The Business Of Fashion/Tanya Dukes: Can Baselworld Catch Up With the Times?

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Can Baselworld Catch Up With the Times?

The watch industry's biggest trade fair is promising an overhaul as attendance plummets. But as brands rely more on direct sales, some question the need for an annual gathering at all.
Baselworld 2019 | Source: Getty Images
Baselworld 2019 | Source: Getty Images
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BoF Professional Exclusive
By Tanya Dukes
March 29, 2019 05:25

BASEL, Switzerland — At Baselworld, the chatter in the exhibit halls flanking the convention centre wasn’t so much on the new chronographs, tourbillons and pilot watches on display as the ones that weren’t.

The list of brands skipping the jewellery and watch industry’s biggest annual exhibition has grown far longer than the roster of attendees, with the number of exhibitors down by two-thirds in the last two years, to 520 this year. Last year, Swatch Group, the world’s largest watch manufacturer by revenue, announced it was pulling out of Baselworld, with chief executive Nick Hayek telling CNBC “when you look at these old traditional watch fairs, it doesn't make any sense anymore.” Raymond Weil, Corum and other major players were also absent this year.

Behind the dropoff: watch brands are relying more on direct sales to customers and are cutting ties with the department stores and other wholesalers that flock to Switzerland each year. When brands can debut new products on Instagram, a pilgrimage to Basel to show off for buyers becomes less essential. It’s a problem confronting fashion industry gatherings as well — fashion weeks in New York and London have seen a steady trickle of designers decamp to Paris or stop showing. Baselworld’s decline has been swifter, with analysts and buyers describing the mass exodus as a rebellion against leadership widely viewed as inflexible, as well as rampant price gouging by the conference’s Swiss hosts.

    When you look at these old traditional watch fairs, it doesn't make any sense anymore

Baselworld is fighting back under Michel Loris-Melikoff, who stepped into the managing director role last year. He’s promised over the next few years to broaden the show’s appeal for brands and consumers with talks, collectors’ areas, a retailer summit, an e-concierge for travel planning and lower pricing. Next year, the event will also move to late April, right after SIHH, a trade fair dominated by Richemont-owned brands, making it easier for retailers to attend both events.

The success or failure of these changes will affect not only the $20 billion Swiss watch industry but also a vast network of retailers, manufacturers and service providers that rely on the fairs to spot trends, connect with new brands and find suppliers.

“The trade show model is less and less relevant,” said Reginald Brack, a watch industry analyst at market research firm NPD Group. “Retailers are crowdsourcing through social media. It accelerates the whole process.”

    Retailers are crowdsourcing through social media. It accelerates the whole process.

Inside the exhibition halls this week, seating, trees and a plaza for fashion shows occupied spaces once held by watch brands, creating a bustling atmosphere despite a 22 percent drop in attendance from last year. An entire hall typically devoted to jewellery brands was closed entirely.

Additional options for food and refreshments, including a Moët & Chandon wine bar, were added to the mix.

Changing the format is no guarantee to win back brands that increasingly rely on clicks to their website and Instagram likes to discover in real time what’s popular. Swiss watch brands are slow to change but they’ve begun to adapt when it comes to technology.

In 2017, IWC was the first Richemont watch brand to launch e-commerce. “Now it’s a big part of their strategy,” Brack said. “They want to connect to consumers and they want them for life.” Audemars Piguet cited its goal to forge “more direct relationships with end clients and watch enthusiasts” in its decision not to attend next year’s SIHH.

    This is the Super Bowl for the industry and we all need to be in the stadium

Bulgari, one of four LVMH watch brands that exhibited at Baselworld this year, hasn’t decided whether it will return in 2020, chief executive Jean-Christophe Babin told BoF. The brand has cut its watch and jewellery wholesale accounts in half, to 300, since the start of 2018 and has looked into alternative ways of connecting with third-party retailers. Last year, the brand hosted roughly 100 clients at the Bulgari Hotel in Dubai, one of six the company operates worldwide. Over three days, Bulgari presented new products and offered a deeper look at its heritage.

“We have a Plan B,” Babin said. “The hotels could absolutely become the center for Bulgari events as opposed to a more corporate event.”

Other brands are already taking this approach. Movado Group exited Baselworld after the 2017 edition and has hosted an annual summit in Davos, Switzerland for the last two years. Swatch Group exhibited new offerings from brands including Breguet, Harry Winston and Omega in Zurich during Baselworld this year. 

These events provide a platform for brands to present their wares without fighting with competitors for attention. For retailers, it means an increasingly crowded calendar and more time away from their stores and clients.

Rüdiger Albers, president of Wempe US, said his first day on the ground in Switzerland was a marathon that started the moment his transatlantic flight landed, as he raced directly to Swatch’s Zurich office and then departed for dinner meetings in Basel.

Albers said Swatch’s withdrawal from Baselworld had some benefits, though he’d like to see its brands return. He said watch fairs are still crucial for his business.

    It’s about the process of making a mechanical Swiss watch and how much artistry goes into it. If we don’t keep that alive, the craft would disappear.

“This is the Super Bowl for the industry and we all need to be in the stadium,” he said. “This is a small industry.  If we get together once a year it promotes watch culture when we talk about trends and developments. If everyone does their own thing, the momentum is lost.”

That sentiment is shared by Larry Pettinelli, president of Patek Philippe US, who regards Baselworld as a passport to the inner workings of Swiss watchmaking. “It’s not just about selling the finished product,” he said. “We need to talk about the people who make the tiny little parts. It’s about the process of making a mechanical Swiss watch and how much artistry goes into it. If we don’t keep that alive, the craft would disappear.”

As influential as social media can be, there’s still a benefit to seeing the new watches in person. “At this price level, [retailers] want to touch and feel the product. Pictures don’t do it justice,” he said. Occasionally input gleaned during meetings with stores and the press have an impact on the final product. “If we get reactions we don’t expect the Sterns can make some tweaks. They can say, let’s make that hand a different colour or some other modification.”

The presence of prestige brands at Baselworld benefits an entire ecosystem of companies who show there, from household names like Seiko to small exhibitors making under 1,000 pieces each year.

    Even though Baselworld will continue, we may have events all over the globe at different times of the year.

“Retailers would do anything for Rolex and Patek because they’re so important,” said Jared Silver, president of Stephen Silver, a fine jewelry and watch boutique that specialises in low-production runs, and a regular attendee of SIHH and Baselworld. “Indies piggyback on the attention the bigger names bring.”

But the trend appears to be for more, smaller watch exhibitions. Silver said independent brands are flocking to consumer-friendly events like Watches & Wonders, which held its second edition in Miami in February. This also suits the needs of brands that don’t want to arrange their release schedule for the year around Baselworld and SIHH, as well as manufacturers that need to line up orders before those fairs open in April.

“There’s a lot of discussion about what happens between January and the end of April,” said Mario Tedeschi, chief executive of RJ watches, an independent brand producing whimsical, complicated watches with scheduled drops throughout the year. “We might do a local exhibition at a smaller scale with other brands. Even though Baselworld will continue, we may have events all over the globe at different times of the year.”

Related Articles:

LVMH Watch Brands to Attend Baselworld 2019

Swatch Confirms Permanent Withdrawal from Baselworld Watch Fair

Improving Swiss Watch Exports Lift Mood at Baselworld
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