China Watch
The watchmaker is a latecomer to the market but its new ceo believes a sporty, Millennial-targeted look will help it succeed.
Breitling’s Georges Kern on
jump-starting China.
BEIJING — #Squadgoals. It may have been an understatement for the group that Breitling put together here one evening in late November, with actors Brad Pitt, Daniel Wu, photographer Peter Lindbergh, and surfing champion Sally Fitzgibbons rubbing shoulders at the Phoenix Center.
The Grenchen, Switzerland-based watch house was pulling out the stops for the Chinese capital, although up until quite recently, such a night would have been implausible. China had been the elephant in the room, or rather, the elephant not in the room for the watch brand. Despite its long history dating back to 1884 and how its luxury rivals had quickly clamored to reach the lucrative Chinese consumer, Breitling had not made many inroads into the country.
Enter Georges Kern, who arrived last year as its chief executive officer. A luxury watch industry star, Kern had just been promoted at Compagnie Financiere Richemont to the group's head of watchmaking after a 15-year career leading IWC Schaffhausen through a turnaround when he jumped to join the CVC Capital-majority- owned Breitling.
With one successful watch house transformation already under his belt, Kern has set about to do the same for Breitling. Among the changes: he's beefed up the star power of its celebrity brand ambassadors, a reflection of his belief that emotion rather than technique is the key to creating happy, loyal clients. He's also placed China at the core of the company's strategy, setting up an omnichannel distribution network, and launched new products better fit for smaller Asian wrists, and the more youthful customer. And in a post #MeToo era, things like the heavy-handed male gaze marketing that Breitling had long relied on also had to go.
The day after hosting the gala, Kern sat down with WWD to reveal how he plans to catch up in a crowded Chinese marketplace and why he has personally staked on building the independent watchmaker into a more global player.
WWD: Breitling has put China at the center of its strategy since you came on board as ceo. How does the gala night with celebrity ambassadors like Brad Pitt work into your overarching strategy?
Georges Kern: For many years, the brand has been focusing on Western countries where we are in the top three and top four — in the U.S., U.K. and Japan. For some reason, and I really don't know why, we've never entered the Chinese market. But greater China including Hong Kong represents 50 percent of the [watch] luxury industry, it's as simple as that. If we are successful in China and in Hong Kong as we are in other countries, this brand will be one of the biggest brands in the world.
Secondly, we are launching here a line called the Premier, which is an elegant sports watch, inspired by one of our iconic lines of the 1940s. It's a new segment, less bulky than what we usually do at Breitling. With that, we're reaching out to a new customer base in the Western world, but also in Asia, it's a smaller product.
WWD: You’ve revamped certain key aspects of the brand since you took the helm. Given that the awareness is lower for Breitling in China, do you have a different opportunity and perhaps easier time to communicate the new Breitling image here?
G.K.: First of all, I've been traveling to China for the last 25 years. Today, it's easier to enter the market and much quicker. You have digital communication, and the market is totally transparent. Chinese customers are traveling and they know exactly how strong we are in the Western world.
There are two new sentiments in
China. The first phenomenon is that the Millennials might want to consider other brands than the brands of their parents, the classic brands that we all know in China. I think we can be the alternative to the new customer base who again want something newer, fresher, more dynamic.
The second thing is, the Chinese market and taste was very classic, very conservative, and it has changed. We see this already in our sales figures of what people buy. Young people buy more sportier watches. And in a way, that taste — certainly due to digital — has aligned a little bit to the Western world. That's why I think our brand with the specific design and power we have is perfectly adaptable to the Chinese customer. WWD: What about specifically with women? G.K.: We want to be as strong with women as we are with men. The thing is, Breitling never did elegant women's watches. We do sports women's watches and we just launched a product that is 38 mm in diameter. It's big, a Navitimer 1 Automatic, and we will launch more women's sports watches. That market is much less crowded than for elegant women's watches, the small watches with diamonds, blah, blah, blah, which everybody is doing. We don't want to do that.
I think the way we feature in our advertising — be it Sally Fitzgibbons, a surfer, or actors like Charlize Theron — these are tough women, successful women, world champions and they are featured in the same way as men. I think this reflects much more the image of modern women, including in China, than the stereotypes that we had in our advertising with the blond girls waiting for the pilots. That is very much 1980s, and doesn't reflect a modern woman of today.
WWD: What do you have in mind for retail and wholesale distribution in China, and for e-commerce?
G.K.: Our distribution is too low in China. We now have 25 doors and we need to increase to 80 or 85 doors. We need to open many more boutiques — 30 to 40 boutiques in China — which we will do in the next few years, but it takes time. You need to find the locations, you need to find the malls.
I think the landlords appreciate the style of our boutiques, which are very different. It's an industrial loft design which reflects what I would call a modern and retro style. Not vintage but modern retro. We, as a brand, want to be inclusive. We don't want to be exclusive in a negative way. We want people to feel comfortable to stay in the boutique — to appreciate the motorbikes, the pool tables. It's a younger, fresher way of appreciating products. I think that's something that can work with the Millennials in China.
We just started to be online with
Tmall, we've had a WeChat store since a few weeks and they've been featuring us tremendously, and we're launching Breitling China's own web site.
WWD: Do you think the Chinese customer is more receptive to digital than the Western customer?
G.K.: You have very savvy digital countries like the U.S. but China is super digital and, anyway, you need e-commerce because the country is too big; you can't be everywhere.
It's certainly one of the most digital countries, for sure, and young ►
people are like this so we have to be on these platforms and to offer an omnichannel concept — be it offline and online to the customer, be it platforms like Tmall and Alibaba or our own online. We communicate a lot digitally.
WWD: Do you have plans to appoint a mainland China ambassador?
G.K.: For the moment, I think we are very happy with what we have. I think it's quite amazing. I think Daniel is a phenomenal guy — very successful, filming a lot here in China and Brad Pitt is the most famous face in the world. There is no more famous, more recognizable person than Brad Pitt and there are studies on that. I think the coverage we have on that is great. I'd rather look for a Chinese woman to add to our squad.
WWD: There was some chatter about Brad Pitt as he filmed a movie many years ago about Tibet, which is a highly sensitive topic here. Were there any issues with him visiting China?
G.K.: No, not at all. He was here in China three years ago, I think, when we was promoting a movie. I think what is more interesting is it was the first time he was traveling for a brand. He did endorsements previously but he never attended an event for a brand so it was a really an honor for us to have Brad in China. I told him right from the beginning, “We need you to help us in China,” and he loves China. He loves modernity, he likes architecture so he loved the spot [of the gala dinner], Phoenix Center, and enjoyed very much to be here.
WWD: How would you describe the competitive landscape?
G.K.: This is life. We are in a competitive world. If we fear competition, we have to stay at home. I think we have all the assets to be successful. We started a few months ago and we are growing 60 to 70 percent in China from a very low level. If we grow at 60 to 70 percent for the next few years, we will be where we want to be.
We're doing extremely well in [South] Korea and Japan. We have all the assets, the right products now, we have the right campaign, the right ambassadors, the right brand strategy and boutiques to be successful. We've been implementing since a couple of months, and the results we've seen indicate that we are most likely on the right track.
WWD: How do you see the role of Hong Kong and Macau then?
G.K.: These are different markets. Hong Kong is and has been the number-one market for years, bigger than China. It's a huge duty-free platform. We're looking to open boutiques in Hong Kong and Macau, for sure, and we have activities going on. We have to work on all these three regions but we are one price. You always have to adjust prices on exchange rate. The market is transparent. The old days are over where you have different price indexes, forget it. The only problem we have is exchange rates, such as the pound, because of Brexit, is going down. We want world pricing, excluding taxes.
WWD: Is it correct that you took a 5 percent stake in the company?
G.K.: This was the reason why I joined the company as many did, so we could all invest in the company — which is a problem if you fail, but is very rewarding if you are successful. I always wanted to be a little bit more entrepreneurial and it's a question of opportunity and suddenly the opportunity occurred. Especially knowing Breitling, it certainly has one of the best and interesting histories in the industry. We looked at it and said the potential is huge, we have to do it. It wasn't only me but many others joined.
WWD: How do you expect the global business to fare this year?
G.K.: We'll grow by double digits on a worldwide level.
The U.S. is a huge market. We're growing in the U.S. even at a very high level, thank God. It really is the number-one market. We have 80 to 90 percent brand awareness there, but we are very successful with the bigger, bulkier watches. But now also with the Premier, the Superocean, we can gain a new customer base. We want to keep the customer base we have and bring together these two different customers, the recent past Breitling lovers of the past 20 years and the products of the Forties to the Seventies, these collectors are very different. We want to bring them under one hat. Japan and Korea are also huge for us.
The beauty with Breitling is that we are an independent brand so we're much quicker than in a bigger environment, extremely flexible, you can make decisions on the spot. What we've achieved in a year is surprising for outsiders. Breitling has always been a successful, very profitable company. We have that new feeling of a dynamic start-up company trying to disrupt the market a little bit. ■