With 200,000 watches sold in 2012 (at an average retail price of about CHF 2,000, with price tags ranging from CHF 850 to 5,000 and the core range situated between CHF 1,250 and 3,500), Raymond Weil is one of the biggest independent Swiss brands, and a family business on top of that.
Europa Star met Olivier Bernheim, son-in-law of the founder of Raymond Weil, today retired from the brand’s daily operations, who manages the business with his two sons, Pierre and Elie Bernheim.
Europa Star: How would you analyse the watch year that has just passed, in which sales grew by nearly 11 per cent to reach CHF 21.4 billion, given that it was watches costing CHF 3,000 (at export) which increased both in terms of value (up 18 per cent) and volume (up 13.1 per cent) and that the segment occupied by Raymond Weil (between CHF 500 and 3,000) increased by only 0.3 per cent in terms of value?
Olivier Bernheim: In the end, 2012 was a very positive year for us and also resulted in an increase in sales. And this was despite the fact that some countries where we are well established have been practically wiped off the map. I am thinking notably of Portugal, Spain, Italy and Greece, as well as Libya and Egypt. At the same time, we have recorded big sales that are constantly increasing in the USA and in the United Kingdom. Having said that, what seems to me to best describe the current situation is the general uncertainty that reigns. The result is a lack of general security. The main reference points that help us to develop a strategy over the medium term have disappeared. Currencies have become unpredictable, which forces us to adapt from day to day. To sum it up, the perspectives have become a bit blurred in the general economic fog.
ES: What is happening on the distribution front? People have, for a long time now, praised the solidity and depth of your international sales network, the key to your success…
OB: There has been a dual movement. On one hand, the traditional system of distributors no longer works very well. It is a question of margins, but also of mission. In the past, a distributor had real responsibilities and could make decisions. Today, a brand must become global in terms of image and offer. In parallel, having direct contact with retailers has become more important than ever. It allows an in-depth analysis of performance, something that is imperative today because, notably under the pressure of the banks, everything has become more analytical.
ES: As Raymond Weil moves up-market, have you re-qualified, as we might say, your network of retailers?
OB: With the exception of the USA, where earlier we were focused on the major chains and where we have opened a number of quality independent stores, we have a tendency to close a certain number of doors in order to concentrate on the better stores. Our great advantage, as an independent brand, is to be able to offer retailers a quality alternative, rapid reaction time, and a reactivity that is greater than what the big groups can offer. No one misunderstands that these groups are seeking to physically take over more and more space. We have also opened some thirty single-brand boutiques, always in collaboration with the local people. Very recently, this happened in Singapore and Indonesia, as well as in Mumbai, where we just opened a third boutique.
ES: So, what are the specific advantages for a retailer to carry Raymond Weil?
OB: Our collection! It is just right at the moment and matches the consumer’s expectations. Our price positioning is also right and there is a good balance between the different collections, which lets the consumer understand the advantages of each product according to its price. Our strongest expansion is in mechanical watches, for both men and women. And, this is happening not only in China, where the market has rapidly become very watch conscious. Our strategy therefore is to base the brand on its watchmaking reputation.
ES: You mentioned earlier the gradual disappearance of traditional distributors. Given this, how is the brand structured today?
OB: We have three regional branches: one in the USA, which also covers Canada; one in Austria, which also covers Germany, Hungary, Spain, and the small Eastern European countries; and one in India. At the beginning of March, we are opening a new branch in the United Kingdom. The other nations are managed by our Geneva headquarters.
ES: And what about the vertical integration of your production?
OB: We do not want to vertically integrate more than we have already done. This means that we do all our R&D, design, prototyping and cases internally. We purchase our mechanical movements from ETA, Sellita and Dubois Dépraz. We also have an assembly workshop in La Chaux-de-Fonds, both for quartz and mechanical watches, where we assemble between 55 and 60 per cent of our production. The remainder is handled by outside contractors. I believe that it is important to maintain these external relationships since they permit fruitful exchanges of experiences.
ES: Your two sons, who manage the brand at your side, recently created a new brand called “88 Rue du Rhône”. Is this a second Raymond Weil brand?
OB: No. The idea is to be where Raymond Weil was 20 years ago. This means a lower price range, between CHF 350 for a quartz timepiece to CHF 1,150 for an automatic. It is a Swiss Made brand intended for a younger audience, a brand that is more fashion oriented and whose promotion channels are focused more on the web and interactive. It is possible to purchase these watches online, but using a formula that does not harm any of our retailers. This means that a person first selects a retailer before being directed to the e-store.
ES: How are these two brands co-existing?
OB: 88 Rue du Rhône is a completely complementary offer that does not infringe on Raymond Weil’s territory. Having said that, it benefits from the “group effect” and we are trying to place it in all the doors where we are already present. For the retailer, it offers a number of advantages. Of course, it is an additional brand, but it comes from the same supplier, Raymond Weil, with which the relationship of trust is already well established. For a retailer, 88 Rue du Rhône offers the assurance of additional sales. It is a win-win situation, as they say.
ES: Last question. What about China? We hear so much about it constantly…
OB: After the USA, it is our number two market. We have 138 sales points there and we also sell a lot to Chinese outside China. Thanks to our very well calculated price/quality ratio, we are affected only very little by the current major phenomenon: In China, there is a lot of sell-in, much less sell-out. In the case of Raymond Weil, our watches sell.
Source: Europa Star February - March 2013 Magazine Issue