time-keeper


Julien Tornare, the twelve labours of Zenith

INTERVIEW

Français
November 2017


Julien Tornare, the twelve labours of Zenith

Le Locle-based Zenith did not jump on the Chinese bandwagon in the course of the past ten golden years, and did not enjoy the same growth as its peers. Now, the new CEO intends to cash in on this ‘moderation’, which defined the manufacture while others succumbed to delusions of grandeur, and start afresh on a sound basis. Wishful thinking? Europa Star interviewed him.

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eneva-born Julien Tornare has spent his entire career developing sales and markets for watch brands, firstly with Raymond Weil, then for seventeen years with Vacheron Constantin, initially in the US where the brand was on the brink of extinction, and then in Hong Kong where he had the opposite task of taking an already strong brand to yet greater heights.

In other words, Zenith’s new CEO experienced the rise and then rapid fall of Chinese demand from the inside. And that’s no small advantage for 45-year-old Tornare, the new protégé of Jean-Claude Biver, who for the first time is entering the boardroom of a watchmaking brand and the greatest challenge of his career: that of turning Zenith around. For the initiated, there’s not a shadow of a doubt: the brand is a little watchmaking gem. But in recent years the wider public has had eyes rather for megabrands Omega and Rolex, which are in more or less the same price bracket. How to compete?

According to Le Temps, last year 30 million francs were wiped off the brand’s previous annual sales of 80 million francs. So it’s back to square one. At the same time, the brand is possibly the most talked about this year in the watchmaking sector, having found itself in Jean-Claude Biver’s crosshairs. He sees it as the third instalment in his LVMH trilogy, following his close and careful management of Hublot and TAG Heuer – especially since the launch of the Defy 21 at Baselworld and the DefyLab this autumn, both intended to relaunch the El Primero ‘legend’. We talked with Julien Tornare about two topics: business and their new watch products.

BUSINESS

What’s your diagnosis of Zenith, a few months into your new post?

I’ve presented a status report to the LVMH Group. For me, it’s a magnificent brand that’s been a part of the watchmaking landscape for 152 years, a brand for which I – like many other industry insiders – have enormous affection. But behind all that, you still have the impression that it’s never really taken off in terms of sales, marketing and desirability in relation to the end customer... It’s crucial to find a way to remedy that.

We seem to have been hearing this kind of discourse from Zenith forever. Yet it’s a brand that has so much going for it, a history and products that other brands dream of having and, despite everything, top-calibre managers – but the take-off announced for so long has never happened, despite a golden ten years for the industry! Why?

It’s difficult to say. One thing did not work in the brand’s favour – lots of instability and changes at the top. That was reassuring neither for the retailers nor the end customer. It’s vital today to rationalise the brand structure: far too many models, references and calibres have been launched. In short, there’s been too much dispersion. The watchword today is concentration, on four lines of products. We have a vision for the next five years. And we’ll stick to it, I give you my word! Everybody wants stability at Zenith.

And then there’s a second aspect. There was period when the watch brands with the longest history found themselves entrapped in that heritage. Heritage can be reassuring, but a bit boring and dusty... In reality, few brands have been able to prevent their history from becoming a ball and chain, a gilded cage. But during the golden “Chinese” decade the dust was swept under the carpet, because Chinese customers were discovering quality watchmaking and bought everything at any price without asking too many questions.

Many classic brands, whether part of the Swatch Group or Richemont, played on that – their heritage – with their new Chinese customers, so much so that they neglected their local customers. In the meantime, the tastes of those customers had moved on and become more contemporary, and they also demanded prices in line with the product’s real value. The Chinese customers were a bad benchmark, because they could afford to pay crazy prices. Those brands lost ground with their local customer base. The dramatic fall in the Chinese market put an end to that system. Inversely, other brands, less geared to China, had to stay strong with their local customers. They got more contemporary, gained more punch, became more competitive and today, they’re the ones who came off best. I’m thinking especially of Audemars Piguet.

But Zenith doesn’t figure in any of your case studies: it isn’t one of the brands who jumped on the Chinese bandwagon, and it isn’t one of those that developed a much more contemporary image either.

No, we didn’t take advantage of that, it’s true. If Zenith had jumped on the Chinese bandwagon, it would no doubt be making five or six times the turnover it’s currently making in China. But the good thing is that we’ve kept prices at a reasonable level and are not, like others, having to cut prices in China by around 40%. We’ve missed the first wave of Chinese customers, but we’re not captive to them. So we’re going to concentrate on the new generations of buyers.

Our priorities in the years ahead will be China, the United States and Japan. In Europe, most brands sell huge quantities to Asian tourists. So if you’re strong in Asia, you’re bound to sell well in Europe...

But there you go again – China! Precisely where the others fell down, like you explained…

We can’t afford to ignore Chinese customers. They’re still a driving force for the Swiss watchmaking industry!

You’ve opened a few of your own boutiques – though far fewer than other brands. Today, the multi-brand retailers are having a hard time of it (editor’s note: read our feature on this in our folio, Time.Business), caught between the competition from mono-brands and online sales. What’s your distribution strategy, and what message do you want to convey to them?

The message is clear: we’ve developed the proprietary boutique model in very moderate fashion, we’ve never had more than twelve worldwide. Today, we’ve kept the seven most successful. Many brands rushed into the proprietary boutique paradigm on the crest of the Chinese wave, hoping to double their margins. That’s not my strategy, because they left out the multi-brand retailers, who still play a key role for customers who want choice, a selection and advice from more neutral interlocutors.

So I think that those retailers, who were snubbed by brands that used to work a lot with them but then pulled the plug on them, ought to return to centre stage.

As I did with Vacheron Constantin in the United States, I’m going to re-direct Zenith to the best multi-brand retailers who will be our priority for distribution. I’m going to present our five-year strategy to them and go ahead with those who want to, offering decent margins and enabling them to gain market share with us. I think that’s what these retailers really want – the best have been seeking to strengthen their ties with top-quality brands for years but were faced with group strategies in which they no longer had any say.

Today, you have more than 800 outlets worldwide. How are you going to implement your approach, in concrete terms?

We’re going to concentrate on the best, so overall there’ll be fewer outlets in every country. I think we’ll soon be down to 600 outlets. The launch of the Defy 21 is a key moment to set this change in motion. In any case, we won’t have the capacity to deliver this model to everybody.
And then we really want to give priority to those who have continued to support us these past few years and who believe in our brand. We’ll gradually distance ourselves from the ‘semi-dormant’ sales outlets who only kept Zenith because it was an extra name or manufacturer in their catalogue, but did not really support sales. It’s fair game. They have to have some results if we’re going to work together.

What is your stance going to be on the internet and ecommerce, a subject that’s getting the LVMH Group and Jean-Claude Biver – and the entire watchmaking industry – buzzing with excitement?

It’s inevitable: we have to move into e-commerce. The question is how, and at what pace. For a long time, the watchmaking industry thought it was impossible to sell luxury products online. Figures today prove the contrary. We’re still just debuting, everything has to be built from scratch. We already work with pure players like Mr. Porter and Hodinkee for online sales.

The second aspect is the retailers. Some are more dynamic than others online. Today, we are at the stage where we need to officialise the sale of watches on the internet with those who have an e-commerce platform.

The third aspect is the launch of our own e-commerce platform. We’re working on the project. Basically, there are two ways of going about it: either very conventionally, by putting your entire watch collection online; but with that approach a brand isn’t going to sell much, with no discount or the service you find in a boutique. We have to work on another approach, with limited editions and a special online experience. But we’re really only just beginning.

Will that profoundly transform your brand, ultimately?

‘E-commerce’ is a very loaded term, but sometimes we already practise it without realising it. When it comes down to it, what difference is there today, for a retailer, between selling directly online and doing what they already do for customers who phone the shop to order a watch and have it delivered to their home?
Another fundamental issue for the industry is pricing. The internet has made prices much more transparent and consumers more demanding and challenging. Our advantage is that we haven’t abused pricing because of the Chinese market. Our average price is around 7,000 francs. Our direct competitors in the same price category are mass-product brands, whereas we produce just 22,000 watches a year with a notion of exclusivity. We have to work on getting this quality recognised. My problem isn’t the connoisseurs, but those who aren’t aware yet of Zenith’s potential, because it isn’t ‘glamorous’ enough.

PRODUCTS

What’s your assessment so far of the Defy 21 presented at Baselworld (editor’s note: read our detailed presentation of it in Chapter 3/17)?

I’m going to reveal a rather confidential piece of information: nearly half those we sold to retailers in Basel were already presold to end customers, even though the watch wasn’t even in the shops yet. That hadn’t happened at Zenith for a long time!

Your emblematic product is the El Primero, which can also be regarded as a ‘gilded cage’. What place will it occupy in your future collections?

Globally, we’ve reduced our offering to four clearly distinct collections. Two – the Elite and the Chronomaster – represent the more classic, heritage side of the brand. But since we aim to be innovative and not simply repeat history, we take inspiration from what we’ve done before to enter contemporary territory. One example of this is Pilot, which we produce in limited numbers but which posts the best results, despite the fact that it’s vintage – because paradoxically, vintage is fashionable and contemporary! And the other contemporary line is Defy, a systematic reinvention of El Primero to enter the 21st century.

After the Defy 21, with its hand displaying hundredths of a second, the Defy Lab is the second chapter in this remake of an iconic watch (editor’s note: read a detailed presentation of it in our next article)…

A completely new oscillator: we’ve revolutionised the escapement system and the Christiaan Huygens balance spring of 1675 to create the world’s most accurate mechanical watch, with a variation of one second over 24 hours, a 60-hour power reserve and, above all, no loss in amplitude. We guarantee the constancy of this second variation per 24 hours. Thanks to its new silicon wheel, there’s no more friction, no more oil. We’ve eradicated the watchmaker’s worst enemies without leaving mechanical territory! No fewer than 31 parts have been replaced by one single part. Incidentally, with the LVMH Group’s new R&D department we’ve developed a new, ultralight aluminium, a composite of aluminium and polymer, on the principle of a sponge but with holes filled with polymer...

THE OBJECT: Spyglass
“This spyglass is a good luck charm – and a reminder that you should try to take the long-term view. My wife always tells to me ‘step back a little’, especially at difficult times! She’s the one who gave me this antique object. When I left Hong Kong to come back to Europe this year and take up the reins at Zenith, I added it to the things I needed to take back to Switzerland with me for my new assignment!”

See the article: MECHANICAL WATCHMAKING LEAVES HUYGENS BEHIND

Photograph: Fabien Scotti | Arcade Europa Star