How was Baselworld 2016 for Patek Philippe?
The new World Time Chronograph ref: 5930 with our new base calibre was very popular. Each new model has been successful. Every market is ordering everything.
But times are a bit shaky, aren’t they?
Yes, 2015 was not a record year, but what is important is the stock level is very low. Most of the distributors and retailers are asking for more pieces. It is a fantastic situation. I hope it will continue, but I have no idea how 2016 is going to finish.
And what are you doing to meet the difficulties?
People are focusing on lasting value. So you must have the right product and know how to sell it – which means that you need to understand the product; how complicated it is to manufacture a Patek Philippe; and how it is different from other brands. That is why we have increased factory visits, so more retailers today are able to explain the difference.
Sure, the product is king, but don’t economics rule the watch industry?
The quick fluctuation is indeed a difficult side of the business. But in the watch industry we should still be quite happy. If you compare it with say, machinery, the margins are totally different. Retailers, even though their costs for staff and rents are extremely high in places like Hong Kong, can still earn some money. The current situation doesn’t allow retailers to play too much with discounts, as they need to keep their margins. Now they understand why we have always been fighting against discounts.
How is business in Hong Kong at the moment?
The past two years we have seen a slowdown in Hong Kong, in particular from the mainland Chinese. But on the positive side we are gaining local clientele. Also, Patek is strong around the world; what we don’t sell in Hong Kong, we sell somewhere else. I think the general slowdown will continue for two years, maybe more. We have to accept it. We should also not forget that the market was amazing; it went up, up, up non-stop – which is unrealistic. Yes, it will be a challenge this year, but when I say ‘challenge’, I don’t mean disaster, not at all. It just has a small decrease, and our distributor is not worried, he is prepared.
Mainly by not pushing retailers and asking them to be careful with the stock, asking them rather to order fewer pieces.
Do you sometimes buy back unsold stock?
No, we don’t deliver if it won’t sell – simple as that. It is easier, of course, being a family-owned brand with customers expecting to wait for the product. If a brand has to buy back stock, it is too late. And it is a short-term solution; brands doing that will be in big trouble. To buy back stock means that you didn’t think ahead, which is sadly the case with many brands. They totally don’t care; they just have to [meet] their objectives for the next six months. But it doesn’t work like that. Manufacturing and selling watches [is] a long-term process. The last few years, too many brands went too fast, and now they can’t sell all the pieces that they have produced for China. So brands or retailers have to place them somewhere else.
The grey market?
Yes. That is a big problem. We have always been trying to fight against it and we have to continue; we are tough on that. But we cannot stop it. It would be unrealistic to believe that.
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