Louis Erard’s very competitive neo-classic offer

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September 2011

When in 2003 at the head of a group of investors, Alain Spinedi (ex-Sector, ex-Swatch) took over the reins at the Louis Erard brand (founded in 1931), he opted for a rather unique strategy. He wanted to position the brand in a price range of 700 CHF to 2,000 CHF, with an offer of exclusively mechanical timepieces providing Swiss Made quality. To succeed in achieving and maintaining this difficult position, he had to “forgo all additional expenditures”, remove all the “false expenses”, travel economically, and invest in very little, if any, advertising.
Another potential issue at this time was the substantial rise in mechanical watchmaking, with the most innovative, or even the craziest, timepieces receiving the greatest amount of media attention. Louis Erard’s initial strategy was to offer more tempered and definitely more classic watches which would serve to carve out a unique place for the brand in the entry level. Yet, Alain Spinedi quickly realized the danger of this positioning, which would leave the brand at the mercy of the competition, especially the Swatch Group, which, if it wanted, could have easily occupied his terrain.

Louis Erard's very competitive neo-classic offer Alain Spinedi, EXCELLENCE REGULATOR WITH POWER RESERVE

Sensible move upmarket
The first alert came in 2006, a year that saw tensions rise dramatically in terms of the supply of movements. Starting in 2007, Louis Erard, which used approximately 10,000 ETA movements per year, began actively searching for alternatives (mainly with Sellita and Soprod for its complications).
In parallel, the brand refined its strategy. A slight move upmarket became necessary and the Louis Erard offer moved into a higher range, with price tags now between 2,000 CHF and 3,000 CHF. Spinedi then had to justify this change in positioning, while maintaining the same attractiveness. Louis Erard therefore integrated new complications—power reserve, lunar phases, chronographs—into its models and soon earned a special reputation for its regulator type displays.
The brand has always offered a little bit more than the competition for the same price. In this vein, Louis Erard began proposing diamond-set watches, comprised of more stones than its competitors in the same category. The next step was to create a new line of gold watches, still very competitively priced, also seen as another way to establish the image of the brand and to add legitimacy.
Then came the widespread economic crisis of 2008-2009. One of the opposite effects of the sudden slowdown in the market was that less expensive movements became available again. A close observer of the watch market and very attentive to the errors made by his competition as they often moved upmarket too quickly, Spinedi took advantage of the situation to revisit his entry-level collections and revive his least expensive prices. The strategy seemed to pay off, since in 2010, following the crisis, Louis Erard enjoyed a record year with an increase of 14 per cent by volume of its least expensive models, which represented 55 per cent of sales). Watches priced between 2,000 and 3,000 CHF accounted for 35 per cent of sales, while 30 per cent of sales were ladies’ timepieces, mostly diamond-set. Last but not least, 500 gold watches were sold, making up 12 per cent of turnover. His pyramidal strategy was working.

Launch of excellence
The launch in 2011 of the Excellence collection is part of the brand’s winning strategy. After having revived its lower price offer, Louis Erard now intends to strengthen its mid-range and high-end pieces, with new models in steel and in gold, ranging from 1,300 CHF to 3,300 CHF for steel (and up to 5,200 CHF for diamond-set steel), and from 5,200 CHF to 11,000 CHF for gold (a heavy men’s chronograph), with a ladies’ diamond-set chronograph costing 9,000 CHF.
Contrary to many other brands, which divide and subdivide their offer, the new Excellence collection is available only with a very pure grey dial for all models. There are seven versions in all, available in steel or in gold: a regulator, a regulator with power reserve, a power reserve watch (equipped with exclusive in-house modules) as well as a three-hand automatic, a men’s chronograph with lunar phases, a ladies’ simple chronograph, and a ladies’ diamond-set chronograph.
Viewed in its entirety, the Excellence collection is really quite beautiful. It is composed of a family of timekeepers with a very lovely neo-classic design, good proportions (40-mm round cases for men, 36-mm round cases for women, and a 42-mm case for the men’s chronograph), and a very readable, classic and elegant display.
You get the feeling that the designers (all Louis Erard watches are designed by the Scarinzi brothers in Bienne) wanted to continue and deepen what has become a veritable and easily recognizable style—a style whose codes visually belong to those of Haute Horlogerie without, however, pretending to be part of that category. The Excellence collection thus does not have transparent case backs, which would require hand-decorations of the movement and therefore a rise in price. The reactions of retailers regarding the lack of transparent case backs has been varied, as Alain Spinedi explains: “Our retailers who also sell the very high end say that it is alright to not have them. Those who sell only mid-range products sometimes regret not having the transparent case backs.” The former have a point of comparison that the latter don’t have.

Louis Erard's very competitive neo-classic offer EXCELLENCE CHRONOGRAPH

The art of listening
Whatever the case, Alain Spinedi listens carefully to his retailers, since distribution is so important. On this point, his strategy is also well planned and, in some aspects, is really quite interesting. Thus, the Swiss market represents nearly 30 per cent of sales—which very few brands can claim—with 120 points of sale spread throughout the country. “I have always thought,” he explains, “that it was necessary for us to be strong in our own country and that Louis Erard was a Swiss brand for Swiss people. It is also a question of legitimacy. I am so happy to be able to tell foreign retailers, who ask me the question, that we are very present in our own nation. I think this is important.”
The remainder of the brand’s distribution is divided between Europe—with 25 per cent, mainly in Italy, Belgium, Holland, and recently Spain and Portugal—Eastern Europe with 15 per cent, the Middle East with 10 per cent, and the rest in various Asian nations. Even though Louis Erard is still absent from many markets, namely China and the United States (without mentioning South America and even import-ant markets in Europe such as France and Germany), the brand is making important inroads. To reach these markets, Spinedi does not have a miracle formula but, in his opinion, the brand offers some major advantages: the uniqueness of his exclusively mechanical neo-classic offer; the excellent price-quality ratio; an image that strengthens the brand’s identity year after year; and its independence from the large groups. “As an independent brand selling some 10,000 pieces per year, everything is a question of direct relationships, from person to person. This is what makes the difference. This is what builds trust, a trust that comes because we consistently demonstrate that we have a clear strategy, that we do not waver from it, and that our future is well thought out. Retailers who, as in Hong Kong for example, earlier carried 100 brands and are today reduced to selling only ten, understand this point only too well. Our offer is totally complementary to that of the large groups and they know it. Having a ‘simple’ brand that the consumer can rapidly understand—a brand that shows respect for the client by offering him more than the others for the same price—offers an obvious competitive advantage.” More reasons for Alain Spinedi to accumulate even more miles in economy class, as is correct for a sober brand such as Louis Erard.

Source: Europa Star August - September 2011 Magazine Issue