The intention is there, but will it pay off? Given the sharp decline in exports over the past eighteen months, Fine Watch brands have had no choice than to consider how suited their products are to an inventory-heavy market, where bricks-and-mortar distribution finds itself increasingly in competition with online sales. First to strike a blow is Cartier CEO Cyrille Vigneron: “Prices increased too quickly across the profession. Now reality has kicked in and brands must take a step back and ask themselves what is the fair price for each of their collections.” These higher prices can be partly attributed to increased demand for more complicated, hence more costly watches, but this is only half the story: the other half is that brands took advantage of the boom years to introduce across-the-board price hikes, alienating part of their clientele in the process. And now it’s payback time.
The steel deal
One needn’t search for long at Salon International de la Haute Horlogerie (SIHH) to realise that price positioning has become a focus for reflection, and that the objective is to launch fast-moving watches, i.e. ones that won’t stay long in inventory. Price is, of course, a key factor, and just about every reasonably high-volume brand has stepped up efforts to propose entry-level products, mostly plain vanilla versions of their best-selling models in steel. A TimeWaker Date Automatic at Montblanc, a Panthère for women and a Drive Moon Phases for men at Cartier, a Reverso Classic at Jaeger-LeCoultre, a Classic Manufacture at Ulysse Nardin or a Da Vinci Automatic 40 at IWC. Not forgetting Baume & Mercier, probably the only brand exhibiting at SIHH with genuine experience in this field, and which showed a particularly nice Clifton Club.
Brands have told their customers too many lies and the customers are disappointed. This is one of the industry's biggest recent mistakes.
Audemars Piguet is another case in point. The brand performed well last year: CEO François-Henry Bennahmias has announced an increase in sales from just over CHF 800 million to almost CHF 900 million, i.e. between 5% and 10% growth with annual production of 40,000 units. Yet genuinely new products from the brand were thin on the ground at SIHH. Apart from the sit-up-and-take-notice Diamond Outrage jewellery watch, most of its offering involved variations on the stalwart Royal Oak and Royal Oak Offshore lines, with new colours or new materials. Another important decision, Audemars Piguet has ruled out any increase in production volume, which could even shrink slightly this year. A winning formula in times of crisis? “What crisis?”, François-Henry Bennahmias retorts. “The only crisis I see concerns the credibility of messages. Brands have told their customers too many lies and the customers are disappointed. This is one of the industry’s biggest recent mistakes.”
It’s a view echoed by Cyrille Vigneron when he says “luxury must adapt to a new environment, one that obliges us to rethink relations with our customers or our communication.” And where else to begin than the product itself, the question being whether brands known for elaborate mechanisms can really feel “at home” with a basic three-hander, at best with some small flourish on the dial. When you can think big, you can also think small, one might say. The difference being that a classic watch is a law unto itself, and a good classic design is hard to pull off, not to mention the difficulty of standing out from some fierce competition. Fine Watch brands face an additional challenge in that their entry-level is positioned at prices where others are already offering relatively complex and reliable mechanisms that any watch enthusiast can be proud to own. This leaves the brand appeal card which, however irresistible certain names may be, isn’t without risk, particularly when the message doesn’t follow through.
Which is where all eyes turn to the customer. Understanding customer typology can be hard, particularly when pinning down the new generation of spenders who relate to luxury, and the luxury environment, on a different level to their parents. This hasn’t escaped certain brands, such as RJ-Romain Jerome and its Steampunk Camo, for example, and even Roger Dubuis with its Excalibur Spider Pirelli Automatic Skeleton, not forgetting several of those exhibiting at SIHH in the Carré des Horlogers, led by MB&F and its new HM7 Aquapod or H. Moser & Cie’s Swiss Alp line.
None of which necessarily qualify as entry-level. All these brands have in common a CEO who is part of the up-and-coming generation at the head of watchmaking’s “new guard”, and the fanbase they have built up around their distinctive products. Granted, the context is not the same: these brands deal in small runs and limited editions compared with the higher volumes produced by the “historic” manufactures. Different business models imply different constraints, particularly the obligation for the big Maisons to maintain a solid industrial base. Hence the urgent need to find the right message, the right channels and the right product, ready to fight the battle that lies ahead.