Marc Hayek: keep calm and carry on!

Swiss watchmakers are facing a difficult start to the year as the fall in exports took a new downturn in March, at -16%. Marc A. Hayek, who sits on the Swatch Group Executive Group Management Board and has responsibility for Breguet, Blancpain and Jaquet Droz, takes stock.

What's the situation for the three brands under your stewardship?

Generally speaking, I’m happy with the positioning of the brands, each of which has its advantages and drawbacks depending on the market and the economy. Last year we saw an increase in volume sales at Blancpain but a fall in average price. At Breguet, where it would make no sense to try and boost volumes with steel, we’re roughly in line with the previous year. Jaquet Droz has found its niche and now has a solid base, thanks to which it recorded its best ever performances in January and February. Even I was surprised.

Does this bode well for 2016 overall?

At this stage, we can’t say what the year holds for Swiss watchmaking. There are too many uncertainties. We could be looking at anything between -5% and +5%. Having said that, and to look on the bright side, we can expect difficulties to gradually be resolved and exports to pick up again, particularly as the base effect will be positive from April. If we look at how the sector has evolved since the beginning of the century, we observe a six-year cycle.

In 2003 we had to contend with the fallout from SARS. In 2009 the entire planet, Swiss watchmaking included, was hit by the subprime crisis. Six years later, since end 2015, we’re again facing difficulties. There are several reasons for this. However, Swiss watches have a built-in competitive edge, hence there is no reason to believe we won’t be returning to growth. Personally, I’m convinced the situation is set to improve.

You don't think smartwatches are a threat?

The Swiss watch industry manufactures around 28 million watches a year. Current smartwatch production is almost identical, but the distribution networks are completely different. To put it crudely, we’re not competing against Chinese watches, which use a lot more of the same channels as smartwatches. There’s an important distinction between mechanical watches and wearables, and I believe this will remain the case.

Where is the potential today?

We’re stepping up efforts we began three to four years ago in ladies’ watches. At Breguet, for example, women now account for 30% of sales. This clearly shows that women are interested in mechanical watches. We’re working on developing this segment, notably with the Tradition Dame 7038 that we presented at Baselworld. This is, as far as I know, a totally original proposition. The markets had never seen anything like it. Reactions have been extremely positive, which is encouraging.

As far as geographic zones go, and leaving aside China which I think will develop in the same way as the so-called mature markets, there are genuine opportunities to be had in the US. This has been one of our weaker regions in the past, hence why I’ve been pushing my three brands there since last year, bearing in mind there is still a long way to go in terms of education. The aim is to strike the right balance between events, on the theme of the sea for Blancpain, for example, innovation, a characteristic of Breguet that we need to bring to the fore, and the authenticity of the products. A busy but very exciting schedule!