For the first time in more than a decade, there is no Swiss watch fair in January. So enter LVMH Watch Week. In Dubai.
The new event is set to be an early barometer of the watch industry’s mood as the new decade begins.
The Salon International de la Haute Horlogerie, best known as S.I.H.H., was held at this time of year in Geneva largely as a showcase for Richemont brands like Cartier, Jaeger-LeCoultre and IWC. But now it has been rebranded Watches & Wonders and scheduled to open April 25.
The change will affect not only those brands but also ones that piggybacked on the high-profile event, capitalizing on the gathering of the world’s watch retailers, press and collectors by scheduling their own presentations and launches. Among them were businesses owned by the French luxury giant LVMH Moët Hennessy Louis Vuitton, including TAG Heuer, Hublot and Zenith, which organized what they called Geneva Days, and the LVMH-owned jeweler Bulgari, which invested heavily in its watch division over the last decade.
This year, however, those four houses are gathering for a two-day event, starting Monday, at the Bulgari Resort Dubai. They say it was motivated by the S.I.H.H. change and by the decision to reschedule Baselworld, the struggling Swiss watch fair formerly held in March, to open April 30, immediately after Watches & Wonders.
“We felt the postponing of the two fairs was potentially extremely damaging commercially and for our partners and suppliers,” Jean-Christophe Babin, Bulgari’s chief executive, said in a recent interview.
Why Dubai? “On a group level,” said Ricardo Guadalupe, Hublot’s chief executive, “we thought Dubai would be more fun. The city is also a huge hub, the middle of the world. For Hublot, the region represents 10 percent of our sales.”
Ahead of LVMH Watch Week, we asked each of the four chief executives what they expect.
Stéphane Bianchi
Head of the LVMH Watch Division and TAG Heuer chief executive
Since taking the reins at LVMH’s watch division and the TAG Heuer brand in late 2018, Stéphane Bianchi had been quiet about his strategy. But the man recruited by Bernard Arnault, LVMH’s chairman, said that in 2020 he would introduce a new TAG Heuer platform based on “passion for action, mental strength, high performance and avant-garde,” backed by new products as well as new retail and marketing strategies.
In a pronounced shift, Mr. Bianchi said TAG Heuer would focus its partnerships on motor sports and individual sports, moving away from many connections arranged by his predecessor, Jean-Claude Biver, who was often quoted as saying that he wanted to see the brand “everywhere.”
That means that the business will no longer work with top-tier soccer leagues in Germany or Spain and that it will not extend its relationships with the model Cara Delevingne and the graffiti artist Alec Monopoly. “Our brand spirit should be maverick,” Mr. Bianchi said. “We want to prioritize people authentically linked to the brand.”
Mr. Bianchi said that early this year, TAG Heuer would introduce a new website in line with its “strong ambitions around retail and digital.” Those include opening new TAG Heuer boutiques even as the company stops working with some of its third-party retail network (it ended 20 percent of those relationships last year). “We have to rebalance wholesale and resale,” he said.
This year, TAG Heuer marks its 160th anniversary, focusing activities around its most commercially successful product, the Carrera sports chronograph. The brand plans to present one limited-edition piece in Dubai, but hold most of its key launches for Baselworld. “Carrera is a huge part of our turnover, and the new collection will be a huge launch for us,” Mr. Bianchi said.
Mr. Bianchi also said that beginning this year, TAG Heuer will make new timepieces available immediately, following the see-now/buy-now concept that fashion brands have embraced in recent years, some with mixed results. For TAG Heuer, Mr. Bianchi said, “It doesn’t make sense to show a watch and then not sell it for six months.”
This spring, he said, the brand plans to release a major update of Connected, its luxury smartwatch. Sales of the timepiece, introduced in late 2015, are generally thought to total 60,000 to 100,000 a year (the company’s sales figures are not published). By contrast, analysts were expecting last year’s sales of the Apple Watch to reach around 25 million.
TAG Heuer’s pricing at the lower end of the luxury watch market traditionally has made it appealing to younger audiences. But in recent years, such buyers have switched to smartwatches, or have never worn watches at all. “The biggest threat for us would be not to seduce the younger generation,” Mr. Bianchi said.
Jean-Christophe Babin
Bulgari chief executive
Bulgari’s watch division had a decade to remember in the 2010s, fueled by the creative vision of Fabrizio Buonamassa Stigliani, director of its watch design center, and significant investment in Swiss manufacturing facilities. A raft of awards and record-breaking watches — like its Octo Finissimo Chronograph GMT, introduced last year and, at 6.9 millimeters, said to be the world’s thinnest mechanical chronograph — have pushed the Italian marque into the highest echelons of contemporary mechanical watchmaking.
The company’s renaissance means its flagship pieces are all recent releases. “Ten years ago, we had to eliminate all the models we used to sell,” Jean-Christophe Babin said. “They were nice, but not necessarily mirroring what the brand stands for, which is a fusion between Italian design and Swiss engineering. In that time, we’ve provided Bulgari watches with a very strong design character, with designs that do not exist at our competitors. Now, the backbone of our sales are models that were all born during the last decade.”
That story is to continue in Dubai with the introduction of several styles, led by the Serpenti Seduttori Tourbillon — powered by what Mr. Babin called the smallest women’s tourbillon movement now on the market — and the Divas’ Dream Minute Repeater Malachite, which he said was the world’s thinnest minute repeating watch (one that chimes the time on demand) for women.
Bulgari also intends to introduce five models for its Octo Finissimo line of ultrathin watches, including its first in steel. “Most clients start with steel watches and it will appeal to a broader spectrum of buyers,” Mr. Babin said.
While some industry executives have expressed concern about the challenges of the global political climate and the rapid growth of smartwatches, Mr. Babin said he was most worried about the industry’s relevance to today’s consumers.
“Over the last five years, watchmaking has grown much less than other luxury categories,” he said. “Fashion, footwear and jewelry have all grown much better.
"Swiss watchmaking has to reinvent itself,” he continued. “We have to be more daring and more futuristic, rather than overusing vintage and the past. Such watches may satisfy an older clientele, but they’re not resonating with the younger generation. We talk about Elizabeth Taylor, but we don’t use her in our advertising because my daughter doesn’t know who she is. Very few brands have managed to reinvent themselves, which explains why, overall, Swiss exports are very sluggish.”
Ricardo Guadalupe
Hublot chief executive
LVMH, which bought Hublot in 2008, does not publish the individual sales figures of its watch companies, but Ricardo Guadalupe said Hublot’s production levels had increased to about 60,000 watches a year. “We’ve only really been on the market for 15 years, and only making between 40,000 and 60,000 pieces for five or six years,” he said.
The company was transformed from a dusty Swiss watch brand into one of the first names in global luxury by the arrival in 2005 of the Big Bang, a watch that introduced Hublot’s fusion watch design philosophy, mixing materials like gold and rubber in a single design. (Now, Mr. Guadalupe said, 95 percent of the company’s watches are sold on rubber or rubberized straps.)
In Dubai, Hublot intends to introduce the Big Bang Integral, an evolution of the brand’s most recognizable model, offering a collection of bracelets in titanium, gold and ceramic. “We’ve done bracelet watches before, but we’ve just had the watch and put a bracelet on it, which is the wrong way to do it,” Mr. Guadalupe said.
He expects the new style to capitalize on the fashion for bracelet watches, led by brands such as Rolex, Patek Philippe and Audemars Piguet. If in three years’ time, “we’re doing 20 percent of our sales on bracelet watches, that would be incredible,” he said. “The idea is to grow and for these sales to be additional.”
But he struck a note of caution. “Growth is going to be challenging,” he said. “When I started in the industry 30 years ago, Switzerland was exporting 5 billion Swiss francs in watches. Today it’s 20 billion Swiss francs. But doubling our business in the next 10 years will not be possible.”
He said that in 2018 Hublot recorded double-digit growth, but that growth fell to single figures last year. “Hong Kong has suffered,” he admitted, referring to the impact that continued civil unrest and an economic recession have had on luxury watch sales in that region.
“But our figures show our brand is strong,” he said. “We don’t rely on greater China and the Chinese.” According to the Federation of the Swiss Watch Industry, exports to Hong Kong, which it lists separately from mainland China, were down by 26.7 percent in November compared with the same period in 2018.
Mr. Guadalupe said he believed that Hublot could produce as many as 80,000 watches a year during the next decade, but that that would be its limit. “Afterwards, we will have to increase the average price point to increase our sales,” he said. “The future of the watch industry is in the higher end.”
Julien Tornare
Zenith chief executive
Zenith is the smallest brand in LVMH’s watch division. The Swiss investment bank Vontobel estimated the company’s 2018 turnover at 110 million Swiss francs ($113 million), compared with 810 million francs for TAG Heuer and 625 million francs for Hublot. “We are small and we need to grow,” Mr. Tornare said.
There have been some signs of growth. The Defy range was introduced a few months after his appointment in 2017, and Mr. Tornare said Zenith had increased its annual production to 23,000 pieces from 21,000.
He also said he expected 2019 sales to have increased by 12 to 15 percent, and that a focus on sales to consumers rather than to retailers, who might or might not actually sell the timepieces, had helped stimulate performance.
Mr. Tornare said the history of Zenith, founded in 1865, had given it an advantage over many of its competitors. The El Primero automatic chronograph movement, created in 1969, still is its cornerstone — and that kind of legacy gives the company authenticity. “We’re selling watches to different generations, but one thing that always comes back is that people want to understand what they buy,” he said.
Yet, “history doesn’t mean you have to be boring,” he said. “In the watch industry we wanted to be so luxurious, but we missed the point in the past. We need to entertain people. They want to have fun.”
In Dubai, Zenith plans to introduce the Defy 21 Carl Cox, a 200-piece limited-edition watch with a 1/100th of a second high-frequency mechanical chronograph. Mr. Tornare said the partnership with Mr. Cox, a British record producer and DJ, fitted the company’s new advertising slogan: “Time to reach your star.”
Mr. Tornare said the fragile global political climate continued to threaten the Swiss watch industry. “No region is healthy today,” he said. “It’s quite difficult to be confident. But we are at a turning point, characterized by changes. A few years ago, no brand wanted to hear about e-commerce, but now look at where we are. The same with customization.
“Secondhand was ‘the gray market’ and it was dirty and no one wanted to hear about it,” he continued. “Now, we’re all thinking about how we do it and how we get our part of the pie, because it’s big business.”
And just as important, said Mr. Tornare, is the growing influence of sustainability over watchmaking. “The new generation will challenge us on this,” he said, adding that he had ordered a review of watch packaging to see if reductions can be made. “Behaving responsibly is not only for our own conscience — it’s also going to be a selling argument.”
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