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Interview with Daniel Schluep, CEO of Titoni

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May 2016



In response to a questionnaire sent out by Europa Star, 50 CEOs from Switzerland, Europe, Japan and the USA reveal their strategies for dealing with the dangers and opportunities that await in 2016.

Interview with Daniel Schluep, CEO of Titoni

- 1. I think that 2016 is likely to be a year of stagnation. Why? Because the Swiss watch industry has gone through an exceptional period over the last few years. These boom times for mechanical watch sales naturally had to come to an end one day. We now have to reassess the markets and our chances. Business is under pressure, not only for producers, but also for retailers and distributors. In China, for example, there are large volumes of stock due to overstocking in previous years. The market in Hong Kong, the most important for the Swiss watch industry, has declined sharply and China´s growth is adjusting to a “new normal.” What’s more, online sales are increasing and technological progress (smart-watches) will also leave its mark on sales of mechanical watches. Another issue, probably less significant, is the current international situation: too many conflicts around the globe are shaking the business climate and “travelling consumers.”

- 2. As an international brand with a strong focus on Asia, especially Greater China, the markets in this part of the world will continue to play an important role in our portfolio. Due to the current volatile situation in those markets and the world economy in general, one of our top priorities will be to improve our distribution network. Price differences in many markets are still a topic that is widely discussed, but we have to make sure that they do not confuse our consumers: our company stipulates valid international retail prices, but because of different taxes and tariffs in different countries, there are still markets where prices are higher than in others. We have to face this issue on a regular basis and we will discuss the best solution for our consumers with our partners. In China, for example, we want to keep our existing sales channels, while at the same time tapping into new areas for opening Titoni Points of Sale in 3rd and 4th tier cities. As a side note, I want to add that we have just begun a new co-operation with a partner in India and Australia.

- 3. I personally think that a traditional mechanical watch will always represent an object of value, maybe not in the purely monetary sense, but in the way that it evokes and fulfills a longing for tradition. This feeling is part of every human being at one time or another during his or her life. In other words, I don´t think that the mechanical watch will fully disappear. It might become more of a niche product, but it won’t die out. However, I’m fully aware that the younger generation in particular is more and more interested in smart-watches. This is an irreversible fact, and in this sense they pose a serious threat to the Swiss watch industry. I myself greatly admire those watches that, besides time, add many more features and functions, and I can hardly guess what the future will bring us in this respect. Nevertheless, we cannot compete with those companies that invest millions in what are effectively wearable computers, as these smart-watches are. We have to “stick with what we know,” as the saying goes, namely our dedication to producing classical timepieces with a mechanical heart at affordable prices.

- 4. Titoni has not attended the Baselworld exhibition for the past few years. There are a number of reasons for this, all connected to the purpose of organising such a fair. First, Baselworld takes place to get orders from clients. However, for us as a mid-range brand, this reason is irrelevant as we have rolling plans for our new products. Second, Baselworld gives your own brand prestige, depending on the luxury of your “performance” during this annual fair. For Titoni as an independent SME, we can no longer satisfy those lofty “requirements”. Third, Baselworld is a gathering for watch producers, component suppliers, clients, journalists and many other interested parties from the world of watches. In this sense, Baselworld is the most important marketplace in this industry, and we usually invite our clients, journalists and guests to our factory during the fair. Thus, they are also given the chance to see our headquarters and production facilities with their own eyes.

EUROPA STAR’S FOUR QUESTIONS

1. What are your predictions for 2016? Do you think that exports will recover, or will the markets stagnate or continue to decline after the slump we saw in 2015? And what do you think were the reasons for the downturn in 2015?

2. What are your priorities for the coming year: consolidating your existing markets, actively exploring new markets (if so, which), rationalising / consolidating / expanding your distribution network, launching new products, PR initiatives, etc.?

3. Over the longer term, do you believe that mechanical watchmaking will gradually die out, hybridise, or continue to occupy its own exclusive niche? Do you see the advent of smartwatches as a potential threat, or an opportunity for growth and diversification?

4. What exactly do you hope to achieve from your participation in Baselworld 2016? Do you feel your presence at the fair is essential to your business, or are such forums less important now than they were in the past?

LIST OF RESPONDING CEOs