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From feast to fast
Point of View

From feast to fast

Monday, 26 September 2016
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Franco Cologni
President of the FHH Cultural Council

“Talent demands effort, dedication and hours spent perfecting a gesture which, day by day, becomes a gift.”

An entrepreneur at heart, though a man of letters, Franco Cologni was quick to embark on a business career that would lead him to key roles within the Richemont Group.

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6 min read

In the years when it seemed Swiss watchmaking could do no wrong, the Maisons listened only to their ego and turned a deaf ear to their most precious asset: their identity. Now that times are hard, the ego’s echo is making itself heard.

Like the humanist Michel de Montaigne, who preferred to take leave of the court and devote himself to his studies and to philosophy, I too was given the chance, after years in the front line, to fashion myself a privileged observation post from which to contemplate culture, and more particularly the culture relating to the splendid and complex world of Fine Watchmaking. And taking inspiration from the same Montaigne, I too felt the urge to disapprove certain narrow-minded doctrines and some of the blind certitudes which have governed the watch industry in recent years, culminating in today’s lacklustre results. I’m reminded of Pharaoh’s dream in the book of Genesis, a dream I’ve already evoked foretelling seven years of abundance followed by seven years of famine, and which is more apposite than ever.

More than ever, our two concerns must be the product and the customer.
Franco Cologni

When I cast an eye over Swiss watch exports for January to July 2016, my attention is drawn to a certain number of revealing and rather preoccupying figures: for example, the significant decline in value sales of watches with an export (ex-factory) price above CHF 1,500. Is this symptomatic of something? I would call it “the ego’s echo”. In the years when it seemed Swiss watchmaking could do no wrong, the Maisons listened only to their ego and turned a deaf ear to their most precious asset: their identity. Now that times are hard, the ego’s echo is making itself heard. As analysts have noted, there is a price to pay for marketing strategies which focus not on the customer but on short-term perspectives – the “narrow-minded doctrines and blind certitudes” that dismayed Montaigne – and payback time is now.

I hope the Maisons’ riposte won’t be too slow in coming. Most of all, I hope this won’t be a question of making new from old, as in the past, but rather that each choice will be evaluated and considered in the light of healthy consolidation with a cultural vision for the medium and long term. Communication is a case in point: am I right in thinking many Maisons haven’t changed their advertising in a year. Some of the campaigns I’ve seen lack what it takes to give the product the necessary, perhaps even indispensable esteem that will capture the attention of an increasingly cautious customer. And reassure him of the (intrinsic) value and (ethical and aesthetic, hence cultural) values behind the object. More than ever, our two concerns must be the product and the customer.

© Re Up

Indeed:
– Exports are down 5% in the CHF 1,500 to 3,000 bracket. An acceptable result considering the economic climate. Similarly, the CHF 3,000 to 6,000 segment fell by 6%. Such fluctuations in the system are to be expected and came as no surprise. An interesting area is opening up for Fine Watch Maisons, and that is steel, which lends itself to the simplest technical innovations (take the chronograph) as well as the most precious, with diamonds.
– Alarm bells are ringing for watches with an export price above CHF 6,000. This segment tumbled by 15.5% to CHF 4.5 billion out of a total export value of CHF 10.5 billion. If the slope becomes too steep, climbing back could prove painful.
– As the situation stands, it appears there is no end to the downward slide, despite results apparently obtained at Salon International de la Haute Horlogerie in Geneva and at Baselworld.

These reflections on slipping sales lead to another point in fact: the price hikes introduced across almost every sector of Fine Watchmaking. There is, of course, a link between prices and appreciation of the Swiss franc. While the customer remains our focal point, there is no escaping the fact that global tensions (political, economic, social, even moral) severely undermine the desire to invest in this type of good.

© Re Up

Turning to exports per country, dwindling tourist numbers, no doubt linked to security concerns, have spelled suffering for retailers, including those at the top of the ladder and particularly in Europe. The financial burden of excess inventory could well encourage retailers to engage in discount policies which inevitably prove prejudicial. There is also the risk that retailers are less and less loyal to their role as ambassadors.

I know the largest Maisons have the means to adapt and roll with the punches. I hope too that they will reconsider their ego and take inspiration, as Montaigne so wisely said, from doubt and inquiry as to their identity. Among the smaller Maisons, the ones that will be least affected are those which are able to intelligently maintain contact with the customer, and are at pains to nurture this relationship. As for younger brands, lack of oxygen means the economic risk is extremely high.

Empathy must be the first value we promote when faced with the only true judge: the person buying.
Franco Cologni

I know the largest Maisons have the means to adapt and roll with the punches. I hope too that they will reconsider their ego and take inspiration, as Montaigne so wisely said, from doubt and inquiry as to their identity. Among the smaller Maisons, the ones that will be least affected are those which are able to intelligently maintain contact with the customer, and are at pains to nurture this relationship. As for younger brands, lack of oxygen means the economic risk is extremely high.

Time is not just money; time is also patience and sacrifice. The period we are in demands a new model for development and communication that includes these values, reduces unnecessary expenditure, and refocuses attention on the customer. Not forgetting that empathy must be the first value we promote when faced with the only true judge: the person buying.

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