Luxury-watch makers question the benefits of Baselworld fair

Industry's big and small names look to a changing future

PUBLISHED : Friday, 20 March, 2015, 6:13am
UPDATED : Friday, 20 March, 2015, 6:13am

Baselworld, the world's biggest watch and jewellery fair, opened today in the Swiss city of Basel. Despite the fanfare, watch brands are still grappling with softening luxury sales in Asia as well as new challenges from the likes of Apple that have raised a question about the expense of being at the fair.

Baselworld has never really had to trade on its central importance to the watch industry. No other watch event in the world has as many brands showing (about 1,500) or as many new product releases to attract up to 150,000 attendees.

In short, Baselworld is a colossus, and the established thinking has been that unless you were inside the gilded tent of the Richemont group, which has its own fair in the Salon International d'Haute Horlogerie (SIHH) every January in Geneva, then you simply have to show in Basel to generate press for your watches and meet retailers from round the world.

For brands such as Breguet, Baselworld is a chance to showcase its technical mastery. The new Tradition Automatique Seconde Rétrograde 7097, an exquisitely finished watch, will be a hit with collectors and enthusiasts, and is almost guaranteed to sell well.

Similarly, for brands such as Glashütte Original, Baselworld illustrates their ability to find that balance between tradition and innovation with watches such as the PanoMatic Lunar and the PanoReserve, which make use of new materials but stay true to watchmaking design principles. Breguet, Glashütte Original, Patek Philippe, Rolex and a few others see Baselworld as a time to shine, to generate buzz and social media attention - and to hell with the cost.

However, the less well-known brands do not see the fair in such a positive light. The watch world is changing, and not just because of Apple. Some in the industry, at least those based outside Switzerland, are beginning to question the wisdom of putting so much of their time, effort and, crucially, financial resources into the Baselworld fair. An executive at a mid-tier Swiss watchmaker, who wished to remain anonymous, said at last year's show that with brands such as Rolex and Omega spending at least €10 million (HK$82 million) on their Baselworld pavilions, as well as related marketing and events for just one week, it was becoming harder, if not impossible, for smaller brands to make an impression.

In the weeks leading up to the fair, one Hong Kong-based watch executive of a famed Swiss brand who also wished to remain anonymous said trade fairs were losing their raison d'être, as the internet had eroded the excitement of new launches and, more importantly, Asia had its own fairs such as Watches & Wonders as well as dozens of country specific events every year. This executive said sending a team to Switzerland for more than a week every March was increasingly becoming an expensive, time- and labour-intensive chore with the benefits diminishing each year. A single event in Beijing or Shanghai would yield markedly better results, he said.

Questioning the benefits of Baselworld may run counter to the attendance numbers of visitors and brands, which continue to rise each year, but with luxury watch sales in Asia slowing and, in some countries, actually declining year on year, the wisdom of reaching new markets and consumers using old methods has come under scrutiny.

The smartwatch will be a tsunami for traditional watchmakers
Jean-Claude Biver, LVMH Watches

Never more so, as the spectre of smartwatches from the likes of Apple stalks the industry.

"The smartwatch will be a tsunami for them," says Jean-Claude Biver, describing what impact the new devices will have on the industry.

A storied figure in the watch industry who saved Blancpain and made Hublot into a titan, Biver has now been entrusted to lead the LVMH family of watch brands that includes Hublot, Tag Heuer, Zenith and Bulgari. Speaking at the DFS Masters of Time fair in December, Biver was concerned about the rapid development of smartwatches.

"Why? Because of Hublot? No. Because of Zenith? No. Because of Tag. Tag is in the price range, and it's such a young, dynamic brand that they should be concerned because we are close to a price limit where young people might jump onto a connected smartwatch rather than pay US$200 less … for a non-connected watch."

Biver didn't name any other brands, but he felt that the low- to mid-priced Swiss mechanical watches were in trouble.

"Imagine a 25-year-old having the option of buying a quartz watch that tells you hours, minutes and the date for US$900, or buying a smartwatch with lots of features that costs US$1,000. They will never buy the US$900 watch; they will buy the smartwatch."

Biver isn't prepared to wait around and see smartwatches eat into the sales of his brands, so he has already begun developing Tag Heuer's first smartwatch, which will use Silicon Valley components but the case, the design, the soul and the spirit would be Swiss.

We will have to wait a bit longer to see Tag Heuer's smartwatch, but Baselworld will see Frederique Constant's Horological Smartwatch, which links to smartphones and has features such as an activity tracker and two years of battery life as well as a first look for many of Swatch's Apple riposte, the Swatch Touch.

The pre-Baselworld stopover in Silicon Valley to see the new Apple Watch before retailers and the watch press headed to Switzerland to see the wares there may have just been a one off, but Apple has undoubtedly stolen some of Baselworld's thunder.

For now, however, despite the increasing drain on resources and diminishing returns, Baselworld is still the top platform for watch brands to reach the widest audience.