Top Watchmakers Turn Even More Exclusive to Survive
New York Times, November 26, 2009
The doomsday prophecies began to circulate around the luxury watch business about nine months ago.
Exports of high-end timepieces from Switzerland had declined by double digits in 6 of the top 10 markets compared with the previous year; inventory from the 2008 holiday season-that-wasn’t sat beneath a layer of dust in retail showcases; and suppliers, among the hardest hit by the downturn, were forecasting a slump on par with the devastating crisis of the 1970s, when the introduction of cheap Japanese quartz watches ravaged the industry.
“We had the impression we were living on the North Pole and wondered if the sun was ever going to come out again,” said Mathias Buttet, president of BNB Concept, which makes complicated movements on behalf of brands like Hublot and Concord.
At the Baselworld luxury fair in March, gray skies mirrored the industry’s grim outlook.
“We were predicting that out of about 600 brands in Switzerland, roughly 200 would shut down,” said Joe Thompson, editor in chief of WatchTime magazine.
As it happens, reports of the trade’s demise were somewhat exaggerated. So far, only one brand, Villemont, has filed for bankruptcy, and that was in January, when the bold-faced names of haute horlogerie still believed in their own infallibility.
But the market remains bleak. Demand sharply contracted in the first nine months of 2009, with exports of Swiss timepieces plunging 26 percent worldwide, 42 percent in the United States and a whopping 59 percent in Russia, according to the Federation of the Swiss Watch Industry.
“The figures now are not so positive,” acknowledged Jean-Daniel Pasche, president of the federation, in a recent interview. He said the trade had lost nearly 3,500 jobs since the start of the year — a figure that included plenty of top-level executives.
Worldwide, the American market has suffered the greatest casualties, both statistically and anecdotally. Not only have well-known personalities such as Frédéric de Narp, the head of Cartier’s North American business, departed, but some brands have also elected to maintain only a sales team in the United States, leaving the regional president position conspicuously empty.
“Swiss headquarters are having a very difficult time comprehending what’s going on in the U.S.,” Mr. Thompson said. “A decade of gains is about to be wiped out. We’re on track to hit 1999 figures.”
In certain circles, it has become fashionable to frame the crisis in Darwinian terms.
“During the bubble, the strong got stronger and the weak also got stronger, even if those brands didn’t have legitimacy,” said Thomas Mao, a management consultant based in Los Angeles and founder of the ThePuristS.com, a Web site for watch aficionados. “People forgot that the baseline over the last 10 years was unprecedented and artificial. Now the strong have gotten stronger, and the weak are starving.”
Mr. Mao says that the downturn should be seen as a prime opportunity to retire the “complication cocktails” of recent years, by which he means the watches that boast gratuitous combinations of complex features. He argues that the best future of the industry lies in making its products even more exclusive than before.
At Roger Dubuis, the chief executive Matthias Schuler has come to a similar conclusion. He said he had recently fielded calls from retailers in Scandinavia, France and North Africa, all hoping to secure an Excalibur Double Tourbillon Skeleton, available in a limited run of 28 pieces for $246,000.
“Price is not an issue,” Mr. Schuler said. “We have to have less choice, and the choice has to be more evident.”
The auction market for prestige timepieces would seem to affirm this. It has slowed, yes, but not for the obvious reasons.
“Sale totals are down on average 25 percent, not because watches are down in price but because we are finding 25 percent less property,” said Aurel Bacs, co-head of the international watch department at Christie’s in Geneva. “We at first worried the crisis would force collectors to sell off. Much to our surprise, the opposite has happened. Collectors said, ‘Where else am I going to place my money?”’