Independent Watch Brands Most at Risk in the Downturn
New York Times, Jan. 17, 2016
On the heels of two years of meager growth, Swiss watchmakers are bracing for more bad news once the export figures for 2015 are finalized this month. The industry is on track to record its first decline in exports since 2009. And pessimism among executives at the brands that dominate the business already is at a four-year high, according to a watch industry study by Deloitte published in September.
At the 26th annual Salon International de la Haute Horlogerie, known as SIHH, which opens in Geneva this week, the focus is on small, independent watchmakers and how they will weather the downturn. Home to such prestige brands as Cartier, Panerai and IWC, the trade fair is for the first time opening the exclusive venue to nine independently owned watchmakers, in a space called the Carré des Horlogers. Now that Ralph Lauren Watches is no longer exhibiting at SIHH, the event has room to accommodate a group of artisans pioneering “the nouvelle horology,” said Fabienne Lupo, president and managing director of the fair’s organizer, the Fondation de la Haute Horlogerie.
But, given the industry’s slump, the timing is precarious.
“The situation seems quite more difficult for small brands and suppliers,” Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said in an email.
Lacking deep financial reserves, independent watchmakers and suppliers are the most vulnerable in a challenging economy, and job cuts are already being made. In November, for example, Gilbert Petit-Jean aux Brenets, a watchmaking atelier in Neuchâtel, Switzerland, laid off 60 of its 207 employees.
“For a small company, it’s very intense,” said Jean-Marie Schaller, chief executive of Louis Moinet, based in St.-Blaise, Switzerland. “You have to work very hard to bring three new products in a year. If we don’t do that, people forget about us.”
To drum up excitement for the brand, Mr. Schaller has teamed up with a friend and fellow watchmaker, David Gouten, chief executive of the independent brand Manufacture Royale, based in Vallorbe, Switzerland, to show their watches in a shared space at the Beau-Rivage hotel in Geneva this week.
“We’ve created a concept called Crownology Lab,” Mr. Gouten said. “We’re trying not only to sell watches, but to create a story behind them.”
The watchmakers, convinced that there is strength in numbers, have reserved three rooms to show their watches, including a common press room, where they will display their most unusual pieces. The goal, Mr. Gouten said, is to share their ideas about fine watchmaking in a relaxed atmosphere. “If we don’t have fun, we cannot transmit that fun to our clients,” he said.
The fact that the market is getting tougher “is not good news for independent watchmakers,” said David Sadigh, founder and chief executive of the Digital Luxury Group, a market research firm in Geneva. “Globally speaking, even wealthy customers are becoming more rational during turbulent times, and we can expect them to be more likely to choose established brands with strong reselling value over more contemporary haute horlogerie brands.”
Retailers around the globe, under pressure by big brands — known to dictate how much merchandise a retailer must stock, how it is displayed and which other brands may or may not be shown alongside — often have to make similar choices.
“Smaller brands fight every day for distribution channels,” said Karine Szegedi, head of fashion luxury at Deloitte in Switzerland and a co-author of the firm’s recent industry study. “They fight for every centimeter in a shop.”