What are your feelings after the Salon International de la Haute Horlogerie?
Georges Kern, CEO of IWC: I’m feeling far more serene than I would have imagined just a few weeks ago. Granted, there wasn’t that electricity in the air this time, but this “return to normal” meant we were able to meet with retailers who had come better prepared, who knew what they were there for and placed realistic orders, unlike last year when they ordered anything and everything. In other words, reality is sinking in and so much the better, in particular regarding production where we can at last see where we’re going.
What does IWC have to offer in the current climate? I think it’s safe to say that IWC is holding up very well, as sell-out figures, or sales to end customers, confirm. Our watches have substance and value, so much so that they are faring admirably in the CHF 7,000-15,000 retail price range, compared with watches by more superficial brands. “Bling bling” just isn’t appealing to buyers right now.
We set out to make products for the times, in particular our new Aquatimer family which is positioned in a good price range. We’ve reached our goal of creating a clear identity for the Ingenieur as a Manufacture watch. Then there’s the Da Vinci Perpetual Calendar Digital Date-Month, a world-first. The decision to develop this model was taken several years ago, and it couldn’t have come at a better time. In a word, IWC is about utility, not futility. Suddenly, all the compilations of complications we’d got used to seeing are looking like a salto mortale. At IWC, we don’t want to play at that kind of one-upmanship. We propose “medium” complications at accessible prices, as perfectly illustrated by the Da Vinci Perpetual Calendar with chronograph, whose gold version is positioned at a retail price of €36,900. Calendar chronographs have been a speciality at IWC since 1985 and as such this latest model is fully justified. As for the Aquatimer models, I’d like them to strengthen our presence in the €3,600-12,000 price range, where we are already well-established with our pilot watch line. Retailers know how the land lies. They want value for money, steel, basically watches that will keep their stocks turning over. Which is exactly what IWC is prepared to give them.
Fundamentally, after the SIHH, this could turn out to be not such a bad year after all. Retail sales in December and January equalled sales in November and December 2007. Nothing dramatic there. My personal opinion is that we can forget about growth. The best we can hope for is stability and at worse a decline. Were that to happen, strong brands will come out best. In today’s climate, I like to quote Warren Buffet: “you only find out who is swimming naked when the tide goes out.” I can assure you that at IWC, we’ve all got our costumes on! Joking aside, we’re all reviewing our product portfolios to adapt them to the new situation in the markets. This means less platinum, less white gold. In 2008, 30% of our watches were precious metal. This year you can halve that percentage and replace it with more standard production.
We’re incredibly lucky that our history includes such legendary models as the pilot watches and the Portugaise. I think we’ve implemented a product policy that has worked well so far. We’ve also stepped up our efforts in marketing over recent years, in particular in ways that will benefit the environment, such as protection of the Galapagos Islands or the Cousteau Divers Aquatimer. I also think IWC’s association with Schaffhausen gives the brand something of a rural air, far removed from the glamour and the glitter. In other words, IWC is a solid, salt-of-the-earth brand. This is an aspect we have built on for practically seven years now. People are no longer buying on impulse. Customers are thinking things through and are naturally drawn towards “safe” brands. IWC is one such brand.
These are the factors which together give us our strength and help us keep a steady course in rough seas. When I took over at the head of IWC in 2002, the brand’s main market was Germany, a country which at that time had 4 to 5 million unemployed. We’ve also had the first war in Iraq and the outbreak of SARS to deal with. This was a tough call as there was nothing we could do to influence events. We’re in an altogether different situation today, and I’m confident that we’re winning market share. Today we’re equipped to sail with the wind against us. In the past, we could only swim against the tide. IWC is well-organised, has good cash flow, isn’t weighed down by surplus structures, and keeps its fixed costs under control. Put simply, we’re a solidly Germanic company.