This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.nytimes.com/2020/04/30/fashion/watches-coronavirus-patek-philippe-rolex-switzerland.html
The article has changed 26 times. There is an RSS feed of changes available.
| Version 16 | Version 17 |
|---|---|
| Swiss Watches Amid the Crisis | Swiss Watches Amid the Crisis |
| (7 days later) | |
| As Switzerland began to relax its Covid-19 restrictions this week, some of the watch industry’s biggest names, including Audemars Piguet, Patek Philippe and Ulysse Nardin, were poised to reopen their factories, many of which have been closed since mid-March. | As Switzerland began to relax its Covid-19 restrictions this week, some of the watch industry’s biggest names, including Audemars Piguet, Patek Philippe and Ulysse Nardin, were poised to reopen their factories, many of which have been closed since mid-March. |
| But what kind of market will the industry be rejoining? And will it generate enough sales to maintain the thousands of brand employees and the ancillary businesses connected to watches? | But what kind of market will the industry be rejoining? And will it generate enough sales to maintain the thousands of brand employees and the ancillary businesses connected to watches? |
| Like most of the questions surrounding the Covid-19 catastrophe, only time will tell. | Like most of the questions surrounding the Covid-19 catastrophe, only time will tell. |
| Global demand for most retail goods has plummeted as consumers are slowly emerging from — or, in many cases, are still under — stay-at-home orders. So the six-week pause in manufacturing actually became a saving grace for many watchmakers now focused on cutting costs and preserving cash. | Global demand for most retail goods has plummeted as consumers are slowly emerging from — or, in many cases, are still under — stay-at-home orders. So the six-week pause in manufacturing actually became a saving grace for many watchmakers now focused on cutting costs and preserving cash. |
| “At the end of February we were up 12 percent, and now we’re at minus 8 percent year-over-year,” Edouard Meylan, chief executive of the independent Swiss brand H. Moser & Cie, said during a recent interview. “If we are very lean and efficient, this won’t cost us much provided it lasts less than three to four months. It’s going to be a few hundred thousand francs, but not the end of the world. If we’re looking at six months or more of disruption, it could cost a lot more.” | “At the end of February we were up 12 percent, and now we’re at minus 8 percent year-over-year,” Edouard Meylan, chief executive of the independent Swiss brand H. Moser & Cie, said during a recent interview. “If we are very lean and efficient, this won’t cost us much provided it lasts less than three to four months. It’s going to be a few hundred thousand francs, but not the end of the world. If we’re looking at six months or more of disruption, it could cost a lot more.” |
| The luxury watch business has been in a steep decline since February, when coronavirus lockdowns were imposed in China. In March, Swiss watch exports dropped 21.9 percent over all by value compared with the previous year, with the Federation of the Swiss Watch Industry saying there would be “a probable deterioration in April.” | The luxury watch business has been in a steep decline since February, when coronavirus lockdowns were imposed in China. In March, Swiss watch exports dropped 21.9 percent over all by value compared with the previous year, with the Federation of the Swiss Watch Industry saying there would be “a probable deterioration in April.” |
| And the decline was even worse — 41.3 percent — in Hong Kong, which was Switzerland’s No. 1 destination for watch exports in 2019 despite the months of pro-democracy protests that roiled the city. | And the decline was even worse — 41.3 percent — in Hong Kong, which was Switzerland’s No. 1 destination for watch exports in 2019 despite the months of pro-democracy protests that roiled the city. |
| The drop has come after a record-breaking year for watchmaking: In 2019, Swiss exports rose 2.4 percent over the preceding year, to reach $22.2 billion. | The drop has come after a record-breaking year for watchmaking: In 2019, Swiss exports rose 2.4 percent over the preceding year, to reach $22.2 billion. |
| There is little concern for brands owned by the well-financed luxury groups — LVMH Moët Hennessy Louis Vuitton, Kering, Compagnie Financière Richemont and Swatch Group — but the hundreds of independently owned watchmakers and the parts suppliers who provide everything from sapphire crystals to movement components are vulnerable, despite the Swiss government’s pledge of 60 billion francs ($61.8 billion) in emergency aid to help companies protect jobs and salaries. | There is little concern for brands owned by the well-financed luxury groups — LVMH Moët Hennessy Louis Vuitton, Kering, Compagnie Financière Richemont and Swatch Group — but the hundreds of independently owned watchmakers and the parts suppliers who provide everything from sapphire crystals to movement components are vulnerable, despite the Swiss government’s pledge of 60 billion francs ($61.8 billion) in emergency aid to help companies protect jobs and salaries. |
| “We are part of an ecosystem,” said Patrick Pruniaux, chief executive of the Kering-owned brands Ulysse Nardin and Girard-Perregaux. “There would be no success if some of our suppliers cannot make it.” | “We are part of an ecosystem,” said Patrick Pruniaux, chief executive of the Kering-owned brands Ulysse Nardin and Girard-Perregaux. “There would be no success if some of our suppliers cannot make it.” |
| Beyond asking which companies will survive, watchmakers are preoccupied with a fundamental question: What will the luxury landscape look like in a post-Covid-19 world? | Beyond asking which companies will survive, watchmakers are preoccupied with a fundamental question: What will the luxury landscape look like in a post-Covid-19 world? |
| “It’s not like suddenly everyone wants watches again,” said Maximilian Büsser, founder and creative director of the Geneva-based independent brand MB&F. “I don’t think when you come out of this insane situation that’s people’s first priority.” | “It’s not like suddenly everyone wants watches again,” said Maximilian Büsser, founder and creative director of the Geneva-based independent brand MB&F. “I don’t think when you come out of this insane situation that’s people’s first priority.” |
| Nevertheless, MB&F decided in late March to carry on with the unveiling of a new wristwatch that it had presold to retailers earlier in the year: the HM10 Bulldog, the 10th version of what Mr. Büsser calls his Horological Machines. (The red gold version is $120,000, the titanium version, $105,000). | Nevertheless, MB&F decided in late March to carry on with the unveiling of a new wristwatch that it had presold to retailers earlier in the year: the HM10 Bulldog, the 10th version of what Mr. Büsser calls his Horological Machines. (The red gold version is $120,000, the titanium version, $105,000). |
| Its canine mascot seems tailor-made for the current crisis. “It’s exactly what we need right now: pure grit,” Mr. Büsser said. | Its canine mascot seems tailor-made for the current crisis. “It’s exactly what we need right now: pure grit,” Mr. Büsser said. |
| The rest of the trade is taking a patchwork response to product introductions, many of which traditionally would occur at the industry’s two major — now canceled — trade shows: Watches & Wonders, which had been scheduled for last Saturday to Wednesday in Geneva and Baselworld for this Thursday to Tuesday in Basel. | The rest of the trade is taking a patchwork response to product introductions, many of which traditionally would occur at the industry’s two major — now canceled — trade shows: Watches & Wonders, which had been scheduled for last Saturday to Wednesday in Geneva and Baselworld for this Thursday to Tuesday in Basel. |
| Patek Philippe has postponed all 2020 watch introductions until 2021, and Rolex and Tudor put all product news on hold indefinitely. | Patek Philippe has postponed all 2020 watch introductions until 2021, and Rolex and Tudor put all product news on hold indefinitely. |
| Most brands, however, have continued introducing watches — even $280,000 tourbillons — through Instagram posts and emailed news releases. | Most brands, however, have continued introducing watches — even $280,000 tourbillons — through Instagram posts and emailed news releases. |
| A number of companies, including Breitling and Grand Seiko, have opted for the YouTube or Zoom equivalents of a news conference. | A number of companies, including Breitling and Grand Seiko, have opted for the YouTube or Zoom equivalents of a news conference. |
| “We keep doing everything we can within our sphere of influence to bring normality back into our lives,” Breitling’s chief executive, Georges Kern, said in a video at the start of the brand’s first-ever digital summit on April 16. He presented the brand’s new models, interspersed with slick scenes featuring its celebrity ambassadors: Brad Pitt, Charlize Theron and Adam Driver. (Social media reviews seemed generally positive about the watches, but less so about the format.) | “We keep doing everything we can within our sphere of influence to bring normality back into our lives,” Breitling’s chief executive, Georges Kern, said in a video at the start of the brand’s first-ever digital summit on April 16. He presented the brand’s new models, interspersed with slick scenes featuring its celebrity ambassadors: Brad Pitt, Charlize Theron and Adam Driver. (Social media reviews seemed generally positive about the watches, but less so about the format.) |
| Contemporary watchmakers aren’t the only ones trying to recreate experiences during the pandemic. “We launched a YouTube channel as a way to talk about watches and stay in touch with our community,” said Aurel Bacs, a senior watch consultant at the auction house Phillips, which has announced that its May watch auction in Geneva would be postponed to late June and its Hong Kong watch auction set for June would move to July. | Contemporary watchmakers aren’t the only ones trying to recreate experiences during the pandemic. “We launched a YouTube channel as a way to talk about watches and stay in touch with our community,” said Aurel Bacs, a senior watch consultant at the auction house Phillips, which has announced that its May watch auction in Geneva would be postponed to late June and its Hong Kong watch auction set for June would move to July. |
| “We do not wish to sell anything — I couldn’t even ship a watch today from Geneva to Hong Kong, Moscow or New York — but to entertain people at home,” Mr. Bacs added. | “We do not wish to sell anything — I couldn’t even ship a watch today from Geneva to Hong Kong, Moscow or New York — but to entertain people at home,” Mr. Bacs added. |
| Other auction houses, however, have found that some fans stuck at home are spending lots of time considering watches. Sotheby’s ran its first Watches Weekly online sale on April 1 and within two weeks sold a 2014 Patek Philippe Nautilus for $484,000, setting what it called a record for a watch sold online. | Other auction houses, however, have found that some fans stuck at home are spending lots of time considering watches. Sotheby’s ran its first Watches Weekly online sale on April 1 and within two weeks sold a 2014 Patek Philippe Nautilus for $484,000, setting what it called a record for a watch sold online. |
| Swiss watch brands were slow — really slow — to move online. But the lockdowns have turned many into purveyors of digital distraction. | Swiss watch brands were slow — really slow — to move online. But the lockdowns have turned many into purveyors of digital distraction. |
| On March 30, IWC debuted #TimeWellShared, a social media campaign highlighting its brand ambassadors and employees, from the Michelin-star chef Esben Holmboe Bang sharing a langoustine recipe to Tom Brady, the new Tampa Bay Buccaneers quarterback, talking about finding opportunity in adversity. | On March 30, IWC debuted #TimeWellShared, a social media campaign highlighting its brand ambassadors and employees, from the Michelin-star chef Esben Holmboe Bang sharing a langoustine recipe to Tom Brady, the new Tampa Bay Buccaneers quarterback, talking about finding opportunity in adversity. |
| The digital initiative — much like the #OwnYourTime campaign that Panerai announced early this month and Omega’s #SpeedyTuesday series on Instagram Live — emphasizes storytelling and social media engagement over salesmanship. | The digital initiative — much like the #OwnYourTime campaign that Panerai announced early this month and Omega’s #SpeedyTuesday series on Instagram Live — emphasizes storytelling and social media engagement over salesmanship. |
| “It’s highly inappropriate to overload the world with advertising when people have more important things on their minds,” Christoph Grainger-Herr, IWC’s chief executive, said. “At the same time, people love a bit of diversion. It’s an important part of what a luxury and entertainment company can do.” (The campaign also promotes donations to Save the Children.) | “It’s highly inappropriate to overload the world with advertising when people have more important things on their minds,” Christoph Grainger-Herr, IWC’s chief executive, said. “At the same time, people love a bit of diversion. It’s an important part of what a luxury and entertainment company can do.” (The campaign also promotes donations to Save the Children.) |
| One long-term consequence of so much virtual interaction is not lost on watch executives, who, before the pandemic, were among the world’s most frequent fliers. | One long-term consequence of so much virtual interaction is not lost on watch executives, who, before the pandemic, were among the world’s most frequent fliers. |
| “Out of the two to three meetings I had today, I probably would have spent half a day or a day getting to their office,” said Nick English, co-founder of Bremont in Henley-on-Thames, England. “Suddenly, it’s 45 minutes on a call.” | “Out of the two to three meetings I had today, I probably would have spent half a day or a day getting to their office,” said Nick English, co-founder of Bremont in Henley-on-Thames, England. “Suddenly, it’s 45 minutes on a call.” |
| What watchmakers save on travel costs, however, they stand to lose in declining sales to tourists. “That is the big question: When can people get back to traveling?” said Davide Traxler, chief executive of Parmigiani Fleurier. | What watchmakers save on travel costs, however, they stand to lose in declining sales to tourists. “That is the big question: When can people get back to traveling?” said Davide Traxler, chief executive of Parmigiani Fleurier. |
| All eyes are on China, where reports of a tentative return to luxury buying are fueling hopes that the industry may see a V-shaped recovery. | All eyes are on China, where reports of a tentative return to luxury buying are fueling hopes that the industry may see a V-shaped recovery. |
| On April 13, WWD reported that Hermès posted $2.7 million in sales on the day its flagship in Guangzhou reopened, as wealthy Chinese consumers celebrated coming out of lockdown. The excitement, however, is tempered by fears that Chinese tourists, the luxury industry’s biggest spenders, may no longer flock to places like London, Paris and New York to splurge on watches. | On April 13, WWD reported that Hermès posted $2.7 million in sales on the day its flagship in Guangzhou reopened, as wealthy Chinese consumers celebrated coming out of lockdown. The excitement, however, is tempered by fears that Chinese tourists, the luxury industry’s biggest spenders, may no longer flock to places like London, Paris and New York to splurge on watches. |
| Updated July 22, 2020 | |
| “A fast and strong rebound of Chinese spend in China must be encouraging. But only to a point,” Luca Solca, an analyst with Bernstein, wrote in an April 8 report. “Sales in China need to rebound a lot for luxury goods companies to fully recapture Chinese luxury spend that is currently at zero overseas.” | “A fast and strong rebound of Chinese spend in China must be encouraging. But only to a point,” Luca Solca, an analyst with Bernstein, wrote in an April 8 report. “Sales in China need to rebound a lot for luxury goods companies to fully recapture Chinese luxury spend that is currently at zero overseas.” |
| The industry is rife with speculation about how Covid-19 will reshape the way watches are bought and sold, in China and elsewhere, yet virtually everyone agrees that online sales will be pivotal to the recovery. Even Patek Philippe, a longtime e-commerce holdout, acknowledged as much in late March, announcing it would allow authorized retailers to sell their stock of Patek Philippe watches online — if only for what it called a “temporary period.” | The industry is rife with speculation about how Covid-19 will reshape the way watches are bought and sold, in China and elsewhere, yet virtually everyone agrees that online sales will be pivotal to the recovery. Even Patek Philippe, a longtime e-commerce holdout, acknowledged as much in late March, announcing it would allow authorized retailers to sell their stock of Patek Philippe watches online — if only for what it called a “temporary period.” |
| Benjamin Clymer, founder and chief executive of the New York City-based online watch platform Hodinkee, said in late March that online sales at the Hodinkee Shop had started to pick up after a very quiet few weeks. | Benjamin Clymer, founder and chief executive of the New York City-based online watch platform Hodinkee, said in late March that online sales at the Hodinkee Shop had started to pick up after a very quiet few weeks. |
| “We’re in the worst part of it right now and we’ve already started to see things normalize,” Mr. Clymer said. “To be clear, we’re not having a great week, but we just sold a $20,000 Blancpain at full price, and we sold a vintage Daytona yesterday.” | “We’re in the worst part of it right now and we’ve already started to see things normalize,” Mr. Clymer said. “To be clear, we’re not having a great week, but we just sold a $20,000 Blancpain at full price, and we sold a vintage Daytona yesterday.” |
| “If you pay us, that allows us to pay our distributors, who can pay their folks,” he added. “There are a lot of things to criticize in luxury, but we need each other.” | “If you pay us, that allows us to pay our distributors, who can pay their folks,” he added. “There are a lot of things to criticize in luxury, but we need each other.” |
| Many watchmakers have responded to the pandemic with gestures of support for health care workers and communities in need. Among the efforts: Bulgari, owned by LVMH, transformed its fragrance factory in Lodi, Italy, to produce sanitizing gel for hospitals in Italy and Switzerland. Kering donated $1 million to the Centers for Disease Control Foundation to support health care workers in America. Rolex has been supporting the Red Cross and the World Health Organization’s Covid-19 Solidarity Response Fund, as well as the City Harvest food program and Mount Sinai Hospital, both in New York City. | Many watchmakers have responded to the pandemic with gestures of support for health care workers and communities in need. Among the efforts: Bulgari, owned by LVMH, transformed its fragrance factory in Lodi, Italy, to produce sanitizing gel for hospitals in Italy and Switzerland. Kering donated $1 million to the Centers for Disease Control Foundation to support health care workers in America. Rolex has been supporting the Red Cross and the World Health Organization’s Covid-19 Solidarity Response Fund, as well as the City Harvest food program and Mount Sinai Hospital, both in New York City. |
| “People are very sensitive to the way companies behave right now, whether it’s donations or mounting operations to bring together P.P.E. or support medical research,” said Milton Pedraza, chief executive of the Luxury Institute consulting company, based in New York. | “People are very sensitive to the way companies behave right now, whether it’s donations or mounting operations to bring together P.P.E. or support medical research,” said Milton Pedraza, chief executive of the Luxury Institute consulting company, based in New York. |
| Feelings of good will toward brands, experts say, will be critical in the recovery. Many analysts are predicting a rocky road for brick-and-mortar retailers, as consumers who have grown accustomed to shopping online may fear returning to busy stores. | Feelings of good will toward brands, experts say, will be critical in the recovery. Many analysts are predicting a rocky road for brick-and-mortar retailers, as consumers who have grown accustomed to shopping online may fear returning to busy stores. |
| “It raises questions about retailers located on Madison Avenue, Rue du Rhône, on the high streets of the world,” said David Sadigh, chief executive of Digital Luxury Group, a consulting firm based in Geneva. “There will be retail points of sale that will close, leases that will be renegotiated. And it will result in a different type of shopping experience.” | “It raises questions about retailers located on Madison Avenue, Rue du Rhône, on the high streets of the world,” said David Sadigh, chief executive of Digital Luxury Group, a consulting firm based in Geneva. “There will be retail points of sale that will close, leases that will be renegotiated. And it will result in a different type of shopping experience.” |
| Of all the retail selling tactics, however, one that capitalizes on consumer psychology, and not technology, may be the most promising. | Of all the retail selling tactics, however, one that capitalizes on consumer psychology, and not technology, may be the most promising. |
| “The reality of the category we’re in is there’s more demand than supply, so if Rolex, Patek and Audemars — three brands for which there is significantly more demand than supply — carry on with their existing product lines, we’ll have enough customers for that, and overall business will be unaffected,” said Brian Duffy, chief executive of the Watches of Switzerland Group, which owns numerous multibrand and monobrand stores in the United States and Britain. | “The reality of the category we’re in is there’s more demand than supply, so if Rolex, Patek and Audemars — three brands for which there is significantly more demand than supply — carry on with their existing product lines, we’ll have enough customers for that, and overall business will be unaffected,” said Brian Duffy, chief executive of the Watches of Switzerland Group, which owns numerous multibrand and monobrand stores in the United States and Britain. |
| “The other great thing about our category is it’s not seasonal product,” Mr. Duffy added. “Months from now, it will be every bit as valuable.” | “The other great thing about our category is it’s not seasonal product,” Mr. Duffy added. “Months from now, it will be every bit as valuable.” |
| The Swiss watch trade has learned this lesson before. In the 1970s, the onslaught of cheap Japanese-made quartz timepieces all but obliterated Switzerland’s mechanical watch brands. | The Swiss watch trade has learned this lesson before. In the 1970s, the onslaught of cheap Japanese-made quartz timepieces all but obliterated Switzerland’s mechanical watch brands. |
| The SARS epidemic produced staffing restrictions in 2003 that crippled Baselworld, the trade’s oldest and largest watch fair. And in 2008, the collapse of Lehman Brothers precipitated a global financial crisis that wiped out thousands of watchmaking jobs and two years of growth in the sector. | The SARS epidemic produced staffing restrictions in 2003 that crippled Baselworld, the trade’s oldest and largest watch fair. And in 2008, the collapse of Lehman Brothers precipitated a global financial crisis that wiped out thousands of watchmaking jobs and two years of growth in the sector. |
| But none of those calamities prepared the industry — indeed, any industry — for Covid-19. | But none of those calamities prepared the industry — indeed, any industry — for Covid-19. |
| “It is not a question of the attractiveness of our watches,” Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said in an email. “People cannot buy products, as they cannot move and the shops have been closed.” | “It is not a question of the attractiveness of our watches,” Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said in an email. “People cannot buy products, as they cannot move and the shops have been closed.” |
| The lack of certainty over when the pandemic will end — and whether there will be a second or even third wave of infections — means production could return to a standstill. | The lack of certainty over when the pandemic will end — and whether there will be a second or even third wave of infections — means production could return to a standstill. |
| “Surviving Covid-19 is primarily a matter of doing like the bears in the winter,” Mr. Solca of Bernstein said in an email. “You reduce your activity and cut variable costs, but you maintain your vital functions.” | “Surviving Covid-19 is primarily a matter of doing like the bears in the winter,” Mr. Solca of Bernstein said in an email. “You reduce your activity and cut variable costs, but you maintain your vital functions.” |