Watchmakers put the final touches on their presentations to the world'smost important retailers and an ever-growing contingent of global press.
In Time for Basel, the Hills Are Alive with Luxury Watches…
For the month leading into Basel's Annual Watch Fair, which starts next week, the hills of Switzerland are abuzz with the sound of money, as watchmakers put the final touches on their presentations to the world's most important retailers and an ever-growing contingent of global press. Both groups are eager to discover what's next in a business where a half- million-dollar product can be held in the palm of one's hand.
Retailers from more than 100 countries meet with watchmakers and place orders. Journalists sit through endless presentations clicking away on their digital cameras. Even the general public is allowed access to the Super Bowl of watchmaking, adding to the pressure to create new and impressive designs.
The mad rush to be “show ready” has the normally well-paced Swiss flitting around in a frenzy of activity. Prototypes are being finalized of watches that won't be delivered until the fall and spring. Photographers busily shoot glossy pictures of the latest wares to pack onto DVDs with the hopes they will be splashed across newspaper and magazine articles around the world. Design teams spare no expense to construct elaborate three- and four-floor stands replete with such luxuries as full kitchens staffed by Michelin chefs, fountain ponds and furniture more suitable to a Park Avenue boardroom than a trade show. Stands for prestige brands are mansion-like ranging upwards of 20,000 square feet, only to be broken down immediately after the show and stored until next year's big event.
Blancpain is the emblem of the renaissance of Swiss mechanical watchmaking, an industry left for dead less than three decades ago when hand-crafted timepieces were being buried by Japanese quartz technology. The resurrection of Blancpain made Nicolas G. Hayek, the chairman of Swatch Group adored for saving a beloved Swiss industry. Today both Blancpain, one of numerous brands his group controls, and Swiss-made luxury watches are achieving success nobody could have imagined. In fact, two days before my visit to Blancpain's headquarters about an hour from Geneva, Swatch Group announced record sales and profits powered by its stable of luxury brands ranging from Blancpain, Breguet, Leon Hatot, Jaquet Droz, Glashutte and Omega to the license for Calvin Klein.
Leading Blancpain today is Hayek's grandson Marc A. Hayek, who also serves on the Board of parent Swatch Group. Both for Blancpain and others, high-end watches routinely start at US$10,000 and leap quickly to six digits with months-long waiting lists. Many timepieces cost two or three times as much as the average house, with Blancpain's 1735 priced at 970,000 CHF–or over $800,000. And while much news has been made of traders and investment bankers spending bonuses buying $50,000 fancy watches the way their secretaries buy lattes at Starbucks, the younger Hayek says the market's strength is far deeper and diverse.
Beyond China, sales increases in the 50% range were recorded from spots as diverse as Spain, the Middle East, Hong Kong and Singapore. Hayek is particularly proud that Blancpain had strong sales growth in Switzerland, a fact he attributes to the brand's authenticity. According to Hayek, Haute Horlogerie timepieces are now toys de rigueur for wealthy boys. “In the mid-90s, if you wanted to spend $50,000, $80,000 or $200,000 on something, it was a car, boat, apartment,” Hayek noted. “Today it's a watch as well, and I see no reason to go back.”
If watches have truly established a position as jewellery for men, and there is no sign of a let-up in demand (the only thing Hayek says could have been better in 2006 would have been increased production more in line with demand), one of his concerns is the growing number of companies trying to move into the very top end of the market. “Everyone is selling a tourbillon (considered by many the ultimate in luxury watches), but in 10 years if it needs service, will you be able to fix it? Today, it's very hard to know what you're buying,” Hayek says.
Contributing to this challenge is the idea of the watch as jewellery. Purchasing requires an in-depth knowledge and understanding of watch mechanics, but this often takes a back seat with buyers today. “The look (of the watch) is always important. Buying a $50,000 watch is not a rational purchase,” Hayek notes.
Looking forward, the Hayek scion believes educating customers about what they are buying will become more and more important. Most buyers don't understand that the watch they are acquiring is a complex mechanical instrument he says, noting that the small case on your wrist has about 50% more moving parts than the engine of your car.
However, while customers of automobiles are educated about service requirements, watch buyers will generally wear a watch until it stops working and then be aghast at the time and cost for it to be fixed. Hayek is studying how auto companies educate consumers in this regard and is thinking about how to creatively get customers to make sure they are taking care of their mechanical watches. He mentions a service plan with “the first five years for free with regular service” similar to automakers and a plan with “10,000 mile check-ups.”
Of course figuring out the logistics is easier said than done. With a shortage of fine timepieces to sell, Hayek notes watchmakers are not in the position to provide “loaner” watches as car companies do. Swatch, however, is investing in training more watchmakers, a shortage resulting from the loss of a generation of craftsmen during the downturn. He is also investing in opening more boutiques to better interface with the customer and build greater product understanding. While Hayek has gotten some flack from retailers, he notes that after the Blancpain boutique opened in Geneva, a nearby Blancpain retailer increased sales three-fold.
The American-educated Hayek is in his second stint in the family business. In between he was a successful entrepreneur opening a stylish wine and cigar bar and restaurant in Zurich where he focused on service. If a customer liked a particular wine, he would sell them a case. “It was about enjoyment,” he says.
Hayek has been trying to bring that same sense of customer focus to Blancpain's boutiques. Noting that you can't judge who tomorrow's customer will be from the way they are dressed when they enter the store today, Hayek goes further with his team to stress that how they treat a broke college student who wanders into a boutique will impact whether he or she buys a Blancpain decades later when they become a successful CEO.
To achieve success at the retail level, Hayek has artfully mixed the hospitality of boutique staff with the passion of watch industry veterans. When one walks into a Blancpain boutique, the first conversation may be an offer of a coffee, soft drink or a glass of wine. “We want the customer to be comfortable,” he says, clearly understanding that an extra glass of wine served to somebody who doesn't buy is much smarter than turning off a billionaire who might have bought a $350,000 one-of-a-kind piece.
The emergence of the Chinese watch buyer has been a learning experience for Hayek and his team. He marvels at how a Chinese tourist in Paris reached into a small plastic bag to pull out tens of thousands of Euros to pay for a watch in cash. Certainly, it is a clear reminder to all in the luxury business of the “Pretty Woman” scenario in which Julia Roberts is turned away by a snooty salesperson!
To Hayek, a customer's first visit to a Blancpain store is a success if his salesperson “just has a really good conversation.” Based on Blancpain's success, it looks like all the talk is paying off handsomely.
Douglas D. Gollan
Elite Traveler
For the month leading into Basel's Annual Watch Fair, which starts next week, the hills of Switzerland are abuzz with the sound of money, as watchmakers put the final touches on their presentations to the world's most important retailers and an ever-growing contingent of global press. Both groups are eager to discover what's next in a business where a half- million-dollar product can be held in the palm of one's hand.
Retailers from more than 100 countries meet with watchmakers and place orders. Journalists sit through endless presentations clicking away on their digital cameras. Even the general public is allowed access to the Super Bowl of watchmaking, adding to the pressure to create new and impressive designs.
The mad rush to be “show ready” has the normally well-paced Swiss flitting around in a frenzy of activity. Prototypes are being finalized of watches that won't be delivered until the fall and spring. Photographers busily shoot glossy pictures of the latest wares to pack onto DVDs with the hopes they will be splashed across newspaper and magazine articles around the world. Design teams spare no expense to construct elaborate three- and four-floor stands replete with such luxuries as full kitchens staffed by Michelin chefs, fountain ponds and furniture more suitable to a Park Avenue boardroom than a trade show. Stands for prestige brands are mansion-like ranging upwards of 20,000 square feet, only to be broken down immediately after the show and stored until next year's big event.
Blancpain is the emblem of the renaissance of Swiss mechanical watchmaking, an industry left for dead less than three decades ago when hand-crafted timepieces were being buried by Japanese quartz technology. The resurrection of Blancpain made Nicolas G. Hayek, the chairman of Swatch Group adored for saving a beloved Swiss industry. Today both Blancpain, one of numerous brands his group controls, and Swiss-made luxury watches are achieving success nobody could have imagined. In fact, two days before my visit to Blancpain's headquarters about an hour from Geneva, Swatch Group announced record sales and profits powered by its stable of luxury brands ranging from Blancpain, Breguet, Leon Hatot, Jaquet Droz, Glashutte and Omega to the license for Calvin Klein.
Leading Blancpain today is Hayek's grandson Marc A. Hayek, who also serves on the Board of parent Swatch Group. Both for Blancpain and others, high-end watches routinely start at US$10,000 and leap quickly to six digits with months-long waiting lists. Many timepieces cost two or three times as much as the average house, with Blancpain's 1735 priced at 970,000 CHF–or over $800,000. And while much news has been made of traders and investment bankers spending bonuses buying $50,000 fancy watches the way their secretaries buy lattes at Starbucks, the younger Hayek says the market's strength is far deeper and diverse.
Beyond China, sales increases in the 50% range were recorded from spots as diverse as Spain, the Middle East, Hong Kong and Singapore. Hayek is particularly proud that Blancpain had strong sales growth in Switzerland, a fact he attributes to the brand's authenticity. According to Hayek, Haute Horlogerie timepieces are now toys de rigueur for wealthy boys. “In the mid-90s, if you wanted to spend $50,000, $80,000 or $200,000 on something, it was a car, boat, apartment,” Hayek noted. “Today it's a watch as well, and I see no reason to go back.”
If watches have truly established a position as jewellery for men, and there is no sign of a let-up in demand (the only thing Hayek says could have been better in 2006 would have been increased production more in line with demand), one of his concerns is the growing number of companies trying to move into the very top end of the market. “Everyone is selling a tourbillon (considered by many the ultimate in luxury watches), but in 10 years if it needs service, will you be able to fix it? Today, it's very hard to know what you're buying,” Hayek says.
Contributing to this challenge is the idea of the watch as jewellery. Purchasing requires an in-depth knowledge and understanding of watch mechanics, but this often takes a back seat with buyers today. “The look (of the watch) is always important. Buying a $50,000 watch is not a rational purchase,” Hayek notes.
Looking forward, the Hayek scion believes educating customers about what they are buying will become more and more important. Most buyers don't understand that the watch they are acquiring is a complex mechanical instrument he says, noting that the small case on your wrist has about 50% more moving parts than the engine of your car.
However, while customers of automobiles are educated about service requirements, watch buyers will generally wear a watch until it stops working and then be aghast at the time and cost for it to be fixed. Hayek is studying how auto companies educate consumers in this regard and is thinking about how to creatively get customers to make sure they are taking care of their mechanical watches. He mentions a service plan with “the first five years for free with regular service” similar to automakers and a plan with “10,000 mile check-ups.”
Of course figuring out the logistics is easier said than done. With a shortage of fine timepieces to sell, Hayek notes watchmakers are not in the position to provide “loaner” watches as car companies do. Swatch, however, is investing in training more watchmakers, a shortage resulting from the loss of a generation of craftsmen during the downturn. He is also investing in opening more boutiques to better interface with the customer and build greater product understanding. While Hayek has gotten some flack from retailers, he notes that after the Blancpain boutique opened in Geneva, a nearby Blancpain retailer increased sales three-fold.
The American-educated Hayek is in his second stint in the family business. In between he was a successful entrepreneur opening a stylish wine and cigar bar and restaurant in Zurich where he focused on service. If a customer liked a particular wine, he would sell them a case. “It was about enjoyment,” he says.
Hayek has been trying to bring that same sense of customer focus to Blancpain's boutiques. Noting that you can't judge who tomorrow's customer will be from the way they are dressed when they enter the store today, Hayek goes further with his team to stress that how they treat a broke college student who wanders into a boutique will impact whether he or she buys a Blancpain decades later when they become a successful CEO.
To achieve success at the retail level, Hayek has artfully mixed the hospitality of boutique staff with the passion of watch industry veterans. When one walks into a Blancpain boutique, the first conversation may be an offer of a coffee, soft drink or a glass of wine. “We want the customer to be comfortable,” he says, clearly understanding that an extra glass of wine served to somebody who doesn't buy is much smarter than turning off a billionaire who might have bought a $350,000 one-of-a-kind piece.
The emergence of the Chinese watch buyer has been a learning experience for Hayek and his team. He marvels at how a Chinese tourist in Paris reached into a small plastic bag to pull out tens of thousands of Euros to pay for a watch in cash. Certainly, it is a clear reminder to all in the luxury business of the “Pretty Woman” scenario in which Julia Roberts is turned away by a snooty salesperson!
To Hayek, a customer's first visit to a Blancpain store is a success if his salesperson “just has a really good conversation.” Based on Blancpain's success, it looks like all the talk is paying off handsomely.
Douglas D. Gollan
Elite Traveler
