through. The Margot is just the beginning.” Since none of his clients wanted to bet on developing a major complication for women (prices for the Margot start at CHF 198,000), he is going it alone, with an initial limited edition of 20 pieces (16 of which had been sold at the time of going to press). “The demand is there, but it’s negated by the lack of supply. We are starting to see some success. This women’s complication is in a way the story of my life. It took me two years to develop. There will be more to come!” The watchmaker has observed strong demand in Asia, particularly from Singaporean businesswomen. “But in fact, we are seeing as many collectors buying this product for their wives, as women buying it for themselves.” The beauty of the watch lies not just in its complications, but also in its elegant and understated jewellery elements. Titanium

“This women’s complication is in a way the story of my life.” Christopher Claret petals, droplets of gold and diamonds, and a tiny chime as each petal is removed. The familiar childhood chant is displayed: He loves me, he loves me not... or, in French: Il m’aime un peu (He loves me a little), beaucoup (a lot), passionément (passionately), à la folie (madly), pas du tout (not at all), the verdict appearing randomly at each press of the button located at 2 o’clock. The pusher at 4 o’clock resets the flower: all the petals instantly reform around the centre. The timepiece is as captivating to incurable romantics as it is to connoisseurs of mechanical complications. “The aesthetic details are exquisite but they were very difficult to manage in production. Giving someone a watch like this is truly a gesture of love!”

CHALLENGING THE BRANDS’ APPEAL Another watchmaking company dipping its toe into the waters of women’s watches is Revelation, founded by designer Anouk Danthe and her partner Oliveir Leu, who hitherto offered only men’s models. The watches’ unique feature is a ‘magical dial’ that turns to hide or reveal the mechanism at their heart. The new ‘Revelation R05 First Lady’ uses the same system of polarised crystals to reveal not the date but miniature figurines. For this first ladies’ model, due to be unveiled at next year’s Baselworld, a clover leaf and a ladybird will adorn the dial of a collection on the theme of lucky charms. “It opens the door to an imaginary world, peopled with fairy tale figures, ghosts, even giant squids and underwater treasures!” enthuses Anouk Danthe. Why this foray into ladies’ watches? “We want to be a complete brand, with models

for men, women and sport. One of our men’s models will be adapted for women, but we also have this purely feminine creation. We didn’t want to just add colours.” The company’s sales presence is focused in Switzerland and Japan, both mature markets in watchmaking terms. “The market for women’s watches remains dominated by brand. When a man gives his partner a Cartier or a Hermès, there isn’t the same element of risk as there is if he gives her a Revelation! We want to capture the interest of all those women who know a little bit about watches and want to be surprised.” Eventually the brand intends to stabilise its catalogue at one-third ladies’ and two-thirds gents’ watches, although the demarcation is not always clear-cut. Some models, such as the orange and turquoise versions of the classic R05, have proved equally attractive to men and to women.

“We didn’t want to just add colours.” Anouk Danthe

T R05 FIRST LADY by Revelation

europa star / BRANDS 00

TOWARDS A NEW GENERATION

I MISS LOVELY by Titoni

32 GENDER / europa star

Titoni’s watchmakers have also been thinking a lot about women. The brand founded in 1919, which is active in the mechanical mid-range, already has a solid record in women’s timepieces, with a back-catalogue of elegant models from the 1930s and brightly-coloured pop art lines in the ’60s. It’s now the turn of the most recent collection, ‘Miss Lovely’, to rejuvenate Titoni’s feminine DNA with classically inspired designs featuring soft, harmonious lines. “In our production portfolio, we have about 65% gents’ and 35% ladies’ watches. However, we’re gradually developing our selection of women’s watches. And this figure is also a little bit misleading since many women nowadays also buy gents’ watches”, explains Daniel M. Schluep, CEO of the Granges-based family firm. Titoni’s new ladies’ collection consists entirely of self-winding mechanical watches: the intricate dials express a style that combines traditional touches with features aimed at a new generation. “It is the ideal companion for the self-confident woman. The Miss Lovely models all play feminine and come with a frisky touch. It is not produced for a specific market. They fit the lighthearted lifestyle of the young modern-day woman, whether in Europe, Asia or the Middle East!” According to Daniel M. Schluep, it is important to also offer some complicated pieces for a new generation of female connoisseurs, such as moon phases, world timers or skeleton watches. “Of course, in our segment, complicated ladies’

watches are more of an exception. However, Titoni has the Master Series for both gents and ladies. It is COSC-certified and the ladies’ watches come with real diamonds.”

“Many women nowadays also buy gents’ watches.” Daniel Schluep But despite these positive indications, many questions about ladies’ models still remain, and the watchmaking industry does not yet have all the answers. To what extent will watchmakers really want to invest in developing complications for ladies, apart from the universally appealing moon phase? Will the trend work in favour of calibres that are close to standard men’s movements, or will it veer towards smaller dimensions? (As we announced in our previous issue, several movement manufacturers are hoping to develop automatic ladies’ calibres, a market currently dominated by ETA.) And the perennial question: will quartz or mechanical movements come out on top? Ladies, it’s all up to you! p

WORLD WATCH WEB

WOMEN’S FASHION WATCHES A WORLD OF OPPORTUNITY Sophie Doran, Digital Luxury Group

UNITED KINGDOM

RUSSIA

GERMANY

USA

FRANCE SPAIN SWITZERLAND ITALY

MEXICO

JAPAN QATAR

CHINA TAIWAN HONG KONG

SAUDI ARABIA INDIA UNITED ARAB EMIRATES THAILAND SINGAPORE BRAZIL

There was once a time when ‘fashion’ was a dirty word in watchmaking. When a watch could either be technical or beautiful, but never both. Fashion watches served as the mechanical equivalent of the buxom blonde cliché; very pretty to look at with little going on upstairs.

METHODOLOGY BRANDS TRACKED (14): Bvlgari, Cartier, Chanel, Chaumet, Chopard, Dior, Harry Winston, Hermès, Jacob & Co., Louis Vuitton, Piaget, Ralph Lauren, Tiffany & Co., Van Cleef & Arpels MARKETS TRACKED (20): US, Mexico, Brazil, Germany, UK, France, Spain, Switzerland, Italy, Qatar, Saudi Arabia, UAE, India, Thailand, Singapore, Hong Kong, Taiwan, China, Japan, Russia DATA PERIOD: Q2 2014 YEAR ON YEAR: Q2 2013

It has become very clear in recent years that wealthy independent women are ready to spend large sums on mechanical timepieces. Fast-forward to Baselworld 2014 and the opportunity on every CEO’s lips was the world of women’s complications. Fashion players such as Chanel, Dior, Hermès and Louis Vuitton – with but a relatively recent claim to watchmaking – were gaining technical ground on the historical houses of Geneva, offering products exclusively designed for their existing female clientele. It has become very clear in recent years that wealthy independent women are ready to spend large sums on mechanical timepieces, but what is ultimately lacking in the marketplace is choice. The most celebrated watchmakers in the world have historically focused 95% of their attention on the men’s market, as the majority of collectors have indeed been male.

u europa star / WORLD WATCH WEB

Iconic Haute Joaillerie houses have further finessed their watchmaking expertise to bring more natively feminine timepieces to market.

THE MARKET

When these brands did think about women, it had very little to do with what women want. Instead of designing products for a female audience, brands simply shrunk watches designed for men and finished them in rose gold with some diamonds to the dial. Increasingly sophisticated, wealthy and independent female watch collectors are looking for much much more. For fashion watch brands this marked a tipping point, where the underdog managed an advantage. Fuelled by an innate understanding of what wealthy women want, houses such as Dior and Chanel were able to devise complicated products just for women, bolstered by their expertise with fine jewellery, legitimized with the help of exclusive movements made by the storied horologers of Geneva. Furthermore, iconic Haute Joaillerie houses have further finessed their watchmaking expertise to bring more natively feminine timepieces to market. Houses such as Van Cleef & Arpels, Cartier and Piaget have perhaps benefited from the knowledge and technology found at fellow-Richemont manufactures like Vacheron Constantin, Baume & Mercier and Jaeger-LeCoultre. Their longstanding expertise in designing fine jewellery for women, coupled with innovating watchmaking technology at ‘family’ brands, has no doubt led to an increase of exceptional pieces for women, where mechanical excellence sits equal with rarefied beauty.

As a result the industry for beautiful and technical women’s watches has mobilized, and as brands bring more inspiring products to the table, consumer interest is growing. For the 14 brands under consideration, 68% of searches in Q2 2014 were for ladies’ watches compared with 32% for men’s. The highest volume of searches for fashion and watch/jewellery brands was found in China, where 29% of all searches (of the 14 watch brands selected) were captured. China was the only geographical region in the top five where interest grew, up 6%. All other markets – the U.S., U.K, France and Italy – all registered a decrease in interest, between 3 and 9%.

FOCUS ON CHINA This is perhaps unsurprising when we consider the difference between the newer Chinese female luxury consumer and that of their western counterparts in luxury markets considered developed. According to Bain & Co., men accounted for 90% of China’s high-end purchases in 1995. Today women make up about half, yet still trail the global average in mature markets, where female consumers account for about two-thirds (Bloomberg http://www.europastar.biz/bloomberg). According to local analysts, “Chinese women are becoming more independent, becoming richer, and are buying for themselves,” as the market begins to re-balance its offering between women and men. Whilst the men’s timepiece category

u HIGHEST SEARCH VOLUMES BY COUNTRY (FOR COUTURE, WATCH/JEWELLERY BRANDS)

OTHERS 13% MEXICO 2%

-6%

+6%

29% CHINA

Q2 2014 SHARE OF SEARCH Y/Y EVOLUTION

-2%

RANK COUNTRY SINGAPORE 3% INDIA 3% JAPAN 4% GERMANY 4%

-4% +15% +7% -8%

ITALY 4%

-3%

FRANCE 9%

34 WORLD WATCH WEB / europa star

-9% -7%

-5%

19% UNITED STATES

10% UNITED KINGDOM

China

France

Italy

Germany

Japan

India

Singapore

Mexico

Men accounted for 90% of China’s high-end purchases in 1995. Today women make up about half.

COMPARISON

BRAND

GLOBAL RANK

SHARE OF SEARCH

CHINA RANK

SHARE OF SEARCH

Cartier

53%

62%

Chanel

14%

Chopard

4 (-1)

Piaget

3 (+1)

Hermès

10 (-5)

Bvlgari

5 (+1)

Dior

6 (+1)

Louis Vuitton

Tiffany & Co

12 (-3)

Harry Winston

11 (-1)

Van Cleef & Arpels

7 (+3)

Ralph Lauren

13 (-1)

Chaumet

9 (+4)

Jacob & Co

WORLDWIDE Searches for CWJ brands (14), 20 Markets, Q2 2014, vs Q2 2013

CHINA Searches for CWJ brands (14), China, Q2 2014, vs Q2 2013

(Data: 14 CWJ brands, Worldwide = 20 markets, Q2 2014)

europa star / WORLD WATCH WEB

THE MOST-SEARCHED FOR MODELS

will continue to be impacted by anti-corruption laws and a crackdown on gifting, perhaps the future opportunity lies in the increasingly sophisticated desires of Chinese women.

BRAND

MODEL

Cartier

Ballon Bleu

Cartier

Tank

13%

-7%

THE BRANDS

Chanel

J12

12%

-36%

Cartier

Roadster

-9%

Cartier

Pasha

-9%

Cartier, in terms of online consumer interest, is by far the most popular choice in ladies’ watches both across 20 markets and in China. Global interest only grew by 5% in the comparison period, but in China it increased by 26%, to achieve nearly two-thirds of all searches for these 14 brands. Chanel commands the same share of search in China (for ladies’ watches) as it does on a global scale (14%), as do Hermès and Dior. What was particularly interesting to note that whilst Chaumet ranked 13th on a global scale, in China the brand jumped to 9th place. A similar story at Van Cleef & Arpels, which ranked 11th overall but was the 7th mostsearched for brand in China. On a global scale, Hermès ranks 5th in the world when it comes to searches of women’s watches, yet the brand only ranks 10th in China. Interest in the brand year-on-year dropped a whopping 63%, perhaps reflecting an overall shift in the Chinese market, whereby consumers are moving away from globally recognised luxury brands in a search for something from a niche brand. Or indeed brands with original roots in jewellery and watchmaking, as consumers become more sophisticated and knowledgeable about timepieces. The big increases in interest came from historical lesser-known jewellery and watch manufacturers, such as Chaumet (+129%) and Chopard (+162%). Further supporting this idea was a drop of interest at Louis Vuitton (-45%), Chanel (-52%), Tiffany & Co (-89%) and Ralph Lauren (-31%), four of the biggest and most recognised luxury brands in the world. According to DemandTracker data, Louis Vuitton’s -45% drop was the result of an overall drop in interest for the brand. At Chanel, the -52% decrease can be attributed to a reduction in searches for the price of Chanel watches and the J12. But looking more broadly at Chanel search terms, there is a growing interest for Chanel’s Paris boutiques from China (up 28%). Overall Chinese consumers are increasingly looking for the store locations of luxury brands in the UK, specifically for the 14 brands mentioned above. Meanwhile searches for Singapore and Hong Kong have either dropped or levelled out. This is likely a result of increased wealth and mobility by Mainland Chinese, coupled with more relaxed visa procedures and the reduced cost of travel.

36 WORLD WATCH WEB / europa star

Q2 2014 SHARE OF SEARCH

Y/Y EVOLUTION

20%

+12%

(Search volume, 20 Markets, Q2 2014, vs. Q2 2013)

WOMEN’S WATCHES OF THE FUTURE It’s clear that the interest in women’s watches from houses traditionally rooted in fashion and fine jewellery is there, but rather like the market, it is currently fragmented and unpredictable. Many claim that Chanel created a new category in 2000 when they launched the J12, yet almost fifteen years on the industry is far from consolidated. Traditional Haute Horlogerie brands are just getting their toes wet when it comes to outstanding timepieces for women, deliberately designed for women. Fine jewellery houses are starting to make a more significant play into more watchmaking territory, whilst fashion brands are working to establish their credibility and excellence in the manufacturing field. Essentially, the three groups with the potential to create exceptional timepieces for women are all at various stages of development. But where some may find competitive advantage is within new comprehensive corporate structures, incorporating luxury brands from a myriad of categories, and therefore fast-tracking the individual elements it may require to bring these products to market. Take for example Kering’s recent acquisition of Uylsse Nardin, its biggest stride into the world of Haute Horlogerie yet. Kering has reinforced its watchmaking position alongside Girard-Perregaux, but can also draw from its fine jewellery brands Boucheron, Pomellato and Qeelin. Not to mention design, marketing and communication cues from global fashion brands like Gucci, Bottega Veneta and Saint Laurent Paris. The same could be said of Louis Vuitton and Dior at LVMH, whose watch and jewellery business could be aided by the 2012 acquisition of Boucheron. And of course unbridled success at Hublot and TAG Heuer. Brands within the Swatch Group – namely Omega, Breguet, Blancpain, Jaquet Droz and Glashütte Original – could be set to benefit from the acquisition of Harry Winston, and the famed-jewellers longstanding experience working with women. Whichever way you look at it, before us all lies a world of opportunities for women’s watches. p

Before us all lies a world of opportunities for women’s watches.

SPOTLIGHT

CASIO EDIFICE SMARTPHONE LINK MAKES MANAGING WORLDTIME 300 CITIES Casio introduces the new EDIFICE EQB-500 that uses Bluetooth to allow users to program the world time and more with their smart phones. Smart watches are in the news today, as Apple readies its own version and other companies struggle to make their smart watches as full featured as possible. Casio, with the new EDIFICE EQB-500, is going the other way, allowing an interface via Bluetooth with your smartphone, making setting and usage much, much easier. The new EDIFICE EQB-500 has been specifically designed to make crossing time zones easier than ever before. World time watches are certainly very useful, but setting them accurately has always been a problem – cumbersome, difficult and often confusing. What world travelers need is a watch that syncs with the local time immediately, at the push of a button. Well, the new Edifice timepiece and its Bluetooth interface with smartphones, has fulfilled this need. Managing world time is now as easy as pushing a Bluetooth button on the watch. The system covers 300 cities worldwide, offering an access to the local time even without a specific code. Using the “Casio Watch+” App on the most popular smartphones, changing time settings for home or for the second time zone is quick and painless, as is setting alarms and saving stopwatch data. Wearers can also use the watch controls to check for new emails in whatever email account is registered in the application. And, the new EDIFICE has a “phone finder” feature, which helps to locate the smart phone when mislaid.

And, to top it off, the EDIFICE EQB-500 is a real timepiece, not a blocky, black plastic thing that only is recognizable as a watch because it is strapped to the wrist.

CONNECTING Casio is no stranger to using Bluetooth, having integrated the interface in the G-SHOCK line in 2012, and it has also been used in the CASIO sports watch line of fitness watches. The EDIFICE EQB-500 has a Bluetooth button and with one push, the watch is connected with the smartphone and the time can be set for about 300 cities around the world. In addition, one push of a button switches the two displays, making the home time the larger or smaller display at will. Of course, the watch will automatically update twice a year when the time switches to or from daylight savings time. System compatible with: iPhone 4s to latest – Samsung Galaxy S4/S5/Note3

FULLY FUNCTIONAL The EDIFICE EQB-500 is also a full featured chronograph, one of watchmaking’s most useful complications. Using this new technology, the chronograph can be used to time people or objects over a fixed distance – all users have to do is enter the unit of distance on the smartphone (either miles or kilometers). In addition, the EQB 500 can log up to 100 stopwatch records. The EDIFICE EQB-500 from Casio is a quantum leap forward for world time watches, making setting and managing time zones effortless. u

SPEED AND INTELLIGENCE

Telling the time more simply and reliably, anywhere in the world. A new era in the evolution of multifunctional chronographs.

A fusion of dynamic styling with a sophisticated watch face. Advanced technology to control a vast array of functions coupled with multiple hands for creativity of expression. EDIFICE - Multifunctional chronographs evolving through the power of electronics. That evolution has now leaped ahead to a whole new level. For the first time, Casio analog watches now support Bluetooth速 SMART, providing extensive linked functionality with smartphones. You can access the correct time in major cities around the world with the single push of a button. The correct time precision of this watch, along with advanced technologies, has made this possible. Using instructions from the smartphone, the correct time in any of over 300 cities worldwide can be displayed. The superb quality and boldness of the all-metal design, and the essential quality of the watch, all embody advanced technology that ensures a high level of precision. Together, these innovations take multifunctional chronographs into a whole new realm. EDIFICE EQB-500

GLOBAL TIME SYNC. Uses Bluetooth速 communication to synchronize with the time information in your smartphone. Instantly accesses the time worldwide to display the correct time anywhere, anytime. AUTOMATIC TIME ADJUSTMENT Access your smartphone with a single push of a button. Now you can receive the correct time anywhere and anytime. A single button push accesses your smartphone. Using the time information in the smartphone, the watch automatically adjusts the time. It also supports automatic connection to your smartphone (up to once a day). No matter where you are in the world, it quickly receives the correct time for your location.

DUAL DIAL WORLD TIME FOR 300 CITIES Shows the time for two cities simultaneously. The dual time feature simultaneously displays the time for any two of 300 cities all around the world. You can check the Home Time (local time) and World Time using the hour and minute hands and the inset dial. And switching between the two time displays is simple, making for smooth and easy changes to time settings when you head overseas or return home.

SIMPLE SETTING Quick access to the time in major cities around the world. Simply select one of the 300 World Time cities from the world map in the smartphone app and the time for that city is displayed. You can also set functions such as alarms from your smartphone. Content is sent instantly to the watch, making it easy to configure the settings.

300 World Time cities

Alarm setting function

SHARP FINISHING

Boldly expressive index Highly dimensional shaping composed of straight edges was used to create a sharply defined index with dramatic edges. The result is a simply elegant and highly functional design.

FUNCTIONALLY ELEGANT WATCH FACE DESIGN

THE ENERGY OF MOTOR RACING AT YOUR FINGERTIPS

Strong and powerful watch dial A dial with a depth created by highly dimensional components such as the index, coupled with a functional design featuring advanced molding, shaping and vapor deposition technologies, has achieved a dynamic fusion. The result is a functionally beautiful highly dimensional face design.

Speedometer The layout features a mode dial combined with a speedometer at the 4 o’clock position. The speed calculated from the stopwatch measurement is displayed brilliantly using a design that evokes the speedometers in cars. In watch mode, it shows the weekday.

DIRECT OPERATION

Bluetooth® button Fitted with a dedicated Bluetooth® connection button at the 8 o’clock position. One-push connection and smartphone operability have been achieved, while the Bluetooth® icon gives off the identity as a key icon.

SOLAR POWERED LIGHT INTO POWER Converts light from the sun and other sources into power to continuously drive its functions. Hands that are used to show many different kinds of information, and solar power that drives functions linked to smartphones are now a reality.

For more information, please visit www.edifice-eqb500.eu

BESPOKE

THE PRESENT AND FUTURE FOR CUSTOMISED TIMEPIECES Keith W. Strandberg

Bespoke watch production is growing as more customers want something that no one else has. Some companies have been doing it their entire history, while others have started responding to this demand.

More and more luxury watch companies are making it possible for customers to have unique timepieces, made to their own specifications. At the most basic, customers can make alterations and modifications to existing watch collections to make them different. This personalization takes longer and costs more, but for many customers it’s worth the wait and the extra money. Some companies have taken this a step further, by allowing customers to create their own bespoke timepieces from scratch, including the movement. The price is steep, but for some it is worth every penny to own a one-off timepiece. Companies like Cartier, Vacheron Constantin and Patek Philippe, have been doing this since their inception. Perhaps the most famous bespoke timepiece in history, the Henry Graves Supercomplication by Patek Philippe, is up for auction in November with an estimate of $15 - $20 million.

Some companies allow customers to create their own bespoke timepieces from scratch, including the movement.

I A close-up of Patek Philippe’s Henry Graves Supercomplication with the night sky of New York City ©Sotheby’s

40 BESPOKE / europa star

Bespoke is relatively straightforward for shoes, clothes and other products that are already largely hand-made. The extra steps involve different materials, special touches, unique designs and made-to-measure fabrication. Watches, however, are a different case altogether. Mechanical watches are micro-machines that are designed to last virtually forever, so a great deal of testing goes into everything – the ruggedness of the watch as a whole, the water-, temperatureand shock-resistance of the case, the wear-resistance of the strap, the accuracy and precision of the movement and more. Producing a completely bespoke watch is a huge endeavour that is supremely expensive, as the entire cost of the research

“Thanks to our niche market, our work is recognized and appreciated worldwide.” Rolando Braga and development and testing has to be borne by each bespoke timepiece. “What makes it so difficult is that each time, we are trying to create a completely new, original watch, and this is very rarely done today,” says watchmaker Roger W. Smith, based on the Isle of Man. “We do one completely bespoke watch every two to three years, because of the complexity of it - it’s a massive undertaking, taking about three years from start to finish.” About 15% of the Armand Nicolet turnover is in bespoke, focusing on refurbishing vintage movements and constructing a modern timepiece around them. “Watches are no longer devices that people buy to know the time - nowadays everyone owns a smart phone that is much more efficient when it comes to time keeping,” says Rolando Braga, president of Armand Nicolet. “Watches have now become personal items that reflect the personality of the people wearing them. They tend to represent more and more each individual’s uniqueness and for this reason they can’t be produced in huge lots. They have to be special, just like a piece of jewellery. We are an artisanal company that works with great passion aiming for uniqueness and rareness. If we were to compete with the mass production of the big brands, we would lose for sure but thanks to our niche market, our work is recognized and appreciated worldwide.”

WHO CAN DO IT? Theoretically, any company that controls its own production can do bespoke work. “Bespoke is a small portion but it remains important for Cartier to meet the needs of all our clients, even those who wish to acquire something very unique,” says Elisabeth Guérin, PR specialist at Cartier. “We do not follow trends. Bespoke has always been part of the culture of our Maison. The Maharajah of Patiala, Alberto Santos Dumont, Maria Felix, and so many more have all requested a bespoke creation at Cartier.”

I Right to left: ATELIER CABINOTIERS: VLADIMIR and PHILOSOPHIA by Vacheron Constantin

At the highest end, bespoke is not really a business model, but a way to satisfy the best clients. Some companies don’t market that they do bespoke, but do it for their best customers. “Bespoke is not a trend but a request coming from customers,” clarifies Vacheron Constantin’s retail director, Dominique Bernaz, who also manages the Atelier Cabinotiers department. “Furthermore, it is very important to differentiate bespoke from personalization. Personalization is indeed quite common and popular nowadays, and has become a trend. But bespoke, the way we see it at Vacheron Constantin, is exclusive and has no limitation to the possible watches we create: it can go up to developing a new movement from scratch, in respecting of course the aesthetic values of our Manufacture. This service has always existed, and our Chief Executive Officer, M. JuanCarlos Torres decided in 2006 to create and name a specific bespoke department: Atelier Cabinotiers.”

Customization After the Sale Unlike cars, where customization after the purchase is commonplace, watches, until now, have been left pretty much alone, except for replacement straps. There are companies now that will do basically whatever you want to your timepiece. Wish you had diamonds on it? Like black DLC coating? How about the all black look? Black-Out Concept, Bamford Watch Department and Titan Black are three examples of companies that offer bespoke services using a customer’s watch, or a variety of in-house customization options on some of the most popular watches from established companies like Rolex and Audemars Piguet. All of these companies acknowledge that this customization will void the manufacturer’s warranty, and they replace it with their own. As you can imagine, some watch companies don’t like this very much, feeling that it is tampering with their proprietary designs. The companies doing the work hold that the product is now the customers’ and they are free to do whatever they want to their property.

u europa star / BESPOKE

As luxury becomes more mainstream, the demand for bespoke services will continue to grow. “Genuine luxury is above all a question of education,” says Bovet’s Pascal Raffy. “It can only be magnified if it is manufactured to the highest quality and in discretionary quantities. Bovet timepieces, whether being unique pieces or not, reinforce these criteria indispensable to the most beautiful expression of time, thanks to our incredible wealth of techniques and decorative arts. With the prestigious history of the House of Bovet and my passion as a collector, I naturally feel it is my duty to sustain the skills inherent in the art of watchmaking, to continue to manufacture timepieces that will fire the passion and curiosity of future generations.”

RETAILERS: WHERE DO THEY FIT IN? T Bespoke by Bovet

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Bespoke can be a good opportunity for retailers to solidify their relationships with consumers, by getting them something

Bespoke can be a good opportunity for retailers to solidify their relationships with consumers, by getting them something that no one else has. that no one else has. At the same time, however, working in such proximity with the brand might endanger that relationship or supplant it entirely. The bottom line, however, is that if customers want a bespoke watch, they’ll find a way to get it, whether the retailers help them or not. Also, it’s in the brand’s best interest to have a retailer involved because they can bring more customers for bespoke to them, and they have experience dealing with consumers.

I Bespoke by Piaget

“The majority of collectors who purchase a Bovet timepiece have an excellent watchmaking education and they know that our House has the expertise to personalize unique timepieces like no other manufacture,” says Bovet’s Raffy. “Our partners have a key advisory role to educate collectors about the many possible personalization options related to the specificities of each timepiece. Realizing unique pieces often requires many exchanges between the client and our artisans (sometimes several studies or drawings are necessary). Our partners are the messengers of our expertise and have excellent training to provide a personalized response to the wishes of each collector.” Some companies work through retailers, while others also work directly with customers. “The bespoke service is offered to customers directly from our Manufacture in Geneva or through our Boutique-network throughout the world,” says Vacheron Constantin’s Bernaz. “Retailers are welcome to accompany their customer along all the steps of the bespoke process.” Smaller brands like Armand Nicolet rely on retailers to spread the word about bespoke services. “Only the best retailers have such loyal customers who trust them for the production of special watches, especially considering that this type of project always requires a remarkable investment,” says Braga. Keeping retailers happy and involved in the bespoke process is important, especially for the lesser-known brands. “Many end consumers ask my retailers who then contact me, and of course my retailers get their margin,” says Yvan Arpa of

Artya, which does unique pieces as part of its regular collection. “If you have this link with the customer base, bespoke can be a n ever-ending business model, benefiting both retailer and brand.”

THE FUTURE FOR BESPOKE As customers clamour for the unique, and bespoke and limited editions continue to do well on the auction market, there is no danger that watch companies will stop producing these fantastic watches.

“Bespoke should remain an exception, meaning exclusive.” Dominique Bernaz “Bespoke should remain an exception, meaning exclusive,” says Vacheron Constantin’s Bernaz. “As it has always existed and still exists now: bespoke will remain!” As long as there is demand for the highest level of watchmaking, there will be a demand for bespoke. “Bovet’s identity is based on the manufacture of timepieces that magnify the arts of watchmaking,” says Raffy. “Beyond fashion trends, which by their very nature are ephemeral, our watchmaking art is increasingly respected for the authentic values and the cultural dimension it conveys among an ever-growing body of collectors and future generations. Patrimonial Art always lasts.” p

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ACCESSORIES

SHOULD YOU OFFER MORE THAN JUST WATCHES? Keith W. Strandberg

In today’s changing retail landscape, watch retailers have to do just about anything they can to pull through the market. For some, that means offering other products beside watches. Here we speak to some of the world’s best retailers for their take on the pros and cons of selling other luxury products. Here’s what they had to say.

Shonagh Massie, Marketing Director, Hamilton & Inches (Edinburgh, Scotland): “We are specialists in fine jewellery, silver and gifts along with watches and other timepieces. Our watch brands have always remained one of the strongest areas of our business and we enjoy a good relationship with them and the profile that it provides. Fine jewellery is the other major area of our business and we have incredibly loyal customers who have used us as family jewellers for many years. Purchasing jewellery tends to be based more on emotion and sentiment. The relationship you have with the purchaser needs to be developed. Our sales team does not press our clients, the sale is made through spending time and developing a trust. With watches, although some sales are made in this way, generally the importance is knowledge, watch buyers are generally looking for the information that will make their particular watch stand out. A watch sale can be a very fast sale. Fine jewellery almost never is. Our jewellery ranges are the most successful. We carry only the finest gemstones that are all certified by the GIA. Our ethos has remained the same

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since our beginnings as a retail jeweller, to only sell the very highest quality. We have a dedicated head of department in each of the areas of the business who will do the buying, however they almost never work exclusively. For any new product they will discuss the potential with their peers. Our company has the benefit of over 200 years of knowledge and experience on the sales floor, so nothing is purchased without the input of the sales team. We are always aware of the quality of a piece. You can be certain of the quality of a watch as it is driven by the brand and the price point. Jewellery, due to its endless variety of design and gemstones with their natural complexities, does not carry the same certainty. We are constantly vigilant of the pieces that we purchase and we never compromise on quality of a piece of jewellery, no matter how stunning. The benefits of being a jeweller is that you are there for all of the special moments in someone’s life. There is nothing more rewarding than meeting someone who has purchased a special piece of jewellery from us many, many years ago and seeing how important it is to them. It is a privilege.”

Mark Gold, Mark Gold Jewellers (Durban, South Africa): “We have included many other luxury products in our stores over the years. The luxury buyer can only be fed so many watches from a single brand and personally I don’t believe in representing too many brands. An interesting product that we sold, largely because we assisted with the development, was the Espresso Veloce machine. Very interesting and certainly a powerful reaction from the consumer.  Products other than watches have the benefit of keeping clients interested in your store and offerings.

“The consumer wants something fresh and individual in the modern world.”

They also have the benefit whereby the consumer talks about your store, effectively advertising for you without any output cost. The Espresso Veloce machine was powerful in so far as it had a very powerful viral marketing effect and also achieved sales. Another popular and interesting product that we stock is the MOKA by Giuliano Mazzuoli. This product along with his watches proved to be very individual. The majority of consumers, in my opinion, are tired of being bombarded with mainstream so called high-end watches. The consumer wants something fresh and individual in the modern world. Retailers need to choose very carefully with their offerings so as to be in keeping with their particular store profile. If this is done correctly it certainly is worth offering alternative products in store. It’s no good everyone selling the same goods though as this only creates a situation where discounting can flourish therefore damaging profitability. I would advise other retailers to choose products that will keep your customers excited and therefore returning to your business. This also has the natural effect of strengthening client/store relationships. Choose products that you are passionate about. When you have passion and excitement about the product it makes for a much easier sell and the customer then comes back repeatedly. Choosing product that does not suit your store confuses customers as to what you really are as a brand. If you don’t know then how can the customer relate? The only other advice is to make sure you know enough about your new product and make sure you are able to have the best after-sales for your clients. A happy customer is a repeat customer. Adding new product keeps your store fresh as well as making your sales job exciting and fun as opposed to just an everyday job.”

Chiara Pisa, General Manager, Pisa Orologeria (Milan, Italy): “This year we launched ‘Lancette’, the first collection of jewellery by Pisa and inspired by our passion for time. The Lancette Collection expresses the passion for watchmaking that

“Through the exploration of these accessory services and goods we got closer and closer to our customers’ interests and passions.” has always animated the Pisa family. The hands of a watch are an element that - if properly isolated and projected on a neutral surface or on the dark night sky - is able to indicate a specific moment of Time: a special, unforgettable moment. For this very reason, Lancette represents the most exceptional indicators of Time, they hang from the neck, close to the heart that is the engine of emotions, therefore capturing the moments of joy, of pleasure and sometimes of boredom. The main difficulty has been to communicate externally that this project does not represent the will to forcefully enter the jewellery business. First of all, the collection originates from the intention to offer a complementary service to our clients, secondly we always underline that ‘Lancette’ is a project related to watchmaking: the only world that Pisa represents. Our experience is surely positive: table clocks and pendulum clocks, jewellery, automated storage boxes, vintage pieces and watch straps have given us the possibility to offer something more to our customers. Through the exploration of these

accessory services and goods we got closer and closer to our customers’ interests and passions. They all have been a little success in their own way, because they represented an answer to the eclectic needs of our clientele. This has always represented a core practice for us. Actually, I think the collection ‘Lancette’ can be considered our most successful complementary project, for three main reasons: it has been immediately praised by our historical customers and by our foreign customers who travel to Milan from China, Russia and the Middle East; second, it has been well received by journalists and the press in general, who appreciate the idea and supported us in the communication process; third, it has been an incredible team building example: the project originated from my mother’s ideas and subsequently supported by several members of our staff, all with different identities and personalities: many comments, much advice, many ideas and a lot of positivity! We didn’t inform other retailers about this collection, because we did not intend it for mass distribution, but after the launch on May 20th, we have been contacted by some of them to enquire as to the possibility of developing the project. This struck us, and the appraisal from great distribution players and from other retailers has been welcomed with pleasure, and brought in some ideas. I remember as if was yesterday when in July I was telling one of our customers from Oman how the collection originated and how it was deeply related to my family history, when he smiled and said: “You know Chiara, my jewels are my daughters: they are seven, as the pendants of the collection!” He bought them all!”

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Aderemi Ajidahun, CEO, Hole 19 Group, Zakaa Watches (Abuja, Nigeria): “We are a luxury and lifestyle company and therefore offer a variety of products within different retail environments. Our business currently contains watch and jewellery, fashion and accessories, leather goods, furniture and home fittings. We now have two concept boutiques of over 600 square metres each where all our variety of luxury products are sold, including certain brands of watches. We also have boutiques that are 200 square metres based on watches; here we sell some jewellery, pens, leather goods, watch winders and luxury phones. Some watch brands are also lifestyle brands, for example TAG Heuer, Montblanc, Davidoff and Montegrappa who all offer a variety of lifestyle products and then you have companies like Chopard,

“We see ladies coming in to buy themselves or their partners luxury phones and we are able to introduce them to the world of Haute Horlogerie.” Bvlgari, Cartier, who are also strong in a variety of premium lifestyle products. Our experience has been excellent. You just need to make sure that the balance is correct. We are fortunate as we have different retail environments and can therefore alter the balance from boutique to boutique. We have a boutique at a golf resort where the offering is quite different from our other boutiques. Premium ladies leather goods and luxury phones have been our best non-watch items. In general our ratio of female traffic is unfortunately quite low. Women are not as addicted to watches as men so we wanted to find something to really attract them. As you know women

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love designer handbags, that’s their weakness. 50% of our current sales are for gifts and therefore we have to give our clients solid alternatives. That’s where the luxury phones came into the mix. We regularly sell $10,000 phones. It’s not so straight forward - we are fortunate because we have the opportunity, as there are not so many luxury retailers in our territory. This cannot be said of London, Paris, New York, Geneva, Zurich, Dubai etc. It is often a function of opportunity. There’s no point trying to sell Vertu phones in your boutique if there’s a Vertu boutique down the road. Potential problems? There are many pitfalls: • Getting the brand mix wrong • Achieving a well-balanced display without butchering the watch offers • Thinking there’s the opportunity whereas it just doesn’t exist • Over-stretching finances, one’s self and the company in general. Where we do have any traffic of tourists but a regular closed pool of high net worth clients, the other products can keep them coming back. It’s not every day they want to buy a watch. In an area where there aren’t a large number of

luxury boutiques, the other products can make the retailer the ‘go to destination’. The mix can also bring in a different group of clients with different interests. In our watch boutique, we now see ladies coming in to buy themselves or their partners luxury phones and we are able to introduce them to the world of Haute Horlogerie.” Armen Darakjian, Darakjian Jewelers (Birmingham, Michigan, USA): “Currently we carry winding boxes (Wolf, Orbita, Underwood, Scatola del Tempo), cufflinks (GTO London), wine decanting wands (Philip Stein), pens (Montblanc) and leather goods (Montblanc and Parabellum). In the past, we’ve had many more brands (Pelican, Waterman, Krone). I think these products are a great add-on and peripheral sale. It’s offering another service to the guest who comes in to shop for what they traditionally look for in a jewellery store. Winding boxes have been our most successful product. It’s an easy transition when so many clients are coming to you already for watches.

We all spend so much money getting a client through the door, offering other products just makes sense. It’s a business - we need to maximize that client. Offering other things that compliment what you stock already does a service to the client. The biggest advice I would have is not to just stock it, but understand the selling points and the way it fits into the mix of what you already offer. Our business involves a great deal of emotion. That plays a big role to me in choosing a peripheral product. First I look at the category and see if it’s something that works for the experience we want the Darakjian Jewelers client to have. Then we look at impression, price and distribution. Those are all key factors in our selection of products. A potential problem is diluting your focus, but that will only come if the sales professionals don’t really understand the products, know when to propose them and how to deliver the same experience that you want your clients to have. The biggest benefit is being the one source for the client. In today’s world with all the different messages coming

“In today’s world with all the different messages coming from the five traditional medias and the numerous social media and email tactics, we all need a way to differentiate our stores from the competition.” from the five traditional medias (TV, print, radio, billboards, direct mail) and the numerous social media and email tactics, we all need a way to differentiate our stores from the competition.” Alon Ben Joseph, CEO, Ace Jewelers (Amsterdam, the Netherlands): “At Ace Jewelers we retail the following product categories: watches, jewellery, loose diamonds, leather goods, writing instruments, sunglasses, mobile phones, silver tableware and watch winders. And, we have recently started focusing on so-called ‘wearables’ like smart watches. We have had a good experience selling luxury accessories other than wristwatches as it creates synergies for us as a retailer and for the consumer. Consumers have a trust relationship with their jewellers, hence they want more than just wristwatches. The most successful non-watch products in our boutiques have been writing instruments, sunglasses and watch winders. Watch winders are a logical choice for consumers to seek at jewellers that sell high-end mechanical watches. Consumers that love mechanical watches will also appreciate hand-made writing instruments, like a high-end Montblanc fountain pen. And, in the past jewellers in the Netherlands were opticians too. This changed after WWII, but three years ago we added premium sunglasses

brands to our collection in one of our boutiques that focuses on entry-level Swiss watch brands and fashion watch brands. All developed well and consumers find it a natural fit. We advise our colleagues to definitely reconsider their futures as consumer behaviour is changing drastically. Retail therefore is changing rapidly. On top of that there are many external threats, of which the most important are brands taking over retail distribution from independent jewellers and the rise of smart watches and wearables. So, as jewellers we need to think what our role will be in the near future in the changed landscape. There are also many opportunities in this evolution. We choose the products we carry according to the following principles: first of all we check if the they are of high quality; then we check if they add to our current portfolio of brands. We need to make sure the after-sales service is as good as ours, so we can maintain our high level of service. And, last but not least, would we buy it ourselves as a consumer and do we have fun selling it? The potential problems are that if you branch out too much, your business/ boutique could have an identity crisis. We have a big trend of specialization where boutiques are only selling one brand, but it seems that consumers do not want a world with solely monobrand boutiques. The DNA of shoppers is that they love to browse and be amazed and entertained. Selling more than just watches adds to your own brand. You have the chance to attract more customers and re-invite old customers. Make sure to keep your return on investment in mind, however. The margins are so slim on electronics (mobile phones and wearables), that jewellers are not set-up for these low margins. Electronic vendors are used to huge volumes and jewellers aren’t.” p

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SPOTLIGHT

STRATEGY

MID-SIZED GROUPS PUNCH ABOVE THEIR WEIGHT Serge Maillard

The few medium-sized groups that exist in the shadow of the watchmaking giants are looking to make their mark, albeit in very different market niches. A portrait of some of these discreet actors.

What do Lotus, Festina, Jaguar, Calypso, Candino, Perrelet and L.Leroy have in common? What about M-Watch, Mondaine, Luminox, Pierre Cardin, Givenchy, Esprit, Puma and Joop? H. Moser & Cie and Hautlence? Anyone? Although they are active in extremely different spheres, these watchmaking companies are all linked, albeit loosely, with mid-sized groups determined to preserve their independence: Festina Group, Mondaine Watch Group and MELB Holding.

Neither small individual companies, nor sprawling giants with billion-dollar turnovers, these groups lie somewhere in between. They share an ability to develop synergies between their brands when vertical integration becomes necessary, and they are ambitious enough not to shy away from meeting the big boys on their own turf. These groups have a human dimension; they are often family-run, offering a different perspective of today’s watchmaking scene. They don’t often take the limelight, preferring to remain in the background, regularly and discreetly buying up new brands to build a portfolio that can grow exponentially. Here is a portrait of three of them.

MELB HOLDING, THE HIGH-END ‘WHITE KNIGHT’ After taking over two brands with very different DNA, Hautlence and H. Moser & Cie, Georges-Henri Meylan’s embryonic group is looking to its Asian distribution network to put them back on track. “I stopped work five years ago. Retirement can be a difficult time...” Unlike some, Georges-Henri Meylan, former CEO of Audemars Piguet, did not take up gardening or DIY. Watchmaking is a jealous mistress. So, in 2012 he created MELB Holding, a small family group, and set himself up as president and chief troubleshooter, rescuing brands in financial difficulties. Today he oversees the destinies of two superb houses with very distinct identities, both active in haute horlogerie: the rigorous Schaffhausen firm H. Moser & Cie, whose roots can be traced back to St Petersburg in 1828, and the Neuchâtel brand Hautlence, known for its bold design, which has just

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celebrated its 10th anniversary. How did the holding company come about?“It was a combination of circumstances. My son Bertrand, who is a distributor in Hong Kong, started working with Hautlence. The company was in serious difficulties in 2012. Almost at the same time, we bought H. Moser & Cie, debts and all, and the family grew. I told myself it was possible to meet the challenge. Both these brands are alive and kicking today, although they might not yet be in the peak of health,” explains Meylan. MELB Holding employs more than 60 people: fifty or so at H. Moser & Cie (which is run by Edouard Meylan), another ten at Hautlence and five in the Hong Kong distribution operation.

RADICAL CHANGES AT HAUTLENCE Both brands are gradually getting back on their feet. “It was a lot harder than we thought. With Hautlence, we had to restructure everything, from brand positioning to distribution,” says Meylan. The Neuchâtel brand, operating in the premium sector, was severely affected by the financial crisis. A strategic decision was taken to drastically reduce the price of its timepieces; some of its models are now available for around 20,000 francs. “Initially we were very successful. Then, like many independent companies, we hit the ‘black’ years, from 2009 to 2012,” recalls Guillaume Tetu, co-founder and managing director of Hautlence. “Our clientèle reverted to the safe bets, the classic choices. Our problem was that because of our initial success we were fully stocked just as

U Eric Cantona, Hautlence’s new ambassador

“By repositioning ourselves with more affordable entry prices we can also expand our client base.” Guillaume Tetu the crisis hit in 2008. That almost put us under. The market can very quickly turn against you.” Today, thanks to MELB Holding, the design enthusiast is hoping to relaunch the brand. “By repositioning ourselves with more affordable entry prices we can also expand our client base, which up to now has been made up almost exclusively of collectors,” says Tetu. One result of this new direction is the launch of concept stores known as ‘Hautlounges’, two of which are due to open soon in Jakarta (2015) and Hong Kong (2016). “We are in the process of increasing production, and we are aiming for 1,000 units per year by 2017.” As far as its catalogue is concerned, by the end of the year Hautlence will have brought out the fifth edition of its bestseller, the HL2, this time in black and red. Earlier in the year, Hautlence unveiled its ‘Destination’ collection for men, and a sports model, the HLRQ 04. It now sources base calibres from Soprod, with modules supplied by Dubois-Dépraz.

Cantona’s fingerprint and signature are on the back. “We worked hard on the branding, to give Hautlence a strong identity,” explains Bill Muirhead, CEO of MELB Holding. “The watches were heavily inspired by architecture, but that alone wasn’t inspiring enough; we had to do something different, something to show our restless spirit.” Thus the idea of the ‘Gentlemen Rebels’ Club’, for Hautlence connoisseurs was born. “But that still wasn’t enough. We wondered who would be the ideal am-

“MELB Holding’s great strength lies in its distribution networks in Asia.” Bill Muirhead

ERIC CANTONA, A STRONG IMAGE The company has also secured a prestigious ambassador to promote the brand internationally: Eric Cantona, the football king. As well as using him in its marketing campaign, Hautlence has launched a signature product: a limited edition of 250 Invictus Morphos chronographs in blue, inspired by the eponymous butterfly. These timepieces will be available from December 2014.

bassador for this renaissance. And that is when we thought of Eric Cantona. He is charismatic and controversial. He’s a painter, a footballer and a collector. Although I’m a Liverpool fan myself, I admire his talent, and his proud and passionate side.” New ambassador, new positioning, new models and also... new markets. Until now, Hautlence has relied on a loyal clientèle in Eastern Europe, but today that market is full of uncertainty (see our article on the Russian watch market, p.57). The brand has now set its sights on the United States, niche markets such as Venezuela and Saudi Arabia and, significantly, the Far East. “MELB Holding’s great strength lies in its distribution networks in Asia, which will benefit both Hautlence and Moser & Cie., says Muirhead. Many small, independent brands are interested in our Hong Kong distribution structure. For the time being we also offer De Bethune in addition to the group brands, but we can’t take everyone!”

u I INVICTUS MORPHOS CHRONOGRAPH by Hautlence europa star / STRATEGY

MONDAINE ON THE RISE H. MOSER & CIE: MORE AFFORDABLE TIMPIECES So, what’s the situation with H. Moser & Cie, the other jewel in the group’s crown? “It’s a brand with a very classic identity. But there are still opportunities for it to evolve. We recently brought out a ‘black edition’ as well as a tourbillon. Clients like these gradual changes,” explains GeorgesHenri Meylan. The brand is particularly well anchored in Switzerland and Germany. As for Hautlence, the entry price for these marvels of engineering will be reviewed and production will be increased. “Currently we produce around a thousand models

“Perhaps one day we’ll see an H. Moser & Cie calibre adapted for a Hautlence!” Georges-Henri Meylan annually, but we want to increase this eventually to 3,000-4,000 per year. We’ve realised that many clients today are looking for more affordable timepieces.” In addition to distribution and development, Georges-Henri Meylan sees opportunities for further synergies between his two brands. “It’s a good thing for independents to share a common platform. Perhaps one day we’ll see an H. Moser & Cie calibre adapted for a Hautlence! But we will never abandon the very specific DNA of each brand.” Georges-Henri Meylan’s long career in watchmaking has enabled him to draw certain conclusions. “One thing I learned from my experience at the helm of Audemars Piguet is that it is important to know exactly where you’re going. And with a small ship, there’s no room for error!”

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Brothers Ronnie and André Bernheim, inheritors of the iconic brand inspired by Swiss railway clocks, have embarked on numerous buyouts and licence acquisitions in the space of ten years, from Luminox to Esprit and Pierre Cardin. Rather than the Mondaine group, it would perhaps be more accurate to refer to it as the ‘Bernheim group’. Brothers Ronnie and André Bernheim, who inherited the famous brand that borrows the aesthetics of Switzerland’s railway stations, have diversified their brand catalogue and increased their holdings and licence acquisitions. Today they have, on the one hand, the Maison Mondaine, founded in 1951 by their father, which produces the eponymous watches and also M-Watch products. And on the other, they have a 50% stake in the Californian sports brand Luminox, which they acquired in 2006; it is now managed out of Zurich and San Rafael, with a head office in Hong Kong. Finally, in 2011 they founded the group Marlox, as a result of taking over the German-Asian firm Egana Goldpfeil. It produces and distributes a number of ‘fashion’ watch brands such as Pierre Cardin (whose watch and jewellery division they bought a year ago), Givenchy (bought from LVMH) and also, under licence, Esprit, Puma and Joop. At the same time, the Bernheim brothers dropped the licence for the Camel Active

brand (formerly Camel Trophy). So much for the history lesson! All these companies now share a common denominator: the Mondaine factory in Biberist, in the canton of Solothurn, Switzerland. Luminox watches are produced there under a private label, and the Marlox group rents space. Some of the ‘Swiss made’ brands, including Givenchy and part of the Pierre Cardin and Joop ranges, are made there. Marlox also has significant manufacturing capacity in China. In terms of value, Mondaine remains the group’s top brand, followed by Luminox, Esprit and the other Marlox brands. “We are clearly angled towards production of quartz watches, although we do offer some automatic models for Mondaine, Luminox and Givenchy,” notes Ronnie Bernheim.

SYNERGIES BETWEEN THE BRANDS So why this almost bulimic phase of buying up so many brands and licences in less than ten years? “We have lived and breathed this industry since we were children, and we want to expand our watchmaking capacity. We are also

I HELVETICA by Mondaine

looking to create synergies between the different brands, for example between Luminox and Mondaine. We don’t publish our accounts, but since we took over Luminox our production volume has quadrupled. Previously, the United States was practically the brand’s only outlet. Now, just half of its sales are from the US. This shows the work that we have done in terms of prospecting and opening up new export markets.” Synergies are also possible on an administrative level. For example, the same internal computer management system has just been installed at all the Bernheim brands, which employ around 2,000 people all over the world. “We are a family business, but we have the advantage of industrial bases in both Switzerland and China, along with a firm foundation in the United States through Luminox.” The Biberist factory turns out more than half a million ‘Swiss made’ watches each year. Globally, the various companies operating under the umbrella of the Bernheim brothers, who say their turnover is ‘growing’, produce several million units a year.

A LOOK TOWARD ASIA In terms of distribution, only Luminox has own-brand shops, in Japan and Singapore. “We had also invested in our own stores in China for the Mondaine brand. But after three years we realised the challenge of doing business in China with its new economic climate and regulations… we will remain in this market, but we will wait a little longer before we make any more major marketing investments, including shop-in-shop activities. And with the new Mondaine Helvetica, we will gain additional markets besides the Swiss Railways collection.”

U AERO by M-Watch and P-38 LIGHTNINGTM by Luminox

“We realised the challenge of doing business in China with its new economic climate and regulations.” Ronnie Bernheim

The Marlox Europe distribution company also handles the Mondaine and Luminox brands. “In fact, it’s only in Switzerland that Mondaine handles its own distribution of the Mondaine, M-Watch and Luminox brands.” As far as M-Watch is concerned, the Bernheim brothers are still involved in legal proceedings with the Swiss food distribution company Migros, their original partner. The brand is now available in Manor department stores.

AMIDST THE SWISS MADE BATTLE However, the Swiss identity of the Bernheim stable is under threat from the new ‘Swiss made’ law currently being drafted; quartz watches will require at least 60% of ‘Swiss value’ in order to be entitled to the designation. “With this new legislation, the Esprit brand for example will no longer be produced according to the Swiss made criteria.” A consultation phase with the watchmaking industry is due to wrap up in mid-October. Ronnie Bernheim, who is very active in the IG Swiss Made association, is trying to tone down the draft legislation: “Many details still need to be worked out. Some of our proposals have been accepted, but we are coming under pressure from certain groups, who see this as an opportunity to weaken brands such as Esprit.”

Ronnie Bernheim is particularly concerned about the transition periods, which in his view are too short for certain critical components such as watch cases. “The industry will need millions of cases that have been produced in Switzerland. But manufacturers will not release the necessary investment until we know when the law will be enacted. According to my calculations we will need at least a five-year transition period for watch cases, from the time the law comes into effect, but the administration wants to base its transition period calculations on a start date of 2013.” With all the speculation surrounding the Apple Watch, the Mondaine brand has benefited from a marketing leg up from the Californian giant, which adopted and popularised the Swiss railway clock aesthetic on its iPads. Has Mondaine noticed an impact on sales? “No doubt Mondaine’s presence in many museums and designer places, and on the wrists of architects and other visually trained people encouraged Apple to go for this iconic design. It is hard to say, however, whether the presence of the clock design had a direct positive effect on the increase in our sales. There was unfortunately no link with our brand or any joint communication, therefore the effect might not be as big as we would have wished!”

u europa star / STRATEGY

FESTINA, A TOTALLY AUTONOMOUS GROUP With end-to-end control of all watchmaking components, including hairsprings, the group is now planning to rationalise its vast catalogue of brands, which ranges from Lotus to Perrelet and L.Leroy. SOPROD AND MHVJ, THE JEWELS BEHIND THE SCENES

The catalogue of Spanish group Festina includes as many entry-level brands like Calypso as it does haute horlogerie such as L.Leroy. The group, which employs around 3,000 people all over the world, including 400 in Switzerland, also owns the Lotus, Festina, Jaguar, Candino and Perrelet brands. Some are Swiss made (Perrelet, Leroy, Candino and Jaguar) while others are not; Festina, Lotus and Calypso are assem-

Miguel Rodriguez prefers the smell of oil, the hard work and elbow grease behind the scenes, to being in the limelight. bled in China. Gérald Roden, former CEO of brands De Grisogono, Gérald Genta and Daniel Roth and an expert in restructuring in the watch industry, last year took over as CEO of Swiss Festina Group, bringing with him the expertise built up over long years in the industry. “Swiss Festina Group’s catalogue is a whole constellation of watchmaking companies. My job is to make the group more profitable, mainly by rationalising things and making the structure more efficient.” Today he and Miguel Rodriguez, the group’s founder and chairman, make up a formidable double act. “Very few people in watchmaking are really friends ... but we are. We have known each other for 40 years. He wanted to beef up Swiss production. I listened carefully to what he had to say, and then I drafted a strategy. We’re like a small family business; we don’t operate under the same constraints as the big watchmaking groups. Decisions are taken quickly!”

54 STRATEGY / europa star

T Left to right: CHRONO BIKE by Festina SAPPHIRE by Candino

How was Festina Group’s portfolio of brands put together? “Miguel Rodriguez makes decisions based on emotion. He prefers the smell of oil, the hard work and elbow grease behind the scenes, to being in the limelight. Whenever a takeover opportunity presented itself, and he took a fancy to the business, he would go for it. But now we are definitely in a consolidation and rationalisation phase. In Switzerland all the administrative services, such as human resources, for all the brands have been centralised in Biel. There is now just one boss.” The great advantage of the group’s Swiss site is that it can handle the manufacture of almost all the necessary components internally, through its subsidiaries Soprod (quartz and mechanical movements) and MHVJ (haute horlogerie and escapements).

“We have many other brands as clients. We are the only group apart from Swatch Group that manufactures its own movement parts, including hairsprings and escapements. Our aim is to build 120,000 Soprod A10 movements this year. This figure has already doubled, and it could double again next year.” With this setup, Gérald Roden’s take on the new ‘Swiss made’ legislation is necessarily very different from that of Mondaine. “It could have gone much further in terms of local production requirements!” Swiss Festina Group produces 100,000 watches for its various brands each year, and assembles 300,000 for other brands at its Mical factory in Solothurn. Globally, Festina Group as a whole produces some four million watches per year.

ENTRY ON THE SMARTWATCHES’ MARKET “In Switzerland, because we operate in a number of different sectors, we want to evolve by site and by area of expertise. For instance, MHVJ produces the high-end movements for L.Leroy, but it also makes haute horlogerie movements

for other brands. Soprod focuses on its own area, which is entry-level movements and small complications.” Swiss Festina Group also wants to apply engineering standards to Soprod’s quartz movement production “with a view to producing more accurate products with redesigned electronics. We want to be more active in the high-quality quartz market, for our Swiss clients and for top-flight brands.”   Another angle under development is the smartwatch. “Over the last 18 months we have registered a number of patents. We are on top of connectivity and production, and we’re currently working on platforms that are compatible with operating systems including Android,

“Some smartwatches already have our technology inside.” Gérald Roden iOS and BlackBerry. Some smartwatches already have our technology inside.” On a personal level, Gérald Roden says he is “disappointed” with the Apple Watch, in terms of both design and functionality. “I think a watch should have an emotional aspect. In this respect, watchmakers have the advantage over the technology players now entering the arena. The next Baselworld will no doubt have a number of pleasant surprises in store!”

NEW STRATEGIES FOR L.LEROY AND PERRELET Which brands had good results last year? “Candino in particular. At the moment, the entry-level sector is doing well. We are also working on a repositioning strategy for L.Leroy and Perrelet. Recent history has shown that for smaller brands, you need to be creative with positioning and with the product to survive.”

I TURBINE PILOT by Perrelet

As far as L.Leroy is concerned, Swiss Festina Group has closed down the Besançon site to centralise production in the Vallée de Joux, although the watches are still certified in the Franche-Comté capital. “We are also in the process of changing our strategy. It is difficult to compete directly with the generic luxury brands of groups that operate in a similar sector. We are now targeting watch connoisseurs, placing the emphasis on producing very high quality movements that have a legitimate connection with the history of the brand.”

“Sales staff in Festina shops need to be more sensitive to the highend products and brands such as Perrelet. ” Gérald Roden Perrelet, for which Gérald Roden is acting CEO, is also evolving. “We are keeping the Turbine model that cemented the brand’s reputation, but we are also working on two ranges sport and classic - and new models in

the entry-level haute horlogerie sector; these will be mechanically creative, and they will be fitted with own-brand movements.”  However, distribution and sales are where the challenge of maintaining such a varied catalogue is probably the most keenly felt: “Sales staff in Festina shops need to be more sensitive to the high-end products and brands such as Perrelet. We are working on that but it takes time.” These brands nevertheless benefit from Festina’s Group powerbase in major markets such as Spain. “In the United States too, we have our own distribution company for Perrelet.”   What are your plans for the second half of the year? “First, we want to finish the internal restructuring that began when I arrived last year. And we are also laying the foundations for a three-year plan, with investment targeting a threefold increase in Swiss production within the next three to four years. Volumes have also increased by 30% compared with last year. Among other things, this will mean expanding our workforce.” p

europa star / STRATEGY

atelier-zuppinger.ch

Plate Tableware or part of a watch movement? Discover the world of Fine Watchmaking at www.hautehorlogerie.org

Plate | The plate which bears the various movement parts and in particular the bridges. The dial is usually affixed to the bottom side of the plate. The plate is pierced with holes for the screws and recesses for the jewels in which the pivots of the movement wheels will run.

MARKET FOCUS

RUSSIA: SANCTIONS AND A NEW WAVE OF CONSUMERS Viacheslav Medvedev

Exports to Russia are still good, but the mood of retailers is worsening. Where does the Russian watch market stand right now? Where did it come from, and where is it heading?

This year, the economic sanctions against Russia made it a popular topic of conversation in Europe. But this is by no means a new situation. In fact, the first time the Russian watchmaking industry experienced sanctions was in 1770. The first watchmaking factories were established under the reign of Catherine the Great. Francois Freinet de Fermat was given 6,500 roubles by the Russian state to buy the necessary equipment and find skilled watchmakers in France. At the time, however, the French government had placed a ban on craftsmen leaving the country,

The first time the Russian watchmaking industry experienced sanctions was in 1770. so de Fermat and the eleven artisans he hired were arrested, and his tools and machines were confiscated. The next conflict between Russia and Europe arose at the start of the Soviet era in the 1920s; the Soviet government had decided to build its first watchmaking factory, but European companies refused to sell equipment to Russians. The Soviet Union’s first watch plant did not appear until several years later. Restrictions on sending equipment and technology to Russia lasted throughout the Soviet period, and some were still in place at the end of the 20th century. I mentioned these examples to remind readers that the economy is always subject to political pressure. If we are to predict what will happen to Russia’s economy and marketplace, it is vital to understand the political situation. I could be wrong about some things, and some of my assessments of the actions of the Russian government could be inaccurate, but I hope this report will help readers to understand the basic trends.

FROM DARKNESS INTO LIGHT The major thrust of Russia’s political and economic policies over the last decade has been to maintain self-sufficiency, not in order to enforce isolation but to reduce economic dependency on other countries, and to strengthen the government’s popularity. Consequently, most of the decisions we have seen over recent years that affect the Russian market are simply a continuation of the policies established in the early 2000s. Russian leaders appear to believe that the global economic crisis was initiated in the US, when the economic bubble burst. They have attempted to minimise the impact of the crisis on Russia by protecting their market from its negative effects. Nevertheless Russia’s 145 million population is not big enough to make the majority of its industries profitable. That’s why, as well as pursuing its isolationist policy, the Russian government has also sought market expansion and integration with other countries, notably through customs union. However, the course to restoring the self-sufficiency of the old Russia, as it was in the Russian Empire and the Soviet Union, was set around 2002. To achieve this goal two elements were essential: resources must be concentrated in the hands of the state, and the country must be made more manageable. In 2003 the “Yukos affair” hit the headlines. The financial goal of the trial from the government’s point of view was to profit from the oil business. Prior to this the Russian government received almost no income from oil exports because of the Production Sharing Agreement, and because no taxes were paid. In 2003 oil export revenues represented just 15% of total state revenues, rising to 33% in 2004, and 42% in 2005. At the same time, the arrest of Khodorkovsky signalled the departure of oligarchs from government, and the state became more manageable. In the 1990s most goods were imported into Russia illegally, but the clampdown on smuggling did not begin until 2005. The following diagram shows how official Swiss exports to Russia changed beginning in 1999. We can see that in 2007 the export value was 77% greater than in 2004. In reality, sales volumes were not growing quite so fast. According to Russian retailers, the peak in luxury watch sales occurred in

u europa star / MARKET FOCUS

SHARE OF INCOME FROM OIL EXPORTS IN RUSSIAN FEDERATION BUDGET (%)

60 50

47.3

47.0 42.2

46.2

49.7

52.0

O When the state took control of Yukos and cancelled the Production Sharing Agreement, the share of oil and gas revenues in the Russian budget increased from 15% in 2003 to 31% in 2004 and 42% in 2005.

40.7

37.3 31.3

30 20

10.4 11.9 10.8 9.0 8.8

14.9 15.4

2004–2005, at a time when the majority of shipments were being smuggled into the country. The reason why the peak represents the beginning of the anti-smuggling campaign is that in 2005 a proportion of goods began entering Russia by official channels. In 2012 the next wave of economy restructuring started. The government adopted a rearmament programme and began to fight corruption, which restricted the consumption of luxury goods. Then followed a process of “deoffshorisation”, along with a crackdown on capital flight and against the political opposition. All of this created frustration among the public and a negative media backdrop.

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1994

1995

4.2 1.9 2.5

UNKNOWN RUSSIANS Now let’s discuss how political processes influence today’s watch market, and how they will influence it in the future. Russia moved from socialism to capitalism in the 1990s. It was a time of blatant, often illegal, accumulation of capital. Russia’s first rich people – the so-called “new Russians” – were businessmen and gangsters. They had money and ambition, but no experience in consumption. Russian consumers had no idea about brands; they were ready to buy anything just to stand out from the crowd. This situation created unique conditions for the development of many brands in Russia that were almost unknown in the rest of the world.

SWISS EXPORTS TO RUSSIA 900’000 800’000

350’000

1200

Quantity, pcs 300’000

1000

700’000

Value, ths.Chf Average price, Chf

250’000 600’000 500’000 400’000

800 200’000 600 150’000

300’000

400

100’000 200’000

58 MARKET FOCUS / europa star

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

200

1999

50’000

1998

100’000

O The peak in official imports between 2005 and 2007 represents a clampdown on smuggling: in 2005 a proportion of black-market goods began entering Russia by official channels.

RUSSIAN POPULATION BY INCOME ($ PER MONTH)

In the 2000s the typical consumer of luxury goods changed, with corrupt officials and members of the security ministries becoming the main customers, despite having often modest official salaries. Russians tend to make most of their purchases abroad, and this is not just because of high prices at home. Since the two main categories of buyers purchase goods with money from illegal income, they prefer to buy goods abroad, or through trusted agents. As a result, up to 90% of watches came into Russia via smuggling. This was not a problem for manufacturers, although it did create difficulties for distributors. For example, most brands calculate their advertising budgets on the basis of local sales volume, so these budgets were lower than they should have been.

High import duties discourage official imports of cheaper watches. As a side note, the typical image of Russians abroad, based on visitors to upscale boutiques in Zurich or Hong Kong, does not correspond with reality: fewer than 15% of Russians have passports, which means that 90% of Russian have never been abroad. Around 40% of Russians survive on a monthly income of $500 or less, and cannot afford expensive watches. Moreover, high import duties discourage official imports of cheaper watches, with the result that around 75% of watch sales in Russia take place on the black market. This is a significant problem, for both the cheapest and the most expensive watches. Russian market volume is estimated to be between 16 and 24 million pieces per year, but only 2.5 to 3 million of these are official imports. Two million timepieces are assembled by Russian companies from imported movements, but components are quite often sourced through illicit channels.

less 80$ (3.8%) over 900$ (12.1%)

80-120$ (5.6%)

700-900$ (10.8%)

120-180$ (9.4%)

180-270$ (14.6%) 420-700$ (23.5%)

270-420$ (20.2%)

Consumption began to decline in 2013 as a result of preconditions formed in 2012, including a deceleration in GDP growth and the strengthening of the state sector, which in turn reduced the income of private business. However, there were also subjective factors affecting demand in various sectors. The biggest impact on the luxury market was the government’s crackdown on corruption – after all, in most cases people were buying tourbillons with money from bribes. When the government realised that the high level of corruption was a serious threat, it took active measures. These days it is not so easy to accept bribes, and spending “dirty” money has become far more risky. Over the last two years it has become dangerous to show off expensive watches. Of course, sometimes this just leads to a change in demand. As the head of one watch company noted, “Putin has forbidden officials to wear rose gold, so we

Watch sales in Russia grew during the 1991–2013 period. Even the crises of 1998 and 2008 merely slowed growth a little, and did not lead to any significant changes for the market. In 2014 many retailers started talking about a new crisis and a decline in sales.

40% of Russians have a monthly income of less than $500, so they cannot afford expensive watches.

RUSSIAN WATCH MARKET BY SOURCES (%) O Around 75% of

In 2014 many retailers started talking about a new crisis and a decline in sales. THE WAGES OF CORRUPTION

I Around

Russian watch sales are on the black market

15% 9% 2% 74%

Official import Domestic assembling (imported movements) Domestic movement production Smuggling

europa star / MARKET FOCUS

now have increasing demand for white gold and platinum.” But the fact is that the consumption pattern for luxury goods is changing. The second reason for the decline is consumer nervousness. Many wealthy Russians have had their assets in Cypriot banks frozen. The United States’ adoption of the “Magnitsky Act” in 2012, news about the freezing of Ukrainian oligarchs’ assets, and the recent economic sanctions against Russia have shown that it has become dangerous to keep deposits in American and European banks. As a result, many Russians are trying to transfer assets to Asian countries or repatriate their money to Russia. This process is also being facilitated by the Russian government, which continues its fight against offshore companies.

The mid-range sector is now showing mid-range results. THE MID-RANGE SECTOR The v now showing mid-range results. 2011–2012 represented a turning point in demand among the middle classes. The income level of many Russians reached the point where an increase of even twenty or thirty percent no longer brought significant changes to their lifestyle or satisfaction. Consequently, those who were no longer satisfied with mere consumption began to take part in protest rallies and demonstrations as a way to give meaning to their lives. Their consumption patterns moved towards less flashy and less expensive products, intended not for showing off but for personal pleasure. A negative mood has dominated among consumers since 2013. Incomes continued to grow – average salaries increased from 26,700 roubles in 2012 to 30,000 roubles in 2013 – but consumption decreased. This was related to, on the one hand, the sharp rise in mandatory payments, and on the other, nervousness. Even at the peak of the crisis in 2008–2009 the Russian authorities continued to claim that the situation was under control, and many people believed them. However, in May and September of 2013, both the President and the Prime Minister officially acknowledged that the crisis had reached Russia, which immediately led to a drop in sales of all types of goods. There is also an opinion that the government welcomed this opportunity to adopt tougher measures, particularly against the political and financial elite, and those who disagreed with state policy. Interestingly, as of July 2014, Russian banks reported an increase in personal savings, which suggests that people have

60 MARKET FOCUS / europa star

disposable income but prefer not to spend it. At the same time some sectors, such as cinemas and computer games outlets, continue to grow. One of the causes of the negative mood among consumers was expressed by former finance minister Yevgeny Yasin, who claimed that since 2000 incomes had grown far in excess of the economy. Now, as the ratio returned to normal, people felt as if their quality of life was declining.

GROWING IMPORTS AND DECLINING SALES Although retailers have been talking about a crisis since last autumn, the volume of imports into Russia is still growing. One of the real reasons for retailers’ complaints is a surplus of stock. Watch v increased by 70% between 2004 and 2013, while over the same period the number of specialised watch stores increased threefold. A simple calculation shows that the turnover of each store can be expected to halve. Moreover, the business is starting to becoming concentrated in the chain stores and monobrand boutiques. More than 40% of watch stores are owned by the 25 largest operators, each of which holds from 10 to 65 stores.

Watch imports from Switzerland to Russia increased by 70% between 2004 and 2013. Last year, Richemont built its own dedicated shopping street in Moscow, and is now no longer dependent on retailers. Thus, the turnover of independent shops can be expected to decline further, despite growth in the market as a whole.

NUMBER OF WATCH STORES IN RUSSIA U Watch

imports from Switzerland to Russia 2004–2013 increased 70%, while over the same period the number of specialised watch stores increased threefold.

1377

1500

1211 1200

935 825

900

495

600

322 300

2003

2004

2005

2008

2011

2013

Most outlets in Russia are located in shopping malls, where cookie-cutter shops stock a virtually identical brand portfolio. This inevitably leads to price competition and makes retail business unprofitable.

SECOND WAVE OF THE CRISIS

T The

below diagram contains a number of unfamiliar names, while at the same time some highprofile brands are absent. The reason is import duty – not all goods enter Russia by official channels.

The second wave of the crisis hit the Russian watch market in 2014. Although it is frequently associated with events in Ukraine and economic sanctions, the real situation is more complicated, with evidence of both negative and positive effects. • There has been a general decline in consumer demand in Russia, estimated at 5–30% across different sectors. The main reason for this is the mood of uncertainty, not income levels. While small and medium businesses experienced a real drop in revenues and have been forced to lay off employees, state companies continued to increase expenditure and salaries. As a result, the average salary grew in the first half of 2014, albeit more slowly than before. Personal savings also grew. Some retailers are saying that their revenue now depends on the news: a peaceful day in Ukraine will translate into better sales. • The Olympic Games in Sochi and the annexation of the Crimea led to a rise of patriotism, which will be an important

TOP BRANDS BY IMPORT VALUE (JAN–JUN 2014)

factor in the years to come. Many Russians feel nostalgic for the USSR; they remember it as an era of high social welfare and confidence about the future. They are the ones currently running the country, and are trying to bring back the best features of the socialist past. A rise in patriotism is likely to make Russians more tolerant of a slight drop in living standards and the narrowing of the market. At the same time we can expect a change of attitude towards money and luxury goods: Orthodox Christianity and 70 years of socialism have laid the foundations for a negative perception of wealth. The privatisation of the 1990s is still seen as a gross injustice in Russian society. We can expect to see a change in consumer attitudes towards foreign goods and the tightening of state import controls, up to the point where Russia may withdraw from the World Trade Organisation (WTO). • The crisis in Ukraine has also brought with it some positive effects: some researchers suggest that it could increase Russia’s GDP by 3% or more. Russia will benefit by shifting orders from Ukraine to domestic plants, revitalising agriculture and industry, reducing smuggling, accelerating modernisation and developing its own independent financial market. Lastly, more funds will be spent within the country rather than abroad. u

TOP BRANDS BY QUANTITY (JAN–JUN 2014) QUANTITY (PCS)

IMPORT VALUE ROLEX TISSOT CASIO ULYSSE NARDIN OMEGA BREGUET PATEK PHILIPPE SWATCH LONGINES RADO BREITLING HUBLOT CARTIER CERTINA CHOPARD IWC AUDEMARS PIGUET TAG HEUER GUESS CK CALVIN KLEIN JAEGER-LECOULTRE SUNLIGHT VACHERON CONSTANTIN MICHAEL KORS MONTBLANC ORIENT

CASIO SWATCH SUNLIGHT TISSOT GUESS ORIENT ROMANSON FUJIAN REIDA TIC-TAC GEONAUTE MY LITTLE PONY CK CLAVIN KLEIN MICHAEL KORS BEN 10 JACQUES LEMANS THE WORLD OF CALGARY BONPRIX CERTINA ANNE KLEIN OBAKU FUJIAN TRANSFORMERS HOTWHEELS BAKUGAN FEIXIANG SWISS MILITARY

50’000 100’000 150’000 200’000 250’000

europa star / MARKET FOCUS

As far as the watch market is concerned, the crisis has certainly created a negative mood. But on the other hand, there are some advantages. Ukraine has traditionally been a source of smuggled goods into Russia: in some years, import figures for certain goods into Ukraine have equalled imports into Russia, despite a wide variance in the capacities of the two markets. This year many distributors note that the decline in consumer demand has been offset by the disappearance of smuggling, resulting in no decline in sales. This summer the number of Russian visitors to Europe dropped by 40%. This, combined with many watch brands’ decisions to equalise prices between Europe and Russia, also supported domestic demand. Industrial output in the April–July period increased by 1.5%. As a result, the demand for watches is growing in a number of industrial cities. Watch imports into Russia continued to grow up to the end of July. The fastest-growing category was watches with an export price of over 1,500 euros (which translates to a retail price of 4,000+ euros). It is difficult to say whether this reflects a real trend in demand or not, as the increase is partly a result of the rise in official transactions and a reduction in smuggling. Another reason is that some major brands are trying to increase the stocks of their Russian subsidiaries.

ties, some will be forced to adopt a low profile as they dodge anti-corruption campaigners, and some capital owners will leave the country. The rest will start buying more simple and less flashy goods. The drop in demand will force brands to concentrate on their own boutiques, making many retail stores unprofitable.

The main result of the current crisis will be the appearance of new consumers.

The state will actively promote the “buy Russian” idea, and we can expect to see an expansion in Russian watch-assembly plants. LUXURY UNDER PRESSURE What can we expect from Russian market in the next year or two? In all probability, there will be a drop in both income and demand. This will affect the luxury sector far more than the mass market, as the state will try to prevent a serious fall in the standard of living of the general population. The state will actively promote the “buy Russian” idea, and we can expect to see an expansion in Russian watch-assembly plants. The strategy of rebuilding the manufacturing sector will force the government to promote a new set of values: creation rather than consumption, something that watch brands would do well to note when it comes to devising their marketing strategies. The greatest changes can be expected in luxury goods and “status symbols”. A significant proportion of past buyers will drop out of the market: some will encounter business difficul-

62 MARKET FOCUS / europa star

Foreign purchases will decrease: fewer Russians will keep money abroad and the number of foreign trips will decrease accordingly. VISA has already noted a fall in purchases from Russia. Companies interested in selling goods to Russians will be forced to develop their presence in Russia. Well-known brands with effective advertising will suffer less, while new, unknown products will find it much more difficult to break into the market.

NEW WAVE OF CONSUMERS Most experts do not expect a major upheaval in the Russian economy. The structure of the industry, exports and foreign exchange reserves will help to reduce the negative fallout. However, some observers feel the next few years will be psychologically difficult for Russians. While we have become used to dramatic boom/bust cycles, we now face a slow decline and accompanying loss of perspective. The low plateau into which we are heading is new to us, and may be worse than the sharp shocks we have experienced previously. Who will be the main consumers over the next one to three years? Just as consumer profiles in the 1990s were different from those of the 2000s, the main result of the current crisis will be the appearance of new consumers. For example, although the ban on food imports from the EU has seriously affected many companies, it has opened up new opportunities for Russian farmers and importers from the BRICs nations. In six months’ time they will have collected their earnings, and will be looking for new, more prestigious cars, apartments and watches. An increase in orders for Russian industry has already led to an increase in demand for industrial workers. Salaries in certain professions have risen from $1,000 last winter up to $3,000 by the end of the summer. These people will be new consumers too. All this means that brands should not stop their advertising and marketing activities. To have a good business in a year or two, it’s important to prepare the ground today. p

LETTER FROM CHINA

SINO-SWISS FREE TRADE AGREEMENT: CONSEQUENCES FOR HONG KONG Over the next ten years China will gradually reduce import duties on Swiss watches by 60%, at a rate of 18% in the first year and 5% each subsequent year. Hong Kong is the world’s foremost market for Swiss watchmaking, but with 90% of its customers hailing from China, will this harm its ability to compete? Here are the responses of Geoffrey Kao, president of the Hong Kong watch federation.

In the short term, does this free trade agreement risk harming Hong Kong’s watch trade, which is, let us not forget, by far the largest market for Swiss watchmaking? Geoffrey Kao: First, let me point out that import duties will be gradually reduced, they won’t be totally lifted. What is more, China will keep a 17% consumption tax. So eventually, there will be at least this price difference with Hong Kong.

“There is nowhere else where you can find such a concentration of international brands.” Nevertheless, some watch companies want to harmonise retail prices across the two zones. LVMH has even promised as much! GK: In practice, their idea is to increase prices in Hong Kong and reduce them in mainland China. But what will the consequences of this be? In my view, leaving aside the preferential pricing, Hong Kong offers three major advantages. The first is choice: there is nowhere else where you can find such a concentration of international brands. The second is quality, as the skills and product selection are at a level that is unique in the world. And the third is security: buying in Hong Kong means the security

of a full guarantee and undisputed authenticity. Moreover, Hong Kong is an amazing city and an Asian hub that connects with all the major destinations in the world. In this respect it will remain a top choice for stopovers. I don’t think the reduction in import duties in China will affect Hong Kong’s status as a shopper’s paradise. The powerful watchmaking groups could develop their own sales networks in China. Swatch has done just that in India with, according to what we heard at the Shenzhen watch fair, a retail price advantage of up to 35% compared with Chinese sales networks. What do you think about that? GK: Operational and infrastructure expenses are the most costly elements. I don’t believe for one minute that they can be 35% cheaper.

“To sell at the same price as Hong Kong, brands would have to absorb the 17% tax themselves, and that would hurt, believe me.” But in ten years’ time, if the price difference between Hong Kong and the mainland is just 17%, and if additionally the big watchmaking groups can bring down prices in China through their own networks... GK: How will they be able to undercut? If you analyse the share prices of watch dealership chains, you realise that they are barely profitable, and some operate at a loss. To sell at the same price as Hong Kong, brands would have to absorb the 17% tax themselves, and that would hurt, believe me. But you are leaving out of the equation the astronomical price per square metre of property in Hong Kong, which has forced some local distributors to open stores in Shanghai or Beijing. GK: Yes, the price of real estate in Shanghai is far cheaper than in Hong Kong, but what counts is the return on investment per square metre. In fact Hong Kong is extremely profitable in that respect, because of the number of sales you can make per square metre! In China, on the other hand, shops are often no more than showcases. p

europa star / LETTER FROM CHINA

LETTER FROM CHINA

33rd Hong Kong Watch & Clock Fair THE BASELWORLD FOR FASHION WATCHES Jean-Luc Adam

For its 33rd edition the Hong Kong Watch & Clock Fair welcomed 765 exhibitors from 19 countries. Among the hottest new trends were silicone and the first smartwatches.

“It’s too expensive to exhibit at Baselworld,” is a frequent lament of exhibitors at the Hong Kong Watch & Clock Fair, when they see my “Europa Star - Switzerland” badge. It must be said, the former British colony is a more suitable location for the production, assembly and distribution of fashion watches at an affordable price. We should note in passing that Hong Kong remains in value terms the second largest exporter of finished watches in the world, second only to Switzerland! “The demand for simple, robust and inexpensive watches will be strong in emerging markets and developing countries,” declares Takashi Yamamoto of the Japanese watchmaking federation. Although ‘inexpensive’ implies cheap components, there is increasingly less need to compromise on quality. Silicone rubber is a good example. This reinforced silicate-based elastomer has remarkable properties: it has high tear strength, it is water-resistant, it will tolerate extreme temperatures, it’s antiallergenic, light and flexible, and it has a smooth, silky texture that does not stick to the skin or cut into the wrist. This synthetic rubber is not only very comfortable to wear, it can take a variety of treatments (printing, engraving, coating) to give it different properties such as changing colour on exposure to UV, or even phosphorescing in the dark! Brands and suppliers at the 33rd Hong Kong Fair surfed the wave

“The demand for simple, robust and inexpensive watches will be strong in emerging markets and developing countries.” Takashi Yamamoto

EZIO

64 LETTER FROM CHINA / europa star

of silicone, and the “Silicon” brand even made it its primary theme, decorating its watch dials with tiny tubes of coloured silicone. You won’t see those anywhere else! Another emerging trend was the smartwatch. Most models on show - such as the Ezio or Cogito - had limited functionality, although some, like the Add Me+ with touch screen, a slim 9mm prototype, were more advanced. Many Hong Kong brands are preparing to plunge into this new sector of the market, but the positioning of smartwatches remains uncertain (see ‘Smartwatches: watchmaking federation presidents air their views’). u

COGITO

MINI

REINA V

THE CHINESE TIMEKEEPER

Some 19,000 buyers strolled the aisles of the iconic Hong Kong Convention Centre. Solus unveiled a watch vending machine in the Hong Kong underground with very good results. FOR THE PROFESSIONALS Some 19,000 buyers strolled the aisles of the iconic Hong Kong Convention Centre over the five days of the fair, 2% more than last year. There was a marked rise in the number of Indian (+37%), Korean (+30%) and Thai (+28%) buyers. The fair is aimed primarily at professionals, as was obvious from the “Small Order Zone”, where the minimum order ranged from 5 to 1000 units, with average orders from the 7000 purchases made comprising around 300 units. There was little risk of getting lost, as the categories were better differentiated than in previous years. The first hall was for entry-level brands, the second was devoted to suppliers and producers of components and machine tools, and the third hall housed the premium brands. The Salon de TE was decorated to resemble an 18th century European railway station, with the “Grand Central” in the middle, a relaxed space where 30 presentations were given during the fair. The Hong Kong Clock & Watch Fair also featured countless seminars, conferences, networking events, receptions and even a design competition (see ’Talent Spotting’ box).

TOP PICKS There were so many innovative ideas on show it would be impossible to cover them all. So here are our top picks! The Hong Kong group Acestar (Van Gogh and Tonino Lamborghini) has bought the Mini licence to launch a ‘Swiss made’ range of watches celebrating the iconic British car. Longitude, another Hong Kong group, has four brands or

EARNSHAW

licences (Everlast, FILA, Solus and New Balance), all with a sports focus. Last year, Solus unveiled a watch vending machine in the Hong Kong underground with very good results, and will be expanding this sales concept. Reina V is a Belgian brand that makes oversized watches solely for women. To limit excess weight, the curved steel back is topped with an aluminium case, onto which a steel crown is screwed. After the phenomenal success of Ice-Watch, perhaps Belgium is about to become a watchmaking superpower? “No, Ice-Watch is not perceived as a Belgian brand, but Belgium is recognised for its designers,” explains director Avi Saraga. The group Solar Time owns a plethora of interesting brands, including Russian label CCCP, the submarine-themed Ballast, and AVI-8 with its war plane aesthetic. They have now added Earnshaw: “They are assembled in England, as we always try to give our products legitimacy,” notes director Vishal Tolani. Thomas Earnshaw, in case you had forgotten, is considered the ‘father of the modern marine chronometer.’ Here too, the design of the watches is perfectly in keeping with the theme. In 2013 The Chinese Timekeeper promised a ladies’ collection. They have delivered, with a diameter reduced to 38 mm. The brand’s founder, Adrien Choux of France, is preparing to open a shop in the tourist city of Xiamen. Memorigin, a Hong Kong brand that produces its own tourbillons and cultivates a typically Asian style, is launching a model equipped with an MO 1231 movement; it has a tourbillon at 12 o’clock, power reserve indicator (70 hours) at 9 o’clock, day/night display at 3 o’clock and finally the current time at 6 o’clock. The ‘Time Machine’, inspired by famous musician Mark Lui, sports a vaguely ‘steampunk’ style that Jules Verne would have appreciated.

In 2013 The Chinese Timekeeper promised a ladies’ collection. They have delivered, with a diameter reduced to 38 mm. europa star / LETTER FROM CHINA

MEMORIGIN

Obaku of Denmark takes great care with the collections it exhibits in Hong Kong, as this is its primary market. This year the brand unveiled a remarkably elegant model in brown and gold, with a smooth case and link bracelet. Although you wouldn’t guess it from the name, Danish Design is a Dutch brand. It launched a men’s watch named the 1050 ‘Date 360’ to reflect the fact that - as the name this time implies - the date is indicated by a white dot that rotates around the dial. Let us finish on a more technical note with Ronda, the Swiss maker of quartz movements, and its Xtratech Z69, a 131/4 chronograph calibre with all the essential functions: 30-minute chrono, central seconds, date and day indicators, small seconds and a ‘three-eyed’ design for a boldly modern look. p

STUDENT GROUP 1st: Wan Nok Yiu, ‘Essence’ watch, School of Continuing and Professional Studies, The Chinese University of Hong Kong. In complete opposition to the smartwatch with its avalanche of information, Ms Wan’s ‘Essence’ pendant watch captures the idea of simplicity and humility in one’s approach to life. 2nd: Cheung Sui Cheung, ‘Impulse’ watch, Hong Kong Institute of Vocational Education. The Impulse is a kind of smartwatch: its 46 mm dial displays five main functions: heart rate for sports activities, GPS location, text messages, a chronograph and an LED flashlight. 3rd: Ahmat Winkie, ‘S-Watch’, School of Continuing and Professional Studies (The Chinese University of Hong Kong). ‘S’ is for Survival, and this smartwatch is dedicated to hikers; you enter the departure point and destination, and the watch indicates the best route to follow. In an emergency it can also function as a mobile phone.

66 LETTER FROM CHINA / europa star

OBAKU

DANISH DESIGN

RONDA

TALENT SPOTTING For the 31st time, the Hong Kong Watch & Clock Fair held a design competition. An expert jury presented awards in two categories: independents (Open Group), which were generally sponsored by companies, and students (Student Group) representing universities and colleges. The criteria were originality, creativity, aesthetics and commercial potential. Here are the results.

OPEN GROUP 1st: Leung Ho Him, ‘The Catcher’ watch, sponsored by MZB World Time Ltd. It was homesickness that inspired Mr Leung to design this dual-time GMT watch. The globe at the bottom of the dial is split into 24 time zones and, by simply adjusting the local time, the reflective ring enables the wearer to read off both local and home time. Through this temporal connection, ‘The Catcher’ brings the wearer closer to family and friends. 2nd: Li Ka Sing, ‘Rorota’ watch, sponsored by FDT Ltd. The design of the ‘Rotora’ was inspired by the idea of sharing. Mr Li has integrated a roller that keeps the ‘6’ at the bottom, regardless of wrist position. This makes it very easy to ‘share’ the time with someone else. 3rd: Tang Siu Hung, ‘Explorer’ watch, sponsored by Beijing Time 100 E-commerce Co. Ltd. Mr Tang’s Explorer is intended for businessmen, the mappa mundi on the dial and the two time zones inviting them to conquer the world. Apart from the shape of the continents, which we found puzzling, the design of the watch is extremely appealing.

LETTER FROM CHINA

SMARTWATCHES: WATCHMAKING FEDERATION PRESIDENTS AIR THEIR VIEWS At the 33rd Hong Kong Clock & Watch Fair it was impossible to escape the ubiquitous smartwatch. The watchmaking world is asking: how do we categorise it? What is it for? Will it really open up a market estimated at 50 billion dollars by 2018? And most of all, will it sound the death knell for the traditional watch on the wrist of the 21st century ‘homo internetus’? Watch federation presidents express their views.

Geoffrey Kao (Hong Kong) kicks off the debate with some quotes from the media: “Smartwatches will be adopted by consumers as they are relatively discreet and capable of functionalities that smartphones cannot provide”; “Google has launched an operating system for smartwatches - Android Wear - which is already being used by eleven manufacturers”; “Hong Kong possesses all the ingredients to become the future capital of smartwatch production”. With an amused smile, Mr Kao notes that Dick Tracy’s radiophone watch from the 1940s comic strip has left the realms of science fiction and become a reality, 70 years later.

“Hong Kong possesses all the ingredients to become the future capital of smartwatch production.” Geoffrey Kao But some observers think that, “even if the technology is capable, it might not necessarily be something that people want.” This is the view of Dae-Boong Kim (South Korea): “Koreans don’t think of smartwatches as watches per se, but more like electronic gadgets. We don’t believe their arrival will impact the watchmaking industry.” Patrice Besnard (France) adds: “We thought about the question, and finally came to the conclusion that smartwatches will have a problem: technology advances very rapidly, and models will go out of fashion just as quickly. The advent of smartwatches also reminded us of the era of the first digital watches, when people predicted the end of analogue watches. In the end, we witnessed a rebirth of the mechanical analogue watch.” Patrice Besnard therefore remains positive: “The classic wristwatch is also an item of jewellery and, that being the case, smartwatches could even stimulate interest in watchmaking.”

Zhang Hong-Guang (China) points out: “First of all, we have to define precisely whether the smartwatch will be a standalone watch, or if it will have to be paired with a smartphone. There is also the problem of poor battery life, which is a long way from watchmaking standards.”

“Smartwatches will have a problem: technology advances very rapidly, and models will go out of fashion just as quickly.” Patrice Besnard

Takashi Yamamoto (Japan) notes: “We are in a similar position to that of South Korea: we produce both traditional watches and smartwatches. The classic watch satisfies the canons of fashion and is also more artistic, whereas the smartwatch will inevitably remain more functional, which in theory should make it less appealing to female customers. However, some functions could well become essential in their eyes, such as the ability to make emergency calls if attacked.”

“Some functions could well become essential such as the ability to make emergency calls if attacked.” Takashi Yamamoto

Patrice Besnard raises a laugh: “And with a smartwatch on their wrist, they’ll waste less time looking in their handbags for their smartphones...” The representative of French watchmaking returns to his Korean counterpart, Mr Kim, with a more serious comment. “Ten years ago, you may remember, we were discussing a very similar topic. You said that with the advent of smartphones young people would no longer buy traditional watches, because they would be able to see the correct time on their touch screens. Well, watchmaking today is in better shape than ever.” p

europa star / LETTER FROM CHINA

SERVICE, PLEASE!

TALKING SERVICE WITH GRAFF Keith W. Strandberg

Michel Pitteloud, Chief Executive Officer of Graff Luxury Watches

An interview with Michel Pitteloud, Chief Executive Officer of Graff Luxury Watches, about the importance of after-sales service.

not possible, our sales associates are on-hand to direct clients to the best support for their bespoke requirements.

What is Graff’s overall attitude towards after-sales service? Michel Pitteloud: Graff appreciates the extreme importance of after-care once a client has made a purchase with us. We ensure our clients receive the very finest experience - from visiting our stores, to purchasing their extraordinary piece, continuing through to ensuring they have the best advice to care for their piece in the future. We do not consider after-sales service as a profit centre.

How challenging has it been to organize your service structure, find watchmakers, etc.? MP: Graff is renowned for nurturing craftsmen from young apprentices, honing their skills and techniques the Graff way, into Master Craftsmen. Attention to detail is consistent throughout the entire production process, including after-care for Graff timepieces. We support and encourage a talented and dynamic team who work tirelessly to ensure that every service request is completed professionally and in the shortest amount of time.

Graff Diamonds was founded in 1960 by Laurence Graff and quickly established itself as one of the leading diamond companies, handling the sourcing, production and sale of some of the world’s most spectacular stones. In 2008, Graff opened its Luxury Watch division, headed up by Michel Pitteloud, a watch industry veteran. In keeping with Graff’s high profile, the watch division has created many incredible watches, combining dazzling diamonds with the highest complications. As Graff only sells in its own boutiques, and uses a network of suppliers for its watches, we find out how Graff handles aftersales service.

“We do not consider after-sales service as a profit centre.”

68 SERVICE, PLEASE! / europa star

Do your boutiques have service centres in them? MP: Some of our stores have an in-house service centre. Where this is

What is the biggest challenge Graff faces concerning service?

“The need for skilled watchmakers has increased along with the necessity of after-sales care.” MP: The biggest challenge is servicing our complicated watches as we require going back to the manufacture/watchmakers we worked with to complete the piece. We are currently in the process of training our own watchmakers so that we can service every Graff Watch ourselves. What is your current warranty on watches? MP: Graff Luxury Watches provide two years warranty. We do not offer, per se, a warranty extension however we do care about our clients and always ensure the best quality service and that expectations are satisfied. What is the average service time for Graff watches? MP: For quartz watches, about a month, and for complicated watches, between one and three months.

How do you organize after sales-service? MP: Where possible, all servicing is carried out within the in-store service centres. In those instances where this is not possible, the watch is sent to our workshop in Switzerland.

MP: The timepiece market is seeing a continual increase in demand for highly technical, dress, sport and jewellery watches; therefore the need for eminently skilled watchmakers has increased along with the necessity of after-sales care.

What message does good customer service send? MP: With a close collaboration between Graff’s London atelier and our workshops in Geneva, there are many stages during the design and production of a Graff watch to ensure that every timepiece is of the highest quality. It is of the utmost importance that by providing after-care for Graff watches, our clients continue to receive the very best experience, and that includes service after purchasing a watch. This ensures a consistent and reliable level of customer service that Graff clients can rely upon.

Are there any unique challenges regarding jewellery watches and jewellery after-sales service? MP: We care for jewellery and nonjewellery just the same. They are both fragile in their own ways.

Do you think after-sales service will be a problem in the short or long term future?

What is the warranty for the stones on watches and in jewellery (e.g. if a stone falls out or is damaged somehow)? MP: If a gemstone(s) falls out due to normal wear then Graff Luxury Watches will change the gemstones free of charge, however if there has been a shock to the pieces then this will be the responsibility of the client. p Discover more at www.europastar.BIZ/Graff

europa star / SERVICE, PLEASE!

RETAILER PROFILE

A look inside the newest M.A.D GALLERY Keith W. Strandberg

The newest M.A.D. Gallery in the world is the one in the Mandarin Oriental Hotel in Taipei, Taiwan. Opened by Swiss Prestige, which is the distributor for many highend brands, including MB&F, Frederique Constant, Fendi, Graham, Greubel Forsey, HYT, Christophe Claret and Laurent Ferrier, this is Swiss Prestige’s first foray into retail.

How’s business? Lori Shen: The market has been extremely slow for the past few years. And I have been in the watch industry for 15 years and have never experienced such a downtrend. The grade A stores are under tremendous pressure from the big groups to maximize the capacity, which means bigger stores and more stock. As a result, the middle and small retailers are struggling with slow traffic. This situation does not make the distributors’ lives easy. We are actually one of the few distributors still existing in Taiwan. What is your background? LS: We are very new in the retail business. Our M.A.D. Gallery is only a few months old. I have always functioned as distributor. Swiss Prestige helped to establish some exclusive brands in Taiwan in the past like Ulysse Nardin and Hublot.

70 RETAILER PROFILE / europa star

“Taiwan has always been one of the top markets for Swiss complicated watches.”

How has business changed in recent years? LS: A few key retailers are dominating the market. Chinese tourists contribute a major share to the mid-range brands. The domestic buying power is decreasing, especially for the midrange brands, but Chinese tourists have taken over this sector of business. Another big change in the market is that international retailers have tried to establish here in the region, hoping to increase their market share, but this has proven unsuccessful. They were hoping to benefit from the business from mainland China like Hong Kong did. But the result was not as expected. Over 90% of the Chinese visitors came as groups and the shopping is restricted to the retailers who

work with travel agents. Furthermore, the locals still buy from local retailers. What is unique about the Taiwan market? LS: Taiwan is a very mature and domestic oriented market. Unlike Hong Kong and Singapore, Taiwan benefits very little from tourism business (except the mainland Chinese which we do, but the share is very small compared to other Asian countries). There are many local watch enthusiasts/collectors with deep knowledge regarding watches and mechanical movements, and complications are very much appreciated, especially at the Haute Horlogerie level. Taiwan has always been one of the top markets for Swiss complicated watches.

What is the biggest challenge facing your store right now? LS: Brand awareness! Most Taiwanese consumers are quite brand-oriented. It is quite challenging to introduce them to an independent niche brand like MB&F. It will take some time to let people understand and appreciate its beauty. But we are confident we will succeed. What is the biggest challenge facing the watch industry right now? LS: Innovation! How do you market your store? LS: As we are not a typical watch store, offering curated products like motorcycles, so we do events combining watches with the arts. We do co-branding with other industries to promote our store as well. Who is your customer? LS: It is a very good mixture of age groups, but the majority of our customers are male. Our youngest customer was only six years old and she did not want to leave the store until her Grandpa bought her the applause machine! How important is customer service? LS: Significant! You can basically get most products in any store and even over the Internet. I believe good customer service makes the difference whether the consumers will buy from you or not. Do you do repairs at your store? How do you handle repairs? LS: No, we don’t do repairs at our store but we do them in our after-sales service centre, which handles basic repairs, such as the exchange of straps, polishing etc. As we are representing

very unique products, any repair is mandated by the manufacturer to be sent back to them for repair. How do you handle training? LS: We do many in-house trainings either with our senior executives or we will hire watch experts/editors/ bloggers to give presentations to our staff on different topics and we also receive training support directly from the brands. There are many ways of doing training. We usually schedule a half-day seminar in the office so the staff will not be disturbed and can be more concentrated on the topics. What is your relationship like with other retailers? LS: As mentioned, we have been in the business as distributors and our relationship with other retailers is very amicable. We received many positive suggestions in the preparation of our gallery.

wouldn’t be here talking to you. I like mechanical products and the luxury world, and this is what I am doing now. What don’t you like? LS: I don’t like listening to lectures from people who have no idea about the market and think they are the experts. What do you feel you do well? LS: I can only say that whatever I do, I do with passion, determination and honesty. Our partners and customers will feel this and it will create a healthy atmosphere. What does time mean to you? LS: Time is to live in the moments.

How important is security? LS: Security cannot be compromised, for our staff and our consumers. We have never been robbed.

Are you optimistic about the future? LS: I try to be optimistic but the market is really slow now and it has been like this for the past few years. The advantage of our store is we are very unique and new, and hopefully with the uniqueness to give us the opportunity staying competitive. And yes, I am positive.

What do you like about your job? LS: It is a mixture of love and hate! I think loving wins, otherwise I

What is your favourite watch? LS: The MB&F Legacy No. 2 in Platinum. p

FACTS AND FIGURES Name: M.A.D. GALLERY Location: Mandarin Oriental Hotel, Taipei, Taiwan How long: Since May 2014 Employees: 5 Size of store: 115 square metres Range of price: 7,600 to14,000,000 Taiwan Dollars Best-selling watch: MB&F LM101 Brands: MB&F

europa star / RETAILER PROFILE

EDITORIAL & ADVERTISERS’ INDEX A Apple 4, 8, 9, 17, 18, 53, 55 A. Lange & Söhne 9 Apple Watch 8, 16, 18, 53 Armand Nicolet 40, 43 Arnold & Son 24, 25, 26 Artya 43 Audemars Piguet 9, 41, 50, 52, 61 B Baume & Mercier 8, 28, 29, 34 Bell & Ross 9 Blancpain 36 Bovet 24, 26, 42, 43 Breguet 20, 36, 61 Breitling 9, 61 Bulgari 29, 33, 35, 46 C Calvin Klein 61 Candino 54, 55 Carl F. Bucherer 11 Cartier 9, 31, 33, 34, 35, 36,40, 46, 61, 74 Casio 37,38,39, 61 Certina 61 Chanel 9, 33, 34, 35, 36 Chaumet 33, 35, 36 Chopard 9, 33,35, 36, 46, 61 Christophe Claret 29, 30, 70 Citizen 27 Cogito 64

Fossil 4, 8 Frédérique Constant 70 G Girard-Perregaux 36 Glashütte Original 36 Graham 70 Graff Luxury Watches 68, 69 Greubel Forsey 70 Guess Watches 61 H Harry Winston 33, 35 Hautlence 50, 51, 52 Hermès 12, 13, 14, 15, 29, 31, 33, 35, 36, COVER I H. Moser & Cie 50, 51, 52 Hublot 9, 36, 61, 70 HYT 70, 74 I Ice-Watch 65 IWC 8, 9, 61 J Jacob & Co. 33 Jaguar 54 Jaquet Droz 22, 24, 25, 36 Jaeger-LeCoultre 3, 8, 34, 61, 74, COVER II L Laurent Ferrier 70 Longines 9, 61 Lotus 54 Louis Vuitton 7, 33, 35, 36 Luminox 53 LVMH 9, 15, 36, 52, 63

D Danish Design 66 de Grisogono 54 Diesel 74 Dior 33, 34, 35, 36 E Earnshaw 65 Ernest Borel 23 Ezio 64

M MB&F 70, 71 Memorigin 66 Michael Kors 61 Mini Watch 65 Mondaine 52, 53, 54 Montblanc 46, 61

F Fendi 70 Fondation de la Haute Horlogerie 56

O Obaku 66 Omega 29, 36, 61, 74 Orient Watch 48, 49, 61

P Panerai 11 Patek Philippe 9, 40, 61, COVER IV Pebble Watch 18 Perrelet 54, 55 Piaget 33, 35, 43 Pierre Cardin 52 R Rado 9, 61 Ralph Lauren 33, 35, 36 Reina V 65 Revelation 31 Richard Mille 9 Richemont 60 Rolex 41, 61, 74 Ronda 66 S Samsung 4, 17, 18, 37 Seiko COVER III Sequel AG (Guess watches) 9 Sinn 9 Slow Watch 8 Sunlight 61 Swatch 4, 16, 61 Swatch Group 4, 8, 10, 36 T TAG Heuer 5, 9, 29, 36, 46, 61 Tiffany & Co. 9, 33, 36 Tissot 61 Titoni 21, 32 The Chinese Timekeeper 65 Tudor 9 U, V Ulysse Nardin 9, 22, 24, 36, 61, 70 Vacheron Constantin 9, 22, 24, 25, 26, 40, 41, 43, 61 Van Cleef & Arpels 9, 33, 34, 35, 36 Vaucher Manufacture 14, 15, 16, 18 W Watch Thinking 16, 17, 18, 19, 20

EUROPA STAR HBM

Europa Star HBM SA, Route des Acacias 25, CH-1227 Carouge/Geneva - Switzerland Tel +41 22 307 78 37, Fax +41 22 300 37 48, contact@europastar.com • www.europastar.com EDITORIAL Editor-in-Chief: Pierre M. Maillard • pmaillard@europastar.com Managing Editor / all editions: Serge Maillard • smaillard@europastar.com Senior Editor: D. Malcolm Lakin • mlakin@europastar.com International Editor: Keith W. Strandberg • keiths821@aol.com Editors China: Jean-Luc Adam, Woody Hu • watches-for-china@europastar.com Editor Spain: Carles Sapena • csapena@europastar.es Art: Alexis Sgouridis • asgouridis@europastar.com Editorial Consultant: Casey Bayandor • cbayandor@europastar.com Asst. Publisher: Nathalie Glattfelder • nglattfelder@europastar.com Contributors • Switzerland: Isabelle Guignet • France: Antoine Menusier • Australia: Martin Foster • Italy: Paolo de Vecchi • Germany: Gerhard Claussen, Timm Delfs • Russia: Vyacheslav Medvedev • Portugal: Miguel Seabra PUBLISHING PRINT/E-MEDIA Executive Director: Casey Bayandor • cbayandor@europastar.com Editorial, Production & Advertising Manager: Talya Lakin • tlakin@europastar.com MARKETING & CIRCULATION PRINT/E-MEDIA Marketing & Circulation Director: Nathalie Glattfelder • nglattfelder@europastar.com Marketing & Circulation Manager: Jocelyne Bailly • jbailly@europastar.com ADVERTISING / INTERNATIONAL SALES DIRECTORS Switzerland / Italy / US: Casey K. Bayandor Tel: +41 22 307 78 37 Fax: +41 22 300 37 48 • cbayandor@europastar.com Europe & International: Nathalie Glattfelder Tel: +41 22 307 78 37 Fax: +41 22 300 37 48 • nglattfelder@europastar.com Spain: Carles Sapena Tel & Fax: +34 93 112 7113 • csapena@europastar.es Asia: Maggie Tong Tel: +852 9658 1830 Fax: +852 2527 5189 • maggietong@europastar.com Ukraine: Julia Mostovenko Tel: +38 044 205 4088 Fax: +38 044 205 4099 • jmostovenko@karavan.ua PUBLISHER: Philippe Maillard MANAGEMENT / ACCOUNTING Business Manager: Catherine Giloux. Tel: +41 22 307 78 48 • cgiloux@europastar.com Credit Manager: Alexandra Montandon. Tel: +41 22 307 78 47 • amontandon@europastar.com MAGAZINES Europa Star - Europe - International - USA & Canada - China Latin America / Spain - Ukraine, Europa Star Première, Bulletin d’informations, Eurotec, CIJ International Jewellery Trends & Colours WEBSITES www.worldwatchweb.com, www.europastar.com, www.watch-aficionado.com, www.watches-for-china.com, www.horalatina.com, www.europastar.es, www.europastarwatch.ru, www.CIJintl.com, eurotec-online.com E-newsletters: www.europastar.com/newsletter MAGAZINE SUBSCRIPTION One year 6 issues, CHF 100 Europe, CHF 140 International. Subscriptions: www.europastar.com/subscribe register@europastar.com Printed in Geneva by SRO-KUNDIG – Audited REMP/FRP 2013-2014 Copyright 2014 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.

Connecting Global Competence

February 20 – 23, 2015 MESSE MÜNCHEN INTERNATIONAL INHORGENTA.COM Inhorgenta-Blog.com

LAKIN@LARGE

WHAT’S IN A NAME? D. Malcolm Lakin

“What’s in a name? That which we call a rose. By any other name would smell as sweet.” William Shakespeare, Romeo and Juliet

It all began when Lauren, my youngest daughter, was recently given a puppy. A delightful little chocolate-coloured female Bichon Havanese, so we set about searching for a name in keeping with the puppy’s playful and affectionate nature. It took us a while, but we finally settled on Maya and the puppy bounces around seemingly happy with her name and blissfully oblivious to the fact that in another household she could have been lumbered with anything from Artemisia to Zephyrine via Philomena. But as Will said, “What’s in a name? …” Would the puppy act differently if she had been given some weird name like the so-called ‘celebrities’ bestow on their offspring? Unless you’re from another planet, you know what I’m talking about, but just in case you don’t spend too much time reading the myriad columns devoted to who does what with which and to whom in the show-biz world, the following are a few examples of the sobriquets that the children of the rich and famous now have to live with: the late Frank Zappa, an American musician whose rock group was called The Mothers of Invention, named his children Dweezil, Moon Unit, Diva Thin Muffin, and Ahmet; Jamie Oliver, the very English television chef, restaurateur and entrepreneur called his children Poppy Honey and Daisy Boo; Jason Lee the American actor called his son Pilot Inspektor, Bob Geldof of The Boomtown Rats and Live Aid fame called one of his daughters

74 LAKIN@LARGE / europa star

I H1 Dracula DLC by HYT in black titanium with retrograde red fluid hours, minutes, seconds, power reserve indicator and regulator functions using a mechanical hand-wound HYT calibre movement.

Fifi Trixibelle and the late master of the Moonwalk, Michael Jackson, named one of his children Blanket! Which brings me to watches. To paraphrase Will, ‘That which we call a Rolex, By any other name would sell as well …’ Oh yes? How about Canteen Zulu by Vestal watches – a virginal best seller if ever there was one, or Last Laugh Tattoo Mechanical Automatic by Mr. Jones? Think I’m joking? Try this for size then: Jump Hour Daddy Blue & Tan Dual Time Zone by Diesel or even M-Theory Time & Space Zero Gravity watch – Moonlight (an interesting timepiece by the way) or Zub Zayu Zirc Midnight Blue by Nooka? The names don’t exactly roll off the tongue in the manner of Rolex, Cartier, Omega or even Jaeger-LeCoultre do they? The problem is that some names are too long, too complicated or too over the top to easily recall, so that when you go into your favourite retailer you’re likely to be tongue-tied, much like the time I purchased some fake vampire fangs to scare my kids one Halloween.

I put them in my mouth and in a deep baritone voice tried to scare them by saying ‘Death to you foolish mortals’. It didn’t work, they fell to the floor laughing when it sounded like ‘Depfth Yooo thoothlth morthaliths.’ As if by some pre-ordained miracle, I received an e-mail from HYT a few weeks ago introducing me to their latest model, the H1 Dracula DLC. Being me, I immediately visualized a couple of pointed fangs, gently dripping with blood with two tiny marks on the neck of a beautiful maiden, who is, of course, now transformed into a vampire. But the Dracula DLC model, seen here with a red liquid cursing through its veins, resembles more a renal dialysis machine than the result of a vampiric nibble. Which, not surprisingly, reminds me of a story about two nuns who were travelling by car across the wild, desolate, snow-bound roads of Transylvania when all of a sudden a vampire leaps in front the car. The nun slams on the brakes and the vampire, with its bloodshot eyes bulging, its claw-like hands and long pointed fingernails menacingly close to the windscreen and it’s lips curled up around two long pointed fangs glares into the car. The nun who was driving panicked and screams at the other nun, “What should we do?” The other nun shrieks, “Show him your cross.” At which point the nun winds down the window, puts her head outside and screams, “Get out the way, you stupid, moronic blood-sucking idiot!” Well, you’ve got to laugh haven’t you.p