Audemars Piguet CEO François-Henry Bennahmias on luxury and loyalty.

In turbulent times for the luxury industry, one watchmaker doesn't seem bothered. Audemars Piguet has seen steady growth where other brands have slowed, and its CEO, François-Henry Bennahmias, says it's all down to loyalty
Audemars Piguet CEO François-Henry Bennahmias on luxury and loyalty.
By Thomas Shambler
Mon 16 Jan 2017 09:05 AM

There wasn't much good news from the watch industry last year. How did Audemars Piguet fair?

It ended up being an excellent year for us. I think our independence as a watchmaker allowed us to do things that other watch brands could not do. That not only insulated us from the market but enabled us to succeed where others failed. We can act quickly. We monitor every single sale, in every single country, every single day.

We make mistakes; we are far from being a perfect company, but compared to many others what we are doing is obviously better. Which is why we are showing growth - this will be our fourth year in a row where we have done better than the last. While I don't like being in this 'crisis mode' as it were, but when you work through a crisis you need to be excellent at what you do to weather the storm better than someone else. You see what companies are good and which aren't in times like this.

What is the biggest problem currently facing the watch industry?

Over exposure. There are too many retailers selling supposedly 'high end' watches. Look at three star Michelin restaurants around the world - there are less than 150. If you compare that to the watch world, there are 'apparently' a thousand watch brands that all put themselves in the highest category of watchmaking. There are too many.

On top of that, the quality of the experience delivered to the end consumer by those retailers is very average. At Audemars Piguet, we put a lot of effort into training our staff, making sure they understand the brand but also how to talk to people. Understanding someone starts with learning how to say hello sometimes, it's as simple as that.

A couple of years ago brands did one or two things. They concentrated on what they do best, or they widened their ranges to attract a larger market share. Which way did Audemars Piguet go?

The only thing that we have ever done regarding price adjustment for our watches was to reduce the price on gold watches. This wasn't in reaction to the crisis, because when we did it, the crisis hadn't even started yet. There are some brands I have seen who have taken their entry level watches and reduced prices by thirty to forty percent. I think that's a huge mistake.

You are not going to increase revenue because the average price goes down - so you have to increase your volume just to break even. And what sort of message does your brand send to the guy who bought the same watch last year for twice as much? Real luxury brands must stay at a certain level.

What are your top markets at the moment?

The United States, Hong Kong and Switzerland. In that order.

When talking about the instability in the watch market, people point to decreasing sales in both Hong Kong and China as what started it all. But it's still your second biggest market. How can that be?

We took a small hit in that region, but only five or six percent. We sell most of our watches to residents of Hong Kong. Unlike some of the other brands, we don't market significantly to Chinese tourists coming into the country to buy luxury goods. So when the storm came, dodged most of it.

And the US remains a strong market for you?

We have been very successful in the US; it has been our number one market for the last ten years. And you can't buy that in that market via advertising or gimmicks; you really need to build it one store at a time. So we did.

This strategy is exactly what we did in Latin America, which many brands continue to treat as a sort of third world market. But in reality, there are many impressive collectors in that region, a lot of knowledge about watchmaking, and it has widely been ignored by many brands. We have been working in that area for the past twenty years, working hard to promote the brand.

Where does the Middle East fit into all that?

It's getting better and bigger - which is surprising, given what we read every day about oil and the economy. Our growth here in the Middle East just this year has been a huge double digit. Huge.

Why do you think that is?

If you find out what it is, then do let me know. Because I sure don't. Seriously, though, it comes down to three main reasons. One, we have an excellent relationship with all our retailers. Two, we remodelled all our stores so that our customers could get to know the new Audemars Piguet. And thirdly, we saw a massive increase in sales in women's watches - they were selling like there's no tomorrow. I don't know why or how, but I can tell you that in the Middle East we are at a 50/50 split between selling men and women's watches. The average worldwide is 70/30.

Your watches can't be manufactured overnight. If you spot a particular trend - or a particular type of watch starts to sell out - it's not like you can order a few hundred more to arrive at the store next week...

Even if we could necessarily do that, and wanted to increase production of ladies watches, for example, then we would decrease the number of men's watches we produced that year. Our overall production of watches will stay at 40,000 per year. No matter what.

There are two concepts somewhat at war with each other when it comes to watches. The first is that a watch is timeless, it doesn't age, it can be handed down to your grandchildren. However, the second is that the watch industry ultimately falls prey to the laws of business - you must create new watches every year, you must attract customers. For a brand that makes iconic timepieces, how do you resolve both those concepts?

For us, that's not exactly correct. First, it's true the watches we make are timeless. We regularly restore watches from the 19th century so, in theory, the watch never dies. However, we see more and more repeat clients. It's not unusual for me to meet collectors with 25 or 30 of our watches. Even the notion of ownership is changing. Maybe 30 years ago someone would buy one watch for their entire life. Now, people want to change their watch every few years. Everything is evolving very fast, and we have had to adapt.

That sort of brand loyalty is very hard to come by. What are you doing differently from other brands to create that kind of dedication to Audemars Piguet?

It's simple, everything we say about the brand is true. Some brands like to say their company has been going since the 1700s, for example, but in reality, it was sold and re-launched with the same name two years ago. Then they say they have been going for 300 years. People don't accept that anymore.

We also value talking to our customers, not just when they are buying a watch, but every single day. It's that sort of dedication from us to our customers; that gets them talking. That makes them tell their friends about us. We have dinners, trips and events all over the world - and the goal isn't to sell watches. It is to bring our customers together and get to know them better. That inspires loyalty.

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