Show You Luxury Houses For Great Timepieces
It is the first new collection of watches for men and women in more than a decade from La Montre Hermès, the luxury house’s watchmaking division, and the first to appear from its creative director, Philippe Delhotal, who joined the company from Patek Philippe in 2009, and it is considered the culmination of a long-term strategy to set up Hermès as a credible maker of mechanical Swiss watches.
But Hermès is not alone in its approach. A fraction of top-level luxury and jewelry brands — like Louis Vuitton, Chanel, Bulgari and Cartier — have been reinforcing their commitments to horology, despite this blaze of activity is at odds with the financial reality. For instance, at the end of 2014, Hermès Group reported an 11 percent sales increase, and growth in 13 of its 14 sectors. The 14th, watches, declined 11 percent.
“Let’s be honest, the watch industry was tough last year, but we know why,” said Mr. Delhotal, citing the Chinese government’s clampdown on corporate gifting and the decline in sales during Hong Kong’s democracy protests.
However he remains positive about a turnaround in watch sales overall and he stressed that Hermès’ transition to high-end watchmaking was still in its early stages. “The beginning of this year seems to being going well, and we hope that 2015 is the year that we recover,” he said. “We are convinced that the potential exists — and we have the trust of the Hermès family; they are helping us to achieve what we need to achieve.”
Since 2006, the company has spent time and money acquiring factories and component manufacturers in Switzerland’s watchmaking heartland, including the case manufacturer Joseph Erard, the dial factory Natéber and the movement manufacturer Vaucher Manufacture Fleurier, as well as establishing the strap atelier LMH Leather.
And in December, Hermès introduced a training program to help its staff members sell watches as the Slim, which will retail in three sizes and several choices of styles for 2,300 euros to 28,500 euros, or $2,574 to $31,895.
“This will help us sell more complicated watches, not just accessories watches. You can’t sell a watch like a Birkin bag,” Mr. Delhotal said. “It’s important for the customer to understand that the product that he sees and buys — whether a bag or a watch — is fully in-house to have confidence in the Hermès brand.”
As competition at the top end of watchmaking increases, Luca Solca, head of luxury goods research at the investment company Exane BNP Paribas, said investing in brand credibility is essential to growing and retaining market share.
“In commercial terms, investing in fine watchmaking brings nothing or close to nothing for these brands,” he said. “If you were focused on building bottom line results, you would go into the market the way, as Gucci for instance, and sell logoed watches at accessible price points.”
For these brands, he continued, “it’s about building brand equity, and through this you build a better opportunity to sell at aspirational luxury price points, which is the bread and butter of these luxury companies. It ultimately increases the quality perception of the brand.”
Mr. Solca acknowledges that, with time, it is possible to make inroads.
“Cartier is now one of the most important players in the watch space, and on the same level as watch brands as Rolex or Omega. There is no reason why in 20 or 30 years brands as Hermès, Tiffany or Bulgari, if they are developed in the right way, could potentially pose a similar threat,” he said. “But it takes a long-term commitment and consistency to establish yourself as a true specialist.”
Digital Luxury Group Intelligence, which tracks consumer interest by tallying online searches, has found that while interest in couture brands (including Bulgari, Cartier, Chanel, Chaumet, Chopard, Dior, Harry Winston, Hermès, Louis Vuitton, Piaget, Ralph Lauren, Tiffany and Van Cleef & Arpels) increased 4 percent from 2013 to 2014, that was significantly less than the 23 percent increase in searches for niche haute horlogerie brands (including Audemars Piguet, Franck Muller, Jaeger-LeCoultre, Patek Philippe and Vacheron Constantin).
“In the information age, luxury consumers are more and more looking for a genuine brand that provides a unique product,” said Jean Christophe Babin, who became chief executive at Bulgari in 2013 after 10 years at Tag Heuer. “It can’t be just about the look. You have to have expertise and the authenticity to back it up so that there is consistency with your history and DNA.”
Mr. Delhotal acknowledged that targeting a luxury customer creates its own challenges: “When you buy a Patek Philippe, it’s about the high watchmaking but when you buy a Hermès watch, you expect a watch that represents the aesthetics and métiers of the Hermès universe — and high watchmaking.
“In fact,” he concluded, “nowadays my job is twice as hard!”