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PANERAI HISTORIA DIVING THROUGH TIME
Tala El Hachache Giacomo Sacchetti Bonnie Santos
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P
anerai’s
book
has
been
created as part of our project at Polimoda Fashion School in Florence, Italy. We were assigned to study and discover
the history and insights behind the world of Panerai taking us on a trip throughout history. Panerai has become one of the most iconic products in the market for its rich history and amusing story, which took this brand from being a small shop in Firenze to an Italian Luxury manufacturer with worldwide distribution. This book will unleash the different key moments throughout time and variations of consumer behaviors explaining Panerai’s
No part of this work may be reproduced or transmitted in any form or by any means without the permission of the author and publisher. Created in Italy on May 2022 as part of a project for Polimoda, Firenze, Italy Only for educational purpose. Not for sale.
adventures. We hope we will be able to take you on a journey throughout history, revealing the innovations behind wristwatches, and how they became a modern day-to-day tool for everyone. So sit back, hold your breath, and let’s dive into the seaworld of Panerai.
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CONTENTS Int ro duc t ion
9
Bra n d His tor y
10
The The The The The The
His tor y Tren dset ter s Ac t ion Shif t Ent r y E x pa nsion
Bra n d Ident it y V ision, Mis sion, Va lues The cha n ge in so ciet y
36 39 43
Bra n d Pos it ionin g
46
Benchma rk in g Current p os it ionin g The O pp or t unit y The S t ren ght s, Wea k nes s & Threa t s Fra gmented C ommunic a t ion The Prop os a l Fut ure p osit ionin g Fina ncia ls
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12 15 16 24 29 32
48 50 52 55 56 58 62 64
The lo c a t ions Revenues The Forec a s t
66 70 74
Ack now ledgment s
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INTRODUCTION Throughout this book, we will take you through our research process and findings that explain the history of watches from the 1850s up to date that have reflected on the success and storytelling behind Panerai. Panerai is one of the oldest Italian luxury mechanical watch manufacturers known for their recognizable Italian design and Swiss savior-fair. They have grown from being a small dream in Florence Italy to an international brand with worldwide presence. Today, Panerai is part of the conglomerate Richemont which together have worked on enhancing the public’s familiarity with the brand and building on its rich story and DNA that have lived throughout history. We began our research through analyzing the brand’s history and understanding where and how it all started. Moreover, we looked at the external factors playing huge roles in manipulating Panerai’s decisions and also its development within time. These factors can include societal changes,
Our data was mostly gathered from our research;
consumer trends, technological and engineering
further information was collected from our lectures
developments, and competing brands within the
at Polimoda and interviews with experts within the
watch industry. Connecting the dots between all
watches industry. We will be taking you on a trip
these data allows us to get stronger insights on
down memory lane explaining the evolution of
what the brand stands for and what we believe
watches, the world of Panerai, and also explaining
lies for them in the future in terms of opportunities
our findings and future recommendations.
in which they can tap into.
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BRAND HISTORY
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THE HISTORY
It all started back in the 1850s. Watches were starting to become industrialized and people were keeping hold of time. Not all people, but more importantly it was the aristocrats who were
‘Orologeria G.Panerai & Co.’ was the first
surely in need of a tool that allowed them to always
watchmaker shop in Florence bringing Swiss-
keep track of time in order to schedule their day
made watches to the region. They had strong
accordingly. This is when pocket watches were
connections with the Swiss market and were able
being worn by the men back in the day, placed
transfer the know-how and products to the Italian
inside their pockets within their vests or pants to
Hence, pocket watches were the men’s watch
Therefore, pocket watches were growing and it
market. Not only were they selling Swiss watches,
protect them from the surroundings like moisture
accessories, whereas women wore their watches
was the time for Giovanni Panerai(1825-1897)
but also have opened a warehouse for their repair
from humidities, and scratches from rough
on their wrists, necks, or waists noting that they
to fulfill his dream and open a watches store on
workshop and created the first watchmaking
contacts.
didn’t have pockets in their garments.
Ponte alle Grazie in Florence Italy in 1850.
school in Florence.
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THE TREND SETTERS
The military was no different. They too needed watches to measure and maintain accurate movement throughout their missions. Hence, pocket watches were part of the tools used by army men as well. However, during the attacks, it was said that using pocket watches were extremely inefficient since it was difficult to check the time and fight simultaneously. Legend says that some soldiers used to wrap their pocket watches with a piece of cloth around their wrists in order to keep track of time in an orderly manner. When soldiers used to go back home, wearing these pocket watches on their wrists created buzz because watches on wrists were considered a women’s accessories. However, few people started to pick up the trend and resonate the idea of wristwatches with the strong, brave, and adventurous military men. Some brands, like Rolex and Omega, started to pick up on this trend and created wristwatches.
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THE ACTION
Guido Panerai, Giovanni’s grandson, took over and wanted to expand his grandfather’s dream along with his son Guissepe. Guido decided to change the name of the store to ‘Orologeria Svizzera’ to showcase their strong connection with the Swiss, being also the home of many brands like Rolex, Longines, Vacheron Constantin, Movado, and even Patek Philippe. Their expansion was evident as they grew their variety of offerings and services. This is where they started focusing on supplying a very important and main customer to Panerai’s future which was the Italian Navy. They were providing the Navy with tools and instruments fit for their activities throughout the First World War. Moreover, Orologeria Svizzera was patenting the use of a newly discovered element Radium, to be used in their products.
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This element had the characteristics of glowing in the dark for long periods of time, which was something mesmerizing back in the days. Moving forward, Guissepe Panerai takes over and directs most of his attention to the army creating wristwatches and tools that were fit for them. They were studying the development of a watch called ‘Mare Nostrum’; however this was never actually produced. The first watch that was officially created by Panerai was the ‘Radiomir’, deriving its name from the Radium element that was painted onto its dials. The Radiomir were famous for their rigidity, waterproof structure, and glow in the dark features. This design was very successful with the marine’s activities and created the perfect match between practicality and formation. The case was supplied by Rolex which consisted of a thick and big pocket watch inverted with wired lungs attached to the sides to fixate the straps on.
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As the use of the Radiomir watch grew with the army throughout the second world war, so was Panerai’s love for innovation and enhancements. In 1943, Panerai created the protecting crown as a way to protect the crown and keep it in its place. This was important because accuracy and precision was important, and so damaging the crown or accidentally changing the time could greatly impact the outcomes of the navy’s missions. Accordingly, the protecting crown piece became an iconic look for Panerai which had been adopted in most of their designs ever since. Furthermore, another one of their iconic collections, the Luminor, was created in 1949 after discovering the threatening effects of Radium emitting radiation. As with the Radiomir, Luminor was named after the luminescent material it was manufactured from.
Panerai have also extended their connections providing specially requested Radiomir watch with bigger features and detailed specifications in terms of its mechanics to the Egyptian forces.
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THE SHIFT
During the 1950s, Panerai was starting to
In addition to this, Guissepe Panerai died and for
witness a new shift with all the changes that were
the first time ever, a non-Panerai was stepping up
negatively impacting it. Firstly, the wars ended and
to take over the company in 1972.Dino Zei was
there was a lack of demand for Panerai watches.
a formal naval officer and had to face several
Secondly, the contract with Rolex was over and
challenges in order to revive the company.
huge drops in production were witnessed. During
Therefore, Zei started by changing the name of the
this period, the watch industry was going through
store to ‘Officine Panerai’ or Panerai Workshops
a new fashionable trend as well, moving towards
to emphasize on the company’s strengths in
slim watches to depict class and elegance.
innovation and technicality. Furthermore, he shifted the brand’s direction towards selling equipment for divers, and less on the bulky watches. This was more and more evident, especially during the 1970s when the quartz watches hit the markets and were considered to be the biggest trend for the watch industry. Digital and also colorful watches were starting to make their mark dominating a huge segment of the market.
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THE ENTRY
In the beginning of the 1990s, the mechanical
edition collection and never became a signature
watches were coming back strong to the watches
collection). These watches were celebrating their
industry and highly appreciated. This is when, in
unique aesthetics and story built behind them.
1993, Panerai decided to enter for the first time the public market as a luxury mechanical watch
Panerai didn’t witness a huge success with the
brand introducing three of their watch collections:
launching since the brand was considered to be
10 models totals -
forgotten and their marketing strategies were not
The 44 mm Luminor and
Luminor Marina, and the 42 mm Mare Nostrum
strong enough.
chronograph (the Mare Nostrum was a limited -
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It was all up until 1996 when one of the world’s famous Hollywood actors, Sylvester Stallone, put the brand back into the market and inside people’s mind. In an interview conducted with him, it was said that he was looking for a special watch that
In celebration to this success, a private Luminor collection named ‘Sly-tech’ was created in honor of Stallone to be given to his friends. One of which was given to one of his close friends and celebrity actor Arnold Schwarzenegger.
he could wear in his action and thriller movie ‘Daylight’. As he discussed his interests with some of his friends, they recommended the Panerai watch and so he paid a visit to the shop hoping to find a suitable watch. He stated that he instantly fell in love with the Luminor watch given its bold design and military story reflecting on the heritage and depth embedded within the brand. It was also waterproof and could light in the dark which was very convenient with the underwater scenes. The watch was a huge success and created a new buzz, introducing the brand officially to the market.
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THE EXPANSION
As Panerai grew in the market in recognition, it caught the eye of Vendome, now know as Richemont Holding Group. Richemont, a Swissbased luxury goods holding company, believed that Panerai had the potential to stand out under its group and so it did. Richemont bought Panerai in 1997 and since then the brand has been grown tremendously. From being a small shop in Florence to having worldwide presence, Panerai has developed into a brand with a very strong DNA and heritage. To date, it stands out for its Italian designs and Swiss savior-fair, its military designs and association with bravery, adventure, and heroism. Today, Panerai continues its path in expanding its innovation, pushing its limitation within their Laboratorio di Idee. Moreover, they are heavily influenced by their love for the ocean and maintaining sustainability within their operations and activities.
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BRAND IDENTITY
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VISION Creating excitement and more experiences. Enduring craftsmanship and the allure of adventure. Expanding the Laboratorio di Idee
MISSION Support the challenges of modern heroes by providing them with exceptionally accurate instruments able to flank them into the most extreme situations
VALUES Technical sports brand associated to the world of the sea. Legacy, focusing on the future and new technologies
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P
C
A
U
S
R
T
R E N T
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THE CHANGE OF SOCIETY
P
A We can easily recall the time when women
S
were highly dependable on men back in the days. Men were consistently considered the one with power, whether that was within a household, a job, or even society as a whole. They were the ones who were supposed to be educated and socially
T
active, and also working and earning money. On the other hand, women were idealized for their beauty and feminism, and also taking care of her home. This was highly reflected through the marketing campaigns and designs of the watches.
Moreover, the watch industry itself was highly men-
Advertisements used to be highly stereotypical,
oriented noting that watches were considered the
reflecting the two socially different jobs that both
male accessories and the women had their jewelry.
genders had. For example, ads used to greatly
This is another reason as to why watches were
emphasize on the idea of a man buying for his
pointed towards men, which gave them access to
woman a gift, highlighting on the two gender-roles.
a great number of brands and designs to choose from. On the contrary, the women’s segment was overlooked upon; hence, lower number of designs were created for them and less focus on creativity was placed on them.
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Nowadays, society has been witnessing new
C
changes with the evolvements in the mentality and recent socio-political movements. Equality between women and men have been greatly
U
emphasized upon within the last few years, which has greatly changed perceptions on women’s positions and hierarchies in society. Moreover, women have been encouraged to become strong, independent, powerful, and established. They have started to earn various degrees and great job rankings allowing them to have higher disposable income and purchasing power. Focusing on the watch industry, it has been witnessing a rise in demand and it has been estimated that sales by women buyers can reach up to 54%. Furthermore, there has been a shift in demand for watch styles by women buyers. They
R R E N T
are favoring nowadays a more masculine feel to the watch. A watch that can represent their accomplishments, make a bold statement, and salute them for their bravery and strong spirit. Within our research, we have discovered that women can not find watches that feature these particular characteristics. Women watches in the market have soft and elegant designs; therefore, the big, bulky, and bold designs for women are absent in the market..
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BRAND POSITIONING
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BENCHMARKING
As we have previously stated, Panerai is
As seen in the table, brands have been analyzed
one the many brands in the market that belongs to
based on several factors: price range, average
the luxury mechanical watches sector. Therefore,
prices, attitude, materials, availability, group,
we wanted to start analyzing the position of the
gender-orientated communications, and gender-
brand and where it fits in comparison with some of
oriented products.
the other brands within the same segment in the market.
Now, we will be moving onto the positioning map and considering how it will look like before
This would help us understand how we stand in the
the applied changes within the recommended
market and how to move forward. We picked five
opportunity. The chosen subjects for the two axes
of the strong players in the market that we believe
are products and communications with regards to
are good to compare to and are focal points in this
gender or genderless orientation. As seen in the benchmarking and positioning
Moreover, the graph shows how other brands
These two features were chosen because we
charts, companies such as IWC and Breitling
are already genderless in their communication
realized that a possible development could be
place products on the market that by attitude and
strategies, not being directed to one specific
attained by Officine Panerai through developing
target are very similar to those of Officine Panerai.
gender, whereas Panerai is still highly oriented
a less male-oriented communication using their
However, if we look at their advertisements,
to one-gender showcasing the need to consider
gender-based product..
we see that they follow more of a genderless
some changes.
particular sector- Hublot, Jaeger LeCoultre, IWC Schaffhausen, Breitling, and Rolex.
communication which Panerai should aim for in their new strategy.
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PANERAI POSITIONING CURRENT
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Moreover, the graph shows how other brands are already genderless in their communication strategies, not being directed to one specific gender, whereas Panerai is still highly oriented to one-gender showcasing the need to consider
THE OPPORTUNITY
some changes. The message and story behind Panerai focus on the individuals that were fearless, brave, heroic, and willing to dive in adventures as how the marine once did in the past. This message was applied for male buyers and was what encouraged them to belong in this community; however, embedding women within this storytelling could be done as well to showcase their strength, dare, and
We believe that Panerai nowadays has an
boldness.
amazing opportunity to grab and hold on to. Given Panerai’s historical background and the trends throughout time, their watches have been highly oriented towards male consumers. We can even say that around 95% of their buyers are men; only very selected women would buy it because the brand never actually advertised the watches to be bought by women.
The message and story behind Panerai focus on the individuals that were fearless, brave, heroic, and willing to dive in adventures as how the marine once did in the past. This message was applied for male buyers and was what encouraged them to belong in this community; however, embedding women within this storytelling could be done as well to showcase their strength, dare, and
However, now is the best opportunity to start
boldness.
changing this mentality while maintaining the same brand DNA and storytelling. Hence, it is very important to highlight that the change will not be applied on the DNA of the brand, but by changing the communication strategies to embed both genders. This is crucial to emphasize on since we strongly believe that the product, design, story, heritage, technicality, and innovation all are part of Panerai that cannot and should not be changed.
It also important to note that Panerai this year has decided to enter the women’s market by selling specifically made designs for them; however, neither the designs nor the communications align with the brand’s image, vision, and values. This secludes women from the Panerai story, which we believe should be adapted to achieve better results. Examples of their recent female collections and communication strategies will be further analyzed within the next sections.
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THE STRENGTHS, WEAKNESSES & THREATS Officine Panerai has been witnessing an increase in demand and interest by buyers, in which Panerai controls
S
using scarcity. Women love Panerai for their classic and day-to-day looks. Moreover, the rigid and bulky structure of the watch is of great interest to them, especially since the trend is moving towards bigger and more masculine watches for women. Moreover, with Richemont’s help, Panerai has strong support and power to grow and earn worldwide distribution and recognition
W
With the newly released ads by Panerai targeting women, there is a clear segregation and lack in representation of what Panerai stands for with regards to its adventurous, marine, and bold looks. There is no emphasis on the women’s segment. The only watch that Panerai could recommend for female buyers is the Luminor Due due to its smaller and thinner design – 38mm, which essentially is sold to men. So, there is no real sense of inclusivity for female buyers. On the contrary, distinctive Luminor Duo watches with female specification like red leather straps or mother-of-pearl dial have been created. These watches do not seem to look like the original Panerai watches nor do they maintain the same DNA. So, there are fewer options to select from by female buyers. The only watch recommended for them is Luminor Due which is very limited in specs and colors. Other collections like the Luminor Marina’s allow buyers to have double straps of two different textiles – leather, rubber, or fabric. This allows them to interchange straps at home based on their usage. Furthermore, the bold, thick, and big shape of the Luminor Marina is highly recommended for men and not women, giving again women smaller options.
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Political and economical instabilities are highly evident within several countries around the world which could effect overall performances. These can include the increase in manufacturing costs and also fluctuating currencies. Also, competing brands serving both genders in the market could be a challenge to overcome since they have been serving in this particular sector for a longer time.
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FR AG MENTED COMMUNICATION
The communication strategy set for
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While
the
representation
of
men
men represents them as strong, adventurous
wearing a Panerai is perfectly in line with the
and courageous individuals, whereas that of
mission, vision and values of the brand, the
the women’s has an elegant, feminine and
same cannot be said for the images featuring
soft background.
women.
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THE PROPOSAL A proposal has been designed for this opportunity which will highlight the ways the brand could improve and where it will stand afterwards.
PRODUCT The same products being sold to men
The smallest Luminor to date is 40mm and the
should be also advertised to be sold to women.
smallest Luminor Due which is recommended
The design and features of Panerai should
to female buyer is 38mm. This is why we are
be maintained as these are the features that
choosing to have a one size smaller dial for the
consumers love and aim to get when purchasing
Luminor featuring the 38mm. This is possible
a Panerai. Moreover, we recommend having a
since decreasing dial sizes is considered easier
smaller-sized dial Luminor- 38mm.
than slimming down watches. This is because slimming down watches could be tricky in terms of layering to construct the mechanics of the watch. This will also help give women more options to buy bulky watches that are not usually sold to women, allowing Panerai to be the first.
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COMMUNICATION Panerai should maintain the same structure and features that are present in their men targeted ads when doing women’s. This will allow Panerai to highlight heroism and bravery in women of which the world is witnessing today. Moreover, women now have an opportunity to become part of this adventurous, strong, and bold sense of feeling that Panerai narrates through their watches and ads. Also,
brand
ambassadors
highlighting
some of the world’s adventurous women such as Hannah Mills and Sarah Marquis should be elected to maintain the same tone and allow women to understand what they will feel obtaining this watch. Examples of these ambassadors include female sailors, explorers, adventurers, and world champions.
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PANERAI POSITIONING FUTURE
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FINANCIALS
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THE LOCATIONS Based on the below data, Panerai owns 129 monobrand stores around the world. There are four markets that are saturated more than others which include North America, Europe, China and the Middle East. Specifically, the Chinese market is by far the most explored by the company, having double the number of stores compared to the American and European markets. They also sell at 573 different locations around the world through authorized dealers. Through dealers, Panerai was able to penetrate markets without opening monobrand stores in which include India, South America, and Africa. Moreover, Europe pertains the highest number of selling points at multibrand locations, due to the brand’s European heritage. Furthermore, Panerai’s almost 4:1 presence in multibrand stores compared to monobrand stores come to no surprise. Research unveils that men prefer to shop watches at multibrand stores because it allows them to have a wider variety of choices simultaneously to help them choose carefully. It is interesting to note that even though Europe
Officine Panerai covers 1.9% of the total watch
The striking thing is that Rolex, being an
there is
has around double the number of selling points
market. The market which is largely dominated
independent brand, which consequently does
definitely a risk by allowing the products to be sold
over China: however, China represents around
by mainly Rolex, Swatch Group and Richemont,
not belong to conglomerates such as Richemont,
through third-party resellers. Moreover, there is
double the sales of Europe and almost half the
which account for 24.8%, 27.5% and 18.6%
LVMH, Swatch Group or Kering, alone covers
also a lack of control in the quality of the service
total sales of Panerai.
respectively. These three companies manage
almost the same slice of the market as the Swatch
70.9% of the entire luxury watch market.
Group, a group which, however, contains more of
From the company’s point of view,
that is rendered to the customer and smaller volumes on consumer data.
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10 luxury watch companies.
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REVENUES
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As we can see from the fluctuations in the market, in 2018 there was a reduction in profits which was fully recovered in 2019 with a total increase in profits of 9.8%. With the advent of the pandemic generated by the SARS-COVID19 virus, in 2020 there was another similar reduction in profits as per 2018. Furthermore, in 2021, we observe a great drop in profits of -21%, which we can mainly assimilate to three factors like lack in marketing, underproduction and the aftermath effects of Sars-Covid-19.
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THE FORECAST With the following table, we hoped to
10% per year to serve both markets. We also
result in the following forecasted total sales with
estimate the forecasted sales for Panerai with
assume that there will be an annual increase in
a constant growth of approximately 17%. These
the new suggested opportunity-targeting female
price of 5% for the increasing manufacturing costs
results are remarkable positive given that it is a
buyers. The table highlights a humble growth in
and balancing economic fluctuations. As per the
double-digit figure growth.
the number of female buyers year by year around
table, we assume that the suggested strategy will
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ACKNOWLEDGEMENTS This book would not have been possible without the generous help provided by Stefano Mangini and Brian Bosio in gathering together and cataloguing the various documents. We also want to thank the following for providing valuable information and photographs: Mr. Giuseppe Patané, Senior Sales Advisor of Panerai store in Florence. Marina Militare Italiana (the Italian Navy) Panerai offical website
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