Watch fairs

To go or not to go

Esquire (Singapore) - - Contents -

The bomb­shell dropped on a Sun­day in late July. Nick Hayek, CEO of the Swatch Group, re­leased a state­ment to Ger­man news­pa­per NZZ am Son­ntag that it would be pulling out of the an­nual Basel­world watch and jew­ellery fair, re­duc­ing its pres­ence by 19 brands and booths. The an­nounce­ment didn’t come in a vac­uum, as it hap­pens: the trade show had al­ready wit­nessed the loss of 850 ex­hibitors in the past two years, in­clud­ing watch­mak­ers such as Her­mès, Gi­rard-Per­re­gaux and Ulysse Nardin. These, along with a hand­ful of in­de­pen­dent watch­mak­ers, de­cided to switch al­le­giance to com­pet­ing fair, the Geneva-based Sa­lon de la Haute Hor­logerie (SIHH)—we’d call it mu­si­cal chairs, ex­cept that no­body re­ally wants to sit in Basel­world’s cor­ner any­more.

While Basel­world still has the sup­port of the re­main­ing big four com­pa­nies (Chopard, Rolex, Patek Philippe and the LVMH

group) that take pride of place in hall one, Swatch Group was the only one to say good­bye to the man­age­ment com­pany’s in­ef­fi­ciency and per­ceived ar­ro­gance.

As Basel­world has shrunk in size and par­tic­i­pant num­bers, it seems to have passed on its strength po­tion to SIHH, which has ex­panded ex­po­nen­tially in re­cent years. To put it in per­spec­tive, the first SIHH was held in 1995 with five ex­hibitors as an ul­tra­ex­clu­sive af­fair. In the past three years, the fair has al­most dou­bled in size, and now hosts 35 brands across a 55,000sqm area. This can be at­trib­uted to the fact that SIHH opened its doors to in­de­pen­dent watch­mak­ers in 2016 by set­ting up Carré de Hor­logers. Like at Basel­world, they are given their own space, but with big dif­fer­ences. One, they are now in­side the Pal­expo hall, as op­posed to be­ing shunned like pari­ahs in a struc­ture op­po­site the main hall, forc­ing vis­i­tors to walk out­side re­gard­less of the el­e­ments. Two, like the rest of the fair, there’s com­pli­men­tary food and drinks (in­clud­ing cham­pagne) served through­out the day for vis­i­tors and ex­hibitors alike. And lastly, the 1,500-odd global me­dia that cover the fair are al­lo­cated time slots to dis­cover the in­de­pen­dent’s new nov­el­ties.

This whole de­ba­cle has raised three very sig­nif­i­cant ques­tions: does the tur­moil at the watch fairs in­di­cate a suf­fer­ing watch in­dus­try? Where the hell is Basel­world go­ing wrong? And lastly, is SIHH’s strat­egy sus­tain­able in the long-term?

To an­swer the first ques­tion: cur­rent ex­port re­ports by Fon­da­tion de la Haute Hor­logerie sug­gest a hard no. Fol­low­ing the sig­nif­i­cant mar­ket de­cline in 2015 and 2016, the watch in­dus­try picked up pace to­wards the end of 2017, with pos­i­tive re­sults show­ing in the first half of 2018, which saw a 10 per­cent in­crease in Swiss watch ex­ports.

Then why did the Swatch Group de­cide to pull out of the world’s big­gest watch fair? The Swiss com­pany, which owns brands such as Omega, Blanc­pain and Harry Win­ston, re­ported a 14.7 per­cent growth in the first half of 2018, buoyed by growth in Asia and Amer­ica. The num­bers are in­dica­tive of mar­ket re­cov­ery, but also point to mas­sive cost-cut­ting ex­er­cises that the group has un­der­taken in the past year, and tak­ing part in Basel­world is not cheap: re­ports sug­gest that the group spends ap­prox­i­mately USD50 mil­lion to take part in the fair (in­clud­ing in­ci­den­tal costs). A huge in­vest­ment, and while we don’t have fig­ures about the re­turns gained, we can pin­point a few other rea­sons why Basel­world has lost favour with its big­gest cus­tomer.

In the state­ment to NZZ am Son­ntag, Hayek said: “To­day ev­ery­thing has be­come more trans­par­ent, fast-mov­ing and in­stan­ta­neous. Ac­cord­ingly, a dif­fer­ent rhythm and a dif­fer­ent ap­proach is needed. In this new con­text, an­nual watch fairs, as they ex­ist to­day, no longer make much sense… The MCH Group, which or­gan­ises Basel­world, is clearly more con­cerned with op­ti­mis­ing and amor­tis­ing its new build­ing—which, in­ci­den­tally, is largely fi­nanced by the watch in­dus­try dur­ing the fairs—than it is in hav­ing the courage to make real progress and to bring about true and pro­found changes.”

Ouch. So ac­cord­ing to Hayek, even though the watch in­dus­try lit­er­ally props the MCH Group like a Swiss at­las, the fair throws in al­most noth­ing in rec­i­proc­ity. Ho­tels charge three times their usual rates on the days of the fair and you have to book the room for the en­tire du­ra­tion of Basel­world. Res­tau­rants around the halls and around town hike up their prices, and I can vouch for the phys­i­cal pain of shelling out CHF20 (about SGD27) for a bowl of medi­ocre, MSG-filled ra­men just to as­suage my crav­ings for home.

The fair of­fers no dis­counted rates on food or ac­com­mo­da­tion for its big­gest cus­tomers, and to add salt to the wound, it pro­vides ab­so­lutely shitty Wi-Fi. I have got­ten bet­ter Wi-Fi sig­nals in the Third World. And should the brands dare get their own routers for their booths, the fair charges them a fee.

Now I know what you’re think­ing: hey, you’re a jour­nal­ist. Don’t you need to post stuff in­stantly on In­sta­gram etc? Yep—and this is what the or­gan­iser of Basel­world doesn’t get. Brands no longer need the plat­form of a fair to reach out to their sup­pli­ers, re­tail­ers and me­dia, thanks to this lit­tle in­ven­tion called the In­ter­net. So why should a jour­nal­ist or a re­tailer make the trek all the way to the city of Basel to see time­pieces that are al­ready blasted all over so­cial me­dia, and en­dure ex­or­bi­tant prices of ac­com­mo­da­tion, food and SIM cards?

As of time of print, there has been no news about what strat­egy the Swatch Group will em­ploy to launch its nov­el­ties to its part­ners, re­tail­ers and the me­dia, but we can be sure that Hayek has done his cal­cu­la­tions and it’ll be less than the al­leged USD50 mil­lion—and without the loss in dig­nity of be­ing treated like a third-class ci­ti­zen.

Why should a jour­nal­ist or a re­tailer make the trek all the way to the city of Basel to see time­pieces that are al­ready blasted all over so­cial me­dia, and en­dure ex­or­bi­tant prices of ac­com­mo­da­tion, food

and SIM cards?

FAIR TRADE

On the other hand, SIHH re­ported a 20 per­cent growth in vis­i­tor num­bers and 12 per­cent in­crease in me­dia ac­cred­i­ta­tions in 2018. Apart from the afore­men­tioned free-flow of food and bev­er­ages, the Wi-Fi does not lag, and the fair also upped the tech­no­log­i­cal ante by up­dat­ing the press room and set­ting up a White Box, which serves as a mini stu­dio.

While things seem to be look­ing up for SIHH, the fair has ex­pe­ri­enced its fair share of set­backs in 2018, as both Aude­mars Piguet and Richard Mille an­nounced they’d be pulling out af­ter the 2019 edi­tion. Both cited in­su­lar rea­sons for their move, stat­ing that their cur­rent busi­ness mod­els war­rant that they con­trol their dis­tri­bu­tion channels and do not see the ex­pen­di­ture worth­while just to meet a hand­ful of re­tail­ers.

This leads us to the fi­nal ques­tion: will other brands fol­low suit and are we on the cusp of wit­ness­ing the death of the watch fair as we know it? The thing is, trade shows are a nec­es­sary evil. They’re pretty much the equiv­a­lent of bees—an­noy­ing as hell but use­ful. They band to­gether com­pa­nies from the same in­dus­try and give them in­stant ac­cess to a global net­work of re­tail­ers, sup­pli­ers and jour­nal­ists—some­thing that even the In­ter­net can’t pro­vide.

And while no­body in their right mind would say no if the Swatch Group or Aude­mars Piguet in­vited them to a god­for­saken part of the world for the un­veil­ing of their new col­lec­tion, can we say the same for smaller brands with less grav­i­tas?

Some brands might well be able to sur­vive without the plat­form of a watch fair, but the ma­jor­ity need ac­cess to the net­work it pro­vides. As Hayek put it suc­cinctly, it’s not the con­cept to blame. The watch fair sim­ply has to evolve to meet the cur­rent de­mands of to­day’s ul­tra-con­nected cli­mate.

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