Sun’s Out, Guns Out

A commandment-breaking analysis of Swatch Group’s Baselworld exit (#BWexit, anyone?)

What gets you out of bed in less than 10 seconds on a Sunday morning — barring fire, flooding and other domestic calamities? For me, it was my phone exploding with messages about the Swatch Group leaving Baselworld. Hands down the most compelling reason to wake up and start getting busy.

(I wish I could say it was my burning desire to attend Sunday morning church service, but that would be a lie and I don’t really want to violate the ninth commandment on the Sabbath day. I’m already stepping all over the fourth commandment just by writing this piece. Bad Suzie.)

Kudos to the Swatch Group for dropping this on us today. First of all, it’s a Sunday, which for those of us in the City of Calvin is a sacrosanct day of rest. Secondly, we’re stranded at the peak of the annual watchmakers’ summer holiday, where companies shut their doors for weeks and emails get rerouted to the Out-of-Office abyss, never to be seen again. If I was planning to release a huge piece of news and didn’t want anyone to bother me about it, that’s exactly how I’d do it.

Now, we’ve heard doubts about the veracity of this news, seeing as how Swatch Group have yet to officially communicate on the subject, but then I also have from a good source that the Baselworld organisers and exhibitors’ committee had full knowledge of this development long before this morning’s news. It’s the real thing, guys. (Unless it’s a negotiating tactic and we see some walkback. But for now, it’s really happening.)

What do we know? The original article is in German, which I can’t even, so I got my share of publicly available information from Le Temps, the Swiss daily published in French by Geneva. The most relevant bits for us include a quote from Nick Hayek Jr, Swatch Group CEO and President of the Executive Group Management Board, saying that the traditional watch fairs no longer make sense for the group.

Omega booth at Baselworld 2018
Omega booth at Baselworld 2018

Swatch Group are certainly not alone in this sentiment. Our founder Wei Koh wrote a widely shared editorial excoriating the Baselworld organisers for dropping the ball on what was once the nexus of industry news, products and excitement. For years, Baselworld exhibitors both large and small have been painfully candid about the challenges they’ve been facing with the fair organisation and drawing unfavourable comparisons with the infrastructure and support offered by the Salon International de la Haute Horlogerie (SIHH) held in January in Geneva.

The comparisons have only intensified since 2016, when the SIHH first included independent brands that were previously only represented at Baselworld. This year, Baselworld organisers cut the fair duration from eight days to six, and announced half as many exhibitors (600–700 as compared to 1,300 in 2017), with a concordant 30-percent reduction in exhibiting space.

Over the last few years, rumours abounded of brands pulling out of Baselworld to participate in the SIHH, some of which were partly substantiated when Kering Group brands Girard-Perregaux and Ulysse Nardin and luxury giant Hermès appeared at Palexpo in January.

There has been a small but steady exodus of brands to the fringes of Baselworld, particularly in the case of the Hyperion Hotel (which I still call the Ramada, out of habit), which has offered watch brands a far more accommodating exhibitors’ package and is literally just a few steps from Messe Basel.

Says Greg Simonian, President of Westime, an American retailer prominent on the West Coast and in Miami, “My honest opinion is that these trade shows are significantly less beneficial than they used to be. The real purpose of a trade show is for brands to get new customers and for guys like me to explore new vendors. This has been happening less and less. I generally meet with people I meet throughout the year on my market. As far as the press factor of the show goes, messages can become diluted with novelties being released at the same time. I question why brands wouldn’t want to explore options with higher return on investment when it comes to media exposure. On another note, Baselworld used to be fun because I got to see everyone, and now this means it will be less fun.”

Good points, Greg, even though you kinda rained on our parade a bit there, as watch press. It’s cool, we still love you guys.

Breguet booth at Baselworld 2018
Breguet booth at Baselworld 2018

Earlier this summer, another Baselworld-related headline dropped when its managing director of 15 years, Sylvie Ritter, announced her resignation to pursue new challenges.

The Swatch Group news did not come out of the blue. For those of us watching closely, it was only a matter of time before the other shoe dropped. (The shoe’s certainly dropped now — you might say the equivalent of the entire Louboutin factory’s production has come raining down on us.)

What’s next? The quote from Nick Hayek Jr certainly suggests that the Swatch Group have something entirely new in mind, something far from the watch fairs that we’re familiar with. The Swatch Group have what it takes (presence, resources, audience and retailer interest) as an 18-brand conglomerate to do something on their own. The question is — will it be centralised, and where will it be?

Speculation circulated at this year’s Baselworld that some of the stronger brands, with a bigger international footprint, might choose to adopt a decentralised roadshow format for greater market presence. Certainly this approach feels more relevant in the 21st century.

There is also the Geneva option. The other big group left in Baselworld, LVMH, have commandeered the Hotel Kempinski in Geneva in January for presentations and meetings; they’ve done it for years against external opposition and add significant draw to the city during the week in question. The Le Temps article suggested that the departure of Swatch Group from Baselworld might create a domino effect with other brands following suit, and LVMH might be the next to keep an eye on, since it’s certain that the continued presence of industry juggernauts such as Rolex and Swatch Group were key to LVMH’s ongoing interest in Baselworld.

So far, it’s been understandably tricky getting responses from people about this (Sunday, summer holidays), but CEO of Zenith Julien Tornare was kind enough to give us his take from halfway around the globe — “On one side, I was convinced some brands would move out as Baselworld has not demonstrated a strong will to evolve into the 21st century, become more digitalised and make it a real worldwide brand and event! The show today is very similar to the one twenty years ago! On top of that, many aspects of it are way too expensive and brands cannot support these costs anymore. Many efforts here must be done. Without Swatch Group brands, I believe others will follow.”

Well said, Julien. Pretty sure there are plenty who agree with him.

The LVMH boat, a short walk from the Hotel Kempinski beside Lake Geneva
The LVMH boat, a short walk from the Hotel Kempinski beside Lake Geneva
(From left) Luc Decroix, Vice President International Sales and Retail TAG Heuer, Ricardo Guadalupe, CEO of Hublot, mayor of the city of Geneva, Remy Pagani and Julien Tornare, CEO of Zenith on the opening night of Geneva Days 2018
(From left) Luc Decroix, Vice President International Sales and Retail TAG Heuer, Ricardo Guadalupe, CEO of Hublot, mayor of the city of Geneva, Remy Pagani and Julien Tornare, CEO of Zenith on the opening night of Geneva Days 2018

Right in the middle of Geneva is the Cité du Temps, the historical building on the Pont de la Machine straddling the lake, which the Swatch Group have occupied since 2006. In previous years, Swatch Group have captured some of the SIHH audience by hosting events and exhibitions at the Cité du Temps; however the Cité du Temps is unlikely to factor into Swatch Group’s post-Baselworld plans, since their lease is coming to an end and they are relinquishing the space to a new tenant in the coming year.

The city of Geneva is also said to be gathering strong support for its push to initiate an annual Watch Week — analogous to the high-visibility and commercially high-impact Fashion Weeks of Paris, Milan and New York. Purely from an infrastructure, logistics and expenditure standpoint, there are dozens of compelling reasons for brands to exhibit in Geneva.

Geneva, Switzerland
Geneva, Switzerland

In terms of cultural balance, however, the weight of an increasingly powerful Geneva focus will shift the centre of gravity in an already disproportionately Francophone industry. No other luxury industry is as geographically concentrated as the watch industry, and as delighted as I am at the possibility of things moving more towards the city I live in, I’ve always maintained that a diverse and balanced ecosystem is essential to long-term sustainability and appeal.

I’d love it if this ends up being the catalyst for a truly decentralised, global watch culture emphasising the importance and individualism of regional markets, but that’s about 50 steps beyond the present; I’m not Dr Strange and I haven’t got a Time Stone necklace, so I can only talk about what’s happening right now.

This discussion could go on for much longer, but I’ve sent out requests to various corners of the industry for comment and input, and we should probably get some of those in before this conversation gets any further down the road.

As my colleague Ken Kessler stated in a comment on our Instagram feed, “This is not to be taken lightly as the repercussions will affect the entire industry. When consumers see an industry behaving like this, they lose confidence in it. All parties concerned need to get their shit together.” Let’s make this a real conversation, guys.

I’ve written opinion pieces before and asked you all not to @ me, but I’m going to make an exception here. Chime in, @ us, send us an email. It’s summer and everyone’s on holiday. What else have we got to do?

 

Update: We’ve just heard from someone familiar with the terms signed between Baselworld and Les Ateliers for the 2019 fair. From what we understand of the agreement, the Hall 1 space vacated by the Swatch Group brands will be filled by the brands previously occupying the Les Ateliers area in Hall 1.1, under extremely favourable conditions. Could this be an indication that MCH Group (Baselworld organisers) are fully recognising the appeal and importance of the independent brands? Cynics will say that it’s a compensatory effort to placate remaining exhibitors, but I personally like the move. The question now is how certain Hall 1 brands (especially those located behind the space that Swatch Group once had) will react to their new neighbours.

Update: Maximilian Büsser, founder of MB&F, originator of the successful Palace concept in previous Baselworld editions and key brand in the Les Ateliers exhibitors’ space, has come back to us with his perspective as one of the brands continuing with Baselworld 2019: “It’s an extremely positive development for us exhibitors at Basel, because whether you have 500 or 600 exhibitors, the number of retailers and press are going to remain around the same. So as an exhibitor, you’d prefer to have fewer brands, right? You have more chance of spending quality time with the people you see. This year, with fewer exhibitors, journalists were telling me they’re less stressed, and retailers were saying the same thing — that it’s become much nicer than it used to be. If you talk about the future impact of this news, I don’t know what that’s going to be, of course, but as an exhibitor I have a positive outlook on this. We can see that the importance of the brands at Les Ateliers is being recognised more and more. Initially we were on the second floor, then the first floor, and now we’re going to be on the ground floor. I want to say to my friends from the brands who are currently exhibiting in the hotels around Baselworld, maybe this is the time to join us.”

I thought about asking Max if the withdrawal of Swatch Group might not actually lead to fewer fair attendees, but then I realised it was a stupid question with a one-word answer: Rolex.