New watches set to hit Australia

This year’s BaselWorld event was always going to be closely analysed, not only because of the state of the international watch market but also because it had big shoes to fill after a record attendance in 2013. Add the ever-increasing media speculation about smartwatches and you can see why the buzz at Basel was high.

Jacques J. Duchêne, president of the Exhibitors’ Committee, confirmed this: “We are extremely satisfied with this year’s BaselWorld. The exhibitors made a very good turnover and were positive about the media exposure that has aroused interest in the BaselWorld 2014 event, and it remains a must-attend show for the watch and jewellery industry.”



Francois Thiebaud, president of the Swiss Exhibitors Committee, announced that 2013 had not been a great year with the industry recording weaker sales than in previous years – Swiss watch exports rose only 1.9 per cent to CHF21.8 billion (AU$26.6 b) last year, considerably less than the 10.9 per cent increase in the previous period. The results were affected by declines in Hong Kong and China, both down 5.6 per cent and 12.5 per cent respectively.

Much of the blame for declining Chinese sales continues to be attributed to the Chinese Government’s crackdown on graft (political corruption) and the custom of giving expensive gifts that was once the norm; however, Thiebaud acknowledged that overall figures for the first two months of 2014 were more promising given that sales “touched CHF3.3 billion (AU$4 b), an increase of 6.8 per cent on the same period last year”.

BaselWorld (Messe Basel) has been restructuring its exhibition halls for some years and this concluded last year with the demolition of the remaining heritage entrance to Hall One. Its replacement is a fully-covered Messeplatz where trams bring in thousands of buyers, exhibitors and media.

As this major redevelopment was occurring, exhibitors were spurred, prodded and inveigled into replacing smart but ageing exhibition stands. Rolex led by example, constructing an exhibition pavilion about the size of a three-storey inner-city building with 40 offices, lounges and interview rooms.

Some might feel that such branded architectural fantasies had more to do with bragging rights than timepiece promotion. According to fair organiser MCH Swiss Exhibition, the largest stand covers 1,625 square metres, which is a stand size that must be seen to be believed.

When one considers that basic floor-space rental at BaselWorld is US$470 (AU$506) per square metre, such a stand size gives an understanding of the costs involved in exhibiting watches at the world’s premier event.

In 2013, Patek Philippe held back from this rush for faux gravitas to see what others would do. Now, one year later, the luminescent new Patek stand could be found in its usual premier position in Hall One but its ground floor area had increased by one third to 630 square metres at floor level, totalling some 1,500 square metres across three levels, accommodating 16 outward-facing showcases, a dozen sales rooms, several conference and meeting rooms, kitchens, a bar and a restaurant, as well as technical and storage space.
 

This year’s BaselWorld event was always going to be closely analysed, not only because of the state of the international watch market but also because it had big shoes to fill after a record attendance in 2013. Add the ever-increasing media speculation about smartwatches and you can see why the buzz at Basel was high.

Jacques J. Duchêne, president of the Exhibitors’ Committee, confirmed this: “We are extremely satisfied with this year’s BaselWorld. The exhibitors made a very good turnover and were positive about the media exposure that has aroused interest in the BaselWorld 2014 event, and it remains a must-attend show for the watch and jewellery industry.”



Francois Thiebaud, president of the Swiss Exhibitors Committee, announced that 2013 had not been a great year with the industry recording weaker sales than in previous years – Swiss watch exports rose only 1.9 per cent to CHF21.8 billion (AU$26.6 b) last year, considerably less than the 10.9 per cent increase in the previous period. The results were affected by declines in Hong Kong and China, both down 5.6 per cent and 12.5 per cent respectively.

Much of the blame for declining Chinese sales continues to be attributed to the Chinese Government’s crackdown on graft (political corruption) and the custom of giving expensive gifts that was once the norm; however, Thiebaud acknowledged that overall figures for the first two months of 2014 were more promising given that sales “touched CHF3.3 billion (AU$4 b), an increase of 6.8 per cent on the same period last year”.

BaselWorld (Messe Basel) has been restructuring its exhibition halls for some years and this concluded last year with the demolition of the remaining heritage entrance to Hall One. Its replacement is a fully-covered Messeplatz where trams bring in thousands of buyers, exhibitors and media.

As this major redevelopment was occurring, exhibitors were spurred, prodded and inveigled into replacing smart but ageing exhibition stands. Rolex led by example, constructing an exhibition pavilion about the size of a three-storey inner-city building with 40 offices, lounges and interview rooms.

Some might feel that such branded architectural fantasies had more to do with bragging rights than timepiece promotion. According to fair organiser MCH Swiss Exhibition, the largest stand covers 1,625 square metres, which is a stand size that must be seen to be believed.

When one considers that basic floor-space rental at BaselWorld is US$470 (AU$506) per square metre, such a stand size gives an understanding of the costs involved in exhibiting watches at the world’s premier event.

In 2013, Patek Philippe held back from this rush for faux gravitas to see what others would do. Now, one year later, the luminescent new Patek stand could be found in its usual premier position in Hall One but its ground floor area had increased by one third to 630 square metres at floor level, totalling some 1,500 square metres across three levels, accommodating 16 outward-facing showcases, a dozen sales rooms, several conference and meeting rooms, kitchens, a bar and a restaurant, as well as technical and storage space.
 

Visitors down on 2013

Nothing is done by half measures at BaselWorld and lower buyer numbers this year didn’t seem to faze the small contingent of Australian suppliers, with many reporting that the quality of the event was not compromised.

The fair organiser initially released post-event statistics showing that 150,000 people attended; however, that figure included all of the staff from around 1,500 exhibitors (across 40 countries) and some 4,000 media representatives.

Numbers can be deceptive. The 2013 event recorded 122,000 buyers, for example, but many exhibitors this year felt there was a drop in buyers visiting their stands even though numbers show 28,000 more visitors compared with 2013’s record attendance. The show’s organiser later confirmed that the number of 2014 buyers had actually dropped four per cent to 117,000.

It’s reasonable to assume that last year’s record numbers could be attributed to the show’s CHF430 million (AU$522.4 m) hall redevelopment.

Additionally, it has been reported that some smaller watch brands have not flourished in this past year but, overall, the industry continues its expansion. Comparative figures over five years to 2013 show some levelling but this would be expected following a re-stocking of the wholesale pipeline after the disruption of the 2008–2009 Global Financial Crisis (GFC).

Generally speaking, the GFC seems like a distant memory for buyers of the “high horology” brands. For example, in the last quarter of 2013, Richemont Group recorded an increased turnover of nine per cent. Swatch Group is also forecasting a double-digit rise in turnover for 2014. Swatch CEO Nick Hayek (junior) has been quoted saying, “Swatch should achieve CHF10 billion (AU$12 b) in sales in 2015 but, if foreign exchange rates remain as miserable as they are now, it could happen later.”
 

Smartwatches no cause for alarm

If you thought 2014 would be the year that the Swiss began to worry about the advent of smartwatches, think again. Even though Google announced its entry into the watch market (or wearable technology market) just a few weeks before BaselWorld, few people discussed the matter. Even less was said about the long-running Apple iWatch rumours. If the Swiss have any concern about a potential upheaval of their market, reminiscent of what the Japanese did in the 1970s, they aren’t saying so – at least not publically!

Hayek has indicated the opposite and says he has no concerns about the possible impact of smartwatches upon traditional watchmakers. Furthermore, he is treating smartwatches as an opportunity, rather than a threat: “The smartwatch is an opportunity for us. If people who never used to wear anything on their wrist start wearing a so-called smartwatch then we certainly can convince them quickly to try wearing a beautiful watch instead.”

Indeed, the big brands with high pricepoints are producing ever more complicated mechanicals and the continued rise of this luxury sector flies in the face of the dire predictions during the 1970s and 1980s that quartz would cause the demise of mechanical watches. Contrarily a whole new collectors market has developed, which has changed the fundamental direction of Swiss watch manufacturing.
 

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