In search of a new model
Are we looking at the end of a model, the model that has shaped the face of world watchmaking over the last two decades?
Given the plethora of factors conspiring to destroy or seriously compromise the foundations of this unique sector of economic activity, we’re tempted to say yes. It would be superfluous to expound upon the worrying state of the world, which is amply discussed elsewhere. All the CEOs we approached had the same things to say: stalled economy in China, fall of the ruble, bloodbath in the Middle East, Europe contending with a refugee crisis of biblical proportions, doubts over Schengen, possible Brexit, rise of nationalism and social inequality, terrorist threats, not to mention the prospect of seeing Trump as leader of the free world or, worse yet, the threat of a monumental environmental catastrophe that would lead to unimaginable geopolitical chaos and human tragedy.
Given the seriousness of these threats, it seems almost irrelevant to be worrying about the watch industry. And yet, as we have often repeated, watchmaking is not like a modular habitat on Mars, it does not exist in its own sterile bubble, and it can hold up a mirror to its time. It faces the same dangers, and it also has to respond to threats unique to its own milieu, which are calling its own models into question. Everything seems to be coming to a head: the rising tide of smartwatches is upsetting the established hierarchies and beginning to reconfigure the game board, particularly at the entry level and in the mid-range (although when we asked our CEOs, who represent the entire spectrum of watch products, they were almost unanimous in downplaying the danger). This rising tide that the latest statistics released by the FH appears to reflect comes at a time when retailers’ drawers are overflowing with unsold merchandise.
The market is saturated, and yet new brands are jumping into the fray every day. At the same time, serious cracks are appearing in the mono-brand boutique model. They are expensive – extremely expensive – and they are often empty (“Without jewellery, the mono-brand model is stupid,” Corum CEO Davide Traxler said bluntly to Le Temps). A return to the multi-brand model appears inevitable (Richemont is currently trying out a new multi-brand concept in China, under the name of Time Vallée, which is open to competition). There is no denying that the dizzying upward mobility of Swiss watchmaking was a way of responding to the growing chasm separating the mega-rich from a disintegrating middle class. But this ascent, combined with greater vertical integration of the means of production, is tearing holes in the historic fabric that underpins the pre-eminence of Swiss watchmaking. Many subcontractors have been hit hard. Quietly, but increasingly openly, jobs are being downsized. Euphoria seems in short supply. What will the watch industry look like in ten years’ time? There must be many people who wish they had a crystal ball. The encouraging figures announced by our Japanese friends, who are not afraid of combining fine mechanical horology with cutting-edge technology, may well provide part of the answer. A new model looks more necessary than ever.