When the Swiss watch industry went through a crisis in the 1970s and 80s, due to cheaper Asian quartz watches replacing high-end mechanical pieces, luxury watch brand Audemars Piguet was no exception to the calamity. Dwindling sales and shrinking revenues put the then century-old brand, through extremely choppy waters.
But then something unexpected happened. The brand known for its dressy perpetual calendars launched something entirely out of character: its first ‘everyday’ sports watch, and the first-ever luxury steel watch, the Royal Oak.
The watch, priced well above the competition, despite the absence of precious metals in the initial models, would become Piguet’s redeemer for years to come, remaining, even today, a best-seller of iconic stature, often worn by the world’s most prominent figures.
There are many brands in the industry today who could do with their own ‘Royal Oak’ moment to steer them through the current watch crunch. This year marks the third year of continuous decline in the export of Swiss watches, an occurrence believed to have taken place only during the Great Depression. Last year, exports fell by as much as 10 percent due to weakened activity in the industry’s largest markets, Hong Kong and the US, according to the Federation of the Swiss Watch Industry. Chinese sales have also decreased as a result of national clampdown on corruption, while Europe was affected by continued slow growth and, at various points, unease due to multiple terror attacks. To add insult to injury, the rise of the Swiss franc against most currencies made Swiss watches more expensive internationally.
The Richemont Group, which owns a number of high-end watch brands including Cartier, Vacheron Constantin and Baume & Mercier, was one of the firms to fall victim to tumbling sales, with the chairman revealing that sales of luxury watches dropped by 11 percent year-on-year.
Staying on track
Jasmine Audemars, granddaughter of Jules-Louis Audemars, co-founder of the Swiss watch house, claims Audemars Piguet has had a good two years. We meet the sprightly 76-year-old chairwoman of the firm’s board of directors in the brand’s redesigned boutique at The Dubai Mall.
“There was a slowdown for certain brands and it was really tough. Now, it seems that things are improving. [But] we at AP never had a problem. For us, 2015-2016 were two good years. The business is still growing and we are very happy. That’s what we want. We want the company to always be in very good health financially, because it’s one way to keep your independence,” she says.
While Audemars refuses to divulge financial information on the firm’s sales and revenues, chief executive François-Henry Bennahmias said last year the firm had stabilised the number of new products launched each year in order to deal with market challenges. Its current production stands at 40,000 watches a year.
The firm also repositioned its precious metal watches, such as its gold watches, to make them more affordable. Bennahmias stressed that part of the reason the company is keeping afloat is due to its smaller size and lack of shareholders, who would otherwise make decision-making more complex.
While the chief executive confirmed business is weak in Hong Kong due to Chinese customers looking elsewhere for competitive pricing, he said demand is still strong in the Middle East.
Old brand, new customers
Audemars agrees, stating the region is currently one of the brand’s most significant markets. “We have two main regions, which are Europe and Asia, and the Middle East is also very important. We have a lot of young clients here. You’d be amazed that there are very rich 25 and 30 year olds,” she says.
Clients in the Middle East are as sharp as they are young, according to the chairwoman, who argued customers in the region are today much better informed when it comes to watches. This, she says, is down largely to the internet and meetups, which are often facilitated by social media. “They go to watch events and forums where experts discuss watches and so on. So when they come to buy watches, they really know what they want,” she says.
The luxury watch brand, which rakes in over $900m in annual revenue, is also testing its women’s collections in the Middle East, where Audemars says female clients are growing, making up almost 30 percent of sales, up from 20 percent four years ago, with the number expected to rise further.
But in a struggling Swiss watch industry, the trick is to keep clients hooked on Audemars Piguet, with the added threat of smart watches increasing competition. And even for a 142-year-old brand, it is an aggressive industry. The president’s approach is to play on the company’s independent DNA, without steering too far away from it. “The people who buy our watches look for two things,” she says. “First the design. They want to have beautiful design and they also want to have a beautiful movement. For us, it is very important to have watches that are as beautiful outside as they are inside.”
But of course, the inside is where the magic really happens. “You cannot see the movement but it has to be as beautiful and hand finished,” says Audemars of what really sets the brand apart. “For people who buy watches high-end watches like AP, high end watches, that’s what they are looking for.”
Despite having had weathered recent storms well, Audemars is under no illusion that the future will be easy, admitting to the “challenges” that lie ahead. “We live in a very competitive world. So we really have to always be innovative. What we want to do is to innovate but always be true to our tradition,” she says.
Is another ‘Royal Oak’ in the works for Audemars Piguet, then? Only time will tell. But given the firm has managed to remain one of the world’s most respected luxury brands, with an estimated value of at least a billion dollars, one could argue it might not really need one.
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