#Resilience


“We have to reinvent the Swatch of the 21st century”

JEAN-CHRISTOPHE BABIN

Español
December 2019


“We have to reinvent the Swatch of the 21st century”

In our latest report about the transformation of the watch world, we selected six major issues which are having a profound impact on the industry’s present and also on its future and discussed them with about forty stakeholders of the industry. Here is the take of Jean-Christophe Babin, CEO of Bulgari.

ABOUT ENTRY-LEVEL
“The weight of Apple is relative”

“The weight of Apple in this segment is relative in my view. It’s difficult to compare it with the core and entrylevel watch offering. This type of product addresses a market which is not really part of the more traditional watch offering. Smart watches are an interesting product technologically, but this kind of technology suffers from rapid obsolescence. Moreover, they generate absolutely nothing in the way of emotion. The user will sooner or later go upmarket: to a Swiss watch that will last and with an emotional investment. The future of Swiss watchmaking lies in the over-CHF 1,000 category – barely the price of an iPhone X that procures zero emotion and will be fit for the bin in 2022.

“The future of Swiss watchmaking lies in the over-CHF 1,000 category – barely the price of an iPhone X that procures zero emotion and will be fit for the bin in 2022.”

“That said, it is true that watchmaking can’t limit itself exclusively to what we call the high-end. The industry needs volumes, in other words brands with a reasonably priced entry-level offering. Sadly, the current trend is to erode that segment in particular, which has been neglected in favour of a general rise in prices, often over-the-top. Today more than ever, badly positioned, uncreative entry-level brands are doomed in the long run. Many brands can still respond by reversing the trend. Which I hope they will do! But before that, they need to innovate and dare to stand up to Apple. The Swatch Group are the only ones capable of doing it, but apparently they don’t want to go down that path despite their huge expertise in electronics.”

“The Swatch Group are the only ones capable of doing it, but apparently they don’t want to go down that path despite their huge expertise in electronics.”

ABOUT DISTRIBUTION
“The best multibrand stores will become even stronger”

“The distribution models we’ve known for decades, unchanging, are undergoing a revolution. Agents have disappeared off the radar. Basically, there are three active channels today: brand-owned boutiques, multibrand stores and e-commerce. For the brands that have a sound network of proprietary boutiques, cutting the number of low-performing multibrand stores is gradually developing into a major policy trend. As a matter of fact, we’re in the process of resizing our network of multibrand retailers to work only with the best in a true partnership spirit. This development is dictated by the market and its players, who have changed enormously. As for e-commerce, that is set to grow. But certainly not to the point where it will make physical stores disappear. They will remain the ultimate point of connection for the customer.”

Jean-Christophe Babin, CEO Bulgari
Jean-Christophe Babin, CEO Bulgari

ABOUT PRE-OWNED
“I absolutely refuse to get involved in this grey market by another name”

“This phenomenon concerns a handful of large, traditional brands first and foremost, those who figure among the most dominant in the watch collection market. At the same time, that allows those brands to exercise greater control over the flows of their own products and over their perceived value. Of course, that’s without mentioning the collateral advantages, such as increasing their existing customer database. But now let’s be honest: 80% of pre-owned watches have never been worn by any customer. It’s a grand bargain sale of new, unsold watches with a 40% discount, which is very damaging to the watch industry. I get phone calls every week and I absolutely refuse to get involved in this grey market by another name.”

“Let’s be honest: 80% of pre-owned watches have never been worn by any customer. It’s a grand bargain sale of new, unsold watches with a 40% discount, which is very damaging to the watch industry.”

ABOUT OPPORTUNITIES
“Large swathes of China don’t yet know what Swiss mechanical watches are all about”

“As regards China, only a part of the Chinese continent has been conquered, because they know about Swiss mechanical watches. Large swathes of the country don’t yet know what Swiss mechanical watches are all about. The slowdown in China has nothing to do with the fact that Swiss watchmaking has reached everybody and the market is saturated, far from it. Above all, it is a result of economic and political mechanisms.”

"We have to reinvent the Swatch of the 21st century. Ice Watch have done it, but they’re not Swiss...."

HIGH-END
“The model for the industry has always been a pyramid”

“The model for the industry has always been a pyramid, which is how it forged its success and staying power. And that model has to go on. But the responsibility for that rests on the shoulders of groups, who control those segments and have the brands for them. And who today are alarmingly immobile. We have to reinvent the Swatch of the 21st century. Ice Watch have done it, but they’re not Swiss.... We at Bulgari aren’t affected by that, because we’re at the very high end of the market, which is doing fine, and in a jewellery group which underpins that position.”