LVMH joins Rolex and Patek Philippe in abandoning Baselworld– what now for the luxury watch industry?

A misjudged response to Covid-19 might have cost the world’s oldest watch fair its most powerful remaining patrons, but the industry’s key players still believe in the power of community - and in one unified trade show

The show must go on – just no longer in Basel

17 April 2020

For an industry routinely accused of progressing at a glacial pace, recent events in the watch sector unfurled uncharacteristically quickly. First, came the news that the MCH Group, parent company to Baselworld, the watch industry’s oldest and erstwhile largest trade show, would not be issuing full refunds to the brands committed to its 'postponed' 2020 instalment – a show scheduled for May but cancelled in March as Europe failed to contain the spread of Covid-19. 

Instead, announced MCH, watchmakers could put 85 per cent of their 2020 investment towards rebooking a space at next year’s show – effectively hitting them with a 15% sucker punch to do so.

It was, not to put too fine a point on it, a peculiar strategy from a show that had lost 75 per cent of its exhibitors – most recently Breitling, Blancpain, Breguet, Longines, Omega, Raymond Weil and Ulysse Nardin – and almost half of its visitors in less than a decade.

Baselworld, an institution that dates back to 1917, was, by its own admission, a show in “survival mode”. Antagonising its diminishing portfolio of patrons over a piddly (in the grand scheme of things) 15 per cent “administration fee”, was, then, Baselworld not so much biting the hand that fed it, as masticating the whole arm up to the shoulder.  

At the beginning of this week, Rolex and Patek Philippe bit back.

“Rolex, Patek Philippe, Chanel, Chopard and Tudor leave Baselworld to create a new watch trade show in Geneva with the Fondation de la Haute Horlogerie,” read the first line of a bombshell press release jointly issued by the quintet of brands on Tuesday. “The show will be held early April 2021 at Palexpo, at the same time as Watches & Wonders” – a rival fair to which Baselworld has already lost a significant number of brands, chiefly those belonging to the Richemont Group.

While it remains to be seen whether MCH can save its flagship show – unlikely, given the fact that today LVMH's watch division (Hublot, TAG Heuer and Zenith) announced its withdrawal from Baselworld – it’s clear that the industry’s key players still believe in the power of unity, and in one unified trade show, as Luxury London discovered last week when it spoke to four CEOs about the effects of Coronavirus and the outlook for luxury watches*...

 

Jean-Christophe Babin, CEO of Bulgari

Former president and CEO of TAG Heuer, Jean-Christophe Babin became CEO of Bulgari in 2013. Bulgari pulled out of Baselworld 2020 in early February, citing the success of LVMH Watch Week in Dubai in January – where, says Babin, Bulgari achieved 60 per cent of its annual sales targets – while denouncing the show’s scheduling in early May. After both Baselworld and Watches & Wonders (previously SIHH) were cancelled due to Coronavirus, Babin helped organise Geneva Watch Days – an interim exhibition involving Bulgari, Breitling, Girard-Perregaux, MB&F and Ulysse Nardin – which is due to take place in August.

Patrick Pruniaux, CEO of Ulysse Nardin and Girard-Perregaux

Forged in the fires of spirits colossus Diageo, luxury industry leap-frogger Patrick Pruniaux cut his teeth in wines and spirits before a nine-year stint at TAG Heuer saw him ascend to the position of vice president of sales. In 2014, Pruniaux was poached by Apple to help launch the tech giant’s first smartwatch in the UK. Mission accomplished, the chance to take control of Ulysse Nardin proved a big enough carrot to lure Pruniaux back to Switzerland in 2017. He became CEO of Kerring stablemate Girard-Perregaux the following year.

 Julien Tornare, CEO of Zenith 

Long-serving Vacheron Constantin managing director Julien Tornare became CEO of Zenith in 2017. Honing in on millennials immediately, Tornare signed an agreement with British watch modifier George Bamford, has since signed American hip-hop producer Swizz Beatz and Flyboard water pilot Franky Zapata as ambassadors, and partnered with prestigious cigar manufacturer Cohiba. Today, along with the other brands in LVMH's watch division, Hublot and TAG Heuer, Zenith withdrew from Baselworld 2021.

Rolf Studer, co-CEO of Oris

Studer swapped bubbles for bezels in 2006, when he left Coca Cola for Oris – becoming co-CEO in 2016. In 2018, Studer oversaw the opening of Oris’s first London boutique on South Molton Street. Studer remains buoyant about the bouncebackability of the luxury watch industry. “We are prepared for a challenging year. However, we have faith in the recovery of the watch industry as a whole. Swiss watches continue to be an investment piece with a solid customer base of well-informed enthusiasts – this will not change following the pandemic.”

Firstly, Luxury London hopes that you and your families are staying safe during these challenging times. How have you been keeping sane during lockdown?

PP: When at home and working, I get distracted once or twice a day by my two-year-old son reminding me who I stay at home for… him! And to support our amazing health professionals and volunteers who are making history fighting Covid19. The confinement is a great opportunity to regroup and do things differently and … keep on exercising!

JT: We are all doing well, thank you, and hoping to stay that way by being careful to comply with the lockdown conditions. It is a wonderful opportunity to spend time with the family and enjoy being at home. Equally, it has forced everyone to take stock of where we are and our priorities.

RS: Although the world has seemed to come to a halt, Oris has been busy taking the necessary measures in response to Covid-19 and continuing to prepare for the remainder of the year. This has been keeping myself and the team focused and although it isn’t technically business as usual, we are trying to continue with our days as best we can.

How does the current climate compare to challenges you’ve faced in the past?

PP: It is different and will be an unprecedented challenge for every business because brick-and-mortar sales to final customers have been put on hold in countries where trading is currently prohibited. For sure, it is unseen but it forces all of us to do things with a different modus operandi and probably use more personal values, experiences, intuition and collective intelligence to solve things.

JT: The current challenge is unlike anything I personally have ever experienced so it is hard to compare. The world has never had anything of this global amplitude in my lifetime, not only from the perspective of the pandemic itself but from the knock-on social and economic consequences.

RS: Oris has survived world wars, the quartz crisis and continues to develop its environmental campaigns as the global climate continues to flux. Although the situation is different, ultimately we are trying to have the same attitude and remain resilient and adapt to the times.

What are you doing to mitigate the effects on Covid-19?

PP: We have implemented forms of alternative and flexible work, including remote working. The morale and the motivation of our staff is a very important aspect and we work hard to animate our community of staff members. There is great deal of unparalleled passion in our teams and we feel everyone is eager to get back to work in the workshop. For those working remotely, I can’t praise enough their motivation, cold blood and professionalism. I feel really proud leading an exceptional staff.

JT: Obviously, sales are a challenge, so we are exercising all our creativity and inventiveness to find new and alternative ways – including live Instagram talks and digitising various processes where possible – of connecting with our audience. We have been working on improving our online presence for some time and the effort put into this should reap results.

RS: As an independent business, we have been able to initiate immediate action company-wide which works in our benefit. It is important to remember that we find ourselves in an acute situation but these measures will be temporary and we are very much looking forward to everything going back to normal.

You’ve had to cease production. What knock-on effect will this have once things return to normal?

PP: Obviously the fact that our production is put on hold will impact somehow our ability to face the growing watch lover’s passion and interest for Ulysse Nardin. Having said that, we have worked really with our whole manufacture and supply chain team to ensure the impact will be as limited as possible.

JT: In line with the current reality, we have modified our launch strategy for the year in terms of what products we are putting into the market and how often. Fortunately, we also have a number of products already launched that will be delivered on the markets this year and that can be leveraged now.

RS: Ceasing production was a necessity to ensure the safety of our staff and avoid any risk. By doing so, it offers the opportunity to plan and prepare for when normality begins to return and focus on other aspects of the business such as watch design and our online capabilities. It has been interesting to adopt a change in perspective and explore alternative marketing and promotional avenues.

What’s your view on the future of watch shows? 

JCB: Fairs such as Basel and SIHH [now Watches & Wonders] are last century business models that did not adapt to the new configurations of the luxury watch business. Basel, for instance, was the yearly gathering of agents and distributors: they attended, ordered, and then we’d deliver [watches] to them to provide to retailers. Today, this chain is obsolete: agents and distributors have almost totally disappeared, the major brands have local and/or regional integrated branches so that business operates 12 months a year, 24 hours a day.

PP: The cancellation of the two biggest trade events this year was an incredible shockwave. Despite this upside-down world we are in, we have decided to take part in Geneva Watch Days, a full-fledged watchmaking gathering happening from August 26th 29th. I still believe in watch shows as a great communication platform for watch brands and their prescribers, the press and the retailers.

JT: The main function – the launch of new watches to retailers, distributors and journalists, and the sharing of innovations and new technology – will not change. While online is irreplaceable for many things, human contact is equally irreplaceable in many instances and this is one of those. Watch fairs are the place where those human relationships are made and developed and on which further deals take place through the year – whether on a bigger or smaller scale. 

Would the luxury watch industry benefit from one unified trade fair? 

JCB: The formats must adapt to the 21st century watch, in that case I would say yes since this connecting moment is worth it for the industry and its actors, media and clients... the industry community gathering for a few days remains part of the game and an important moment... fairs and salons are important because this community needs them! It’s part of our DNA.

PP: The industry would surely benefit from a unified trade show. Especially media and retailers, who would travel only once to Switzerland. Sure there is a digital transition impacting our business model, however, human being need at least once a year to meet. Look at the social distancing currently happening due to the virus: we are all connected through digital devices, but we lack this touch of humanity we get when we see each other.

JT: There are many things to be said in favor of one unified show such as Baselworld in terms of gathering everyone in one place, building on an old tradition while remaining open-minded and adapting to changing needs. As in all industries, innovation is key to the survival of watchmaking.

RS: With the Corona Virus outbreak we’ve seen the industry forced to resort to different tactics in communicating with their customers and stakeholders. This may prove to be a turning point for trade shows as digital communication is developed and adopted.

What is the ideal time of year to present your new collections?

JCB: January or at least early in the year without any doubt. Our LVMH Watch Week in Dubai in January demonstrated the perfect relevance of this agenda. The timing is good since customers can plan and have a full year vision of their business with the brands. Imagine a watch fair such as Basel and SIHH/Watches & Wonders happening late April or early May: we all loose half of the year.

PP: The trend is ‘see now, buy now’. A few years before, we were showing to media new products two months before they were reaching the shops. Printed magazines used to have a printing lead-time. This time is over with influencers, social media and digital publications. Therefore at Ulysse Nardin and Girard Perregaux we have product launches all year long. But should we have a major novelty to present, the best is the beginning of the year.

JT: Retailers tend to have their new annual budgets available at the beginning of the year so January suits us perfectly.

RS: Traditionally, we presented our novelties for the year at Baselworld in March. With digital media and changing distribution and communication channels, this has become much more flexible. We now launch our novelties in a way that we have a constant stream of news throughout the year. This is exciting as we are in permanent contact with our retailers and consumers.

*The above interviews were conducted separately the week before Rolex, Patek Philippe, Tudor, Chanel, Chopard and LVMH announced they were pulling out of Baselworld 2021.