Antonio Calce, CEO of Corum: Despite the fallout from the financial crisis, I feel confident. We reported a substantial drop in sales for the fourth quarter 2008 and, faced with the reality of the situation, I took myself out into the markets to see what the mood was. It became clear that retailers are almost irrationally adverse to investing their cash assets in products which they believe won’t have a high turnover rate, these being the basic products proposed by the different brands. It’s our role to offer them more exclusive, more creative models and limited editions. In a word, watches with high desirability that will encourage retailers to invest, inasmuch as they think they will sell quickly.
This new order made me realise it was time for Corum to completely review its budgetary approach for 2009. We have been working on our collections for a number of years, and they are now structured around our four flagships: Admiral’s Cup, Romvlvs, Golden Bridge and coin watches. Since last Christmas, we have been pushing ahead with some ten new projects that will build on these four ranges, but with far more exclusive products. Initially, we were aiming for 40% new products and 60% reorders, meaning watches already in the collections. Instead, we are offering 80% new products versus 20% reorders, thanks to the new projects we have launched. These include a new version of Golden Bridge and, a very special project, the unveiling of our second in-house movement in 100% titanium.
The feedback I’ve had from our sales networks so far is encouraging so yes, Baselworld will be important, although our change of direction means Corum has already taken firm orders, which I’m delighted about. However, there’s no point hiding from the truth: 2009 won’t measure up to 2008. I expect a drop of around 15% in budgetary terms. Obviously, we’ve taken the necessary measures, such as putting a fifth of our staff on short-time for two weeks in February. There is no point in producing just to build up stocks. Remember though that 2006 and 2007 were both exceptional years for Corum, during which we invested heavily in integrating our distribution networks. 2009 will be a year of transition for the brand, given the lack of visibility for the coming months. We are, however, committed to focusing on the long term, looking five years ahead. At most, some projects have been frozen but are still on the cards, such as building our own production facilities, for which we’ve bought the land and finalised the plans. The next stage has simply been postponed.
As I said, at end 2008 I travelled to our main markets in Europe and Asia. Our two main retailers in Hong Kong were most encouraging. They told me we were on the right track for 2009 with our new strategy. A retailer in Paris placed an order there and then for 30 watches from a limited edition of 300. Furthermore, 80% of Corum retailers confirmed they’ll be at Baselworld. Even if 2009 isn’t an exceptional year, I can already affirm that it won’t be a disaster either. This is a good thing for a brand such as ours, whose aim is to draw on autonomous production resources and its distribution to stay independent.
With 600 stores carrying our products, we are still represented by too many points of sale. We would like to bring this figure down to less than 500. We began this process several years ago, and have had to invest several million in taking back “old merchandise” which we’ve progressively done. We’re continuing to purge the network. If you take the example of our second movement, unveiled this year, we will produce 750 pieces in 2009 that will be offered to just 200 to 250 retailers.
There’s a whole debate raging around limited editions. Personally I’m against them when it means nothing more than putting a new dial on an existing model. This is a dishonest approach based on sheer opportunism. At Corum, we think in terms of function. The number of pieces in a limited edition must also be considered. At the end of the day, though, for business to move ahead, we need to wow the end customer. And we’re not the only ones in this position. The majority of established and extremely desirable brands are finding it equally hard to sell their basic products to retailers who are worried about their liquid funds. It’s a truth we can’t hide. Not to mention the pressure exerted by the big groups. In this context, we intend taking full advantage of our status as a niche brand. A brand that is small in size, granted, but big on quality. For Corum, there can be no other way.