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Building BRICs (III) – A cloudless Russian sky

Building BRICs (III) – A cloudless Russian sky

Friday, 13 May 2011
By Quentin Simonet
Quentin Simonet

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3 min read

Growing pains but most importantly much to gain in the “new markets.” A round-up of the present or potential El Dorados that are China, India, Russia and Brazil. Part three: Russia.

Such was the tsars’ love of watches that Abraham-Louis Breguet opened a subsidiary in Saint Petersburg. Alexander I ordered a number of watches from him, including a sympathique clock and a series of pedometers. Breguet even obtained from the Tsar the official title of “Watchmaker to His Majesty and the Imperial Navy” for himself and his company. Some two centuries later, and thirty years after the fall of the Berlin wall, Russia remains fertile ground on which to sow generous horological seeds. All the more so as the nomenklatura swear by Swiss Made. Indeed, Vladimir Putin, a great admirer of Blancpain and Patek Philippe among others, recently declared that the Russian government should “work like a Swiss watch”! No comment.

None of which prevented the country from feeling the full weight of the recent economic crisis. The logical consequence was a gap in watch sales, both in Russia itself and abroad as tourists tightened their belt. Since then, economic dark clouds have rolled away. “Russia is staging a comeback,” exults Karl-Friedrich Scheufele, Co-president of Chopard. For proof, the 44.5% increase in Swiss watch exports in 2010 which, at CHF 205 million, are chasing the record CHF 290 million of 2008.

© Fédération de l'industrie horlogère suisse FH
© Fédération de l'industrie horlogère suisse FH
One Russia?

But is there really only one Russia? In a country that extends across nine time zones, stretching from central Europe to the far eastern tip of Asia, there are many different realities. Moscow and Vladivostok are poles apart, be this in terms of customers, wealth creation or distribution.

Ulysse Nardin is one of the brands to have carved out a comfortable niche in the ex-USSR and its former republics. The Le Locle-based firm has opened multiple points of sale, including in regions the average Joe or Jane would be hard-pressed to find on a map. This has proved a successful move for the independent brand. In Moscow alone, it has 14 points of sale including one Ulysse Nardin store which, contrary to common practice, acts as a wholesaler for the other outlets: retailers can come and collect the model they don’t have in stock.

© Fédération de l'industrie horlogère suisse FH
© Fédération de l'industrie horlogère suisse FH

Is this an atypical case of healthy business relations? The question is worth asking in the light of difficulties which brands frequently encounter with their Russian retailers. No doubt this is what prompted Swatch Group to take back control of its distribution in Russia five years ago, notably through an agreement with Jamilco in Moscow, previously a distributor of the Swatch brand. Omega, another Swatch name, has its eye on 2014 when it will be the sponsor and official timekeeper for the Sochi Winter Olympics. “The Olympics are a fabulous communications opportunity,” enthuses Omega CEO Stephen Urquhart. “We’ll be highly visible and people will remember this when it comes to buying a watch.”

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