Watch Stories

FT Business of Luxury Lisbon May 2017

Santiago Finance, Watch Stories November 24, 2017

Material World: Craftsmanship, Manufacture & the New Markets

How is the world of luxury evolving? This is a question the FT Business of Luxury Summit tries to answer every year and this year’s theme was “The Material World: Craftsmanship, Manufacturing and the New Markets”, taking place in Lisbon this past May. The themes covered at the conference are relevant in today’s luxury landscape, which is going through many changes that are reshaping the business models of its players. The effect of the internet as a new channel of communication and retail, the emergence of strong new markets and the change in consumer behavior were topics that all companies in the summit had to take into account for their manufacturing and marketing strategies in the immediate and long term future.

One of the problems the luxury market has to deal with is the use of the word ‘luxury’ itself. As Jonathan Anderson, creative director of his eponymous JW Anderson label, pointed out – “They sell luxury chips and luxury sausages in Tesco.” It has become a word so widely used it has lost its meaning and therefore has become the job of the brand to redefine it. Using storytelling and developing closer, emotional connections to your consumer is essential in communicating why a company’s product deserves to be considered a luxury product. This is one of the pillars of the business of luxury. Without a story it is hard to differentiate between high end goods and regular consumer goods.

Brands use different strategies to communicate their story. There are brands that concentrate on anticipating the fashion taste of the consumer or hiring the most creative talent to translate the spirit of the company to the buyer. An example has been the revitalization of Gucci by its Kering Group managing director, Jean Francois Palus, who in the last couple of years has become a trendsetter with the Gucci brand reaping the fruits of his labour. They have seen tremendous growth in sales this year, surpassing even YSL in the first half of the year. As Nicolas Ghesquiere, artistic director of Louis Vuitton women’s collection, said – “Every designer is dreaming to create something that will be so fashionable that it will last forever.”

To redefine luxury some brands concentrate on the artisanship of their products, which are often bespoke goods. By focusing on the artisanship of their products, brands add value to their merchandise by supporting the richness of their history. Cartier is an example of a brand whose story is rooted in their history and which plays an integral part of their mission. Cyrille Vigneron, CEO of Cartier, concentrates his efforts on explaining to the public that ‘Cartier is timeless’ and does not need to completely reinvent itself. Some of the world’s favorite pieces have been designed decades and even a century ago, like the Tank, which was designed over 100 years ago. He relies on the heritage of Cartier and the nature of the products as jewelry and watches are timeless pieces in themselves. Sonraj, the custodian of the finest Swiss watch brands in Pakistan and who partnered as sponsor at this years summit, is another example of a luxury brand that is ensuring they are meeting the needs of the luxury market. By creating their bespoke and limitless editions they are paving the way to prestige and success.

Axel Dumas, CEO of Hermés, also focuses on craftsmanship, the same way his predecessors did. Hermés, a family company, does not supply the market when it wishes, but supplies it when the artisan is finished making the product. And although its product has a much shorter life than Cartier´s, its business model includes a waiting period of months (and sometimes years) for a client that has ordered a Hermés bag, making the wait part of the experience, increasing appreciation for the product.

The culture and values in Hermés have not changed since its inception, and will stay the same, “craftsmanship combined with the finest materials to create beautiful products.” Hermés reinforces the culture by putting the artisan in the center of their story. Their craftsmen are in training for two years before they are allowed to make a bag. Axel Dumas does not forget the digital environment however, and uses it to create “a new narrative that can transform people’s opinions.” Their social media presence, through Instagram and facebook, is an important focus and they benefit greatly from fashion blogs and opinions on the web, constructing an image to support the story of their brand.

The internet and developments in the digital world have been a strong force and point of pressure in the market causing major changes in behavior and processes. Brands need to communicate digitally in an untraditional manner with a huge number of decentralized channels available. Blogs or influencers from facebook and instagram have taken on greater and greater significance and have become a marketing tool for those who have learnt to use it. Some digitalization of processes have allowed for certain traditional components of the chain to be eliminated. As Federico Marchetti, CEO of YOOX Net a Porter recounts, “when we started in the 90s, nobody really believed we could sell luxury goods online.” Today YOOX Net a Porter has been able to eliminate the brick and mortar store and has had a net revenue of €519 million in just the second quarter of this year. Marchetti believes luxury can be sold online and has been able to create a new channel for high end brands. As he explains, the new “shop” is constantly at the customer’s hand, it´s the phone they carry, without restrictions or limitations on what to buy, from groceries to even a watch for €130,000 (which they sold in May).

This digital shopping experience is contrasted to the opposite trend where customers are becoming more aware of the shortfalls that come with buying online. When it comes to luxury and high end products, such as watches or jewellery, there is an obvious benefit to shopping at the physical store, from negotiating discounts to vat and of course the personal experience of trying the product on. This is why we will continue to have new physical stores popping up around the world with tailored customer experiences. For Marchetti, he needs to, with technology, handle the “oxymoron of using the highest technology (including artificial intelligence to analyze the customer’s data) to give the most personalized service.” But YOOX Net a Porter does not eradicate the human touch, because they believe that “human nature is stronger than technology” and in order to create a more personal story it has a team of personal shoppers armed with the artificial intelligence data to give a personal service to its customers.

Whilst YOOX Net A Porter may have turned the luxury goods industry onto digital, companies such as Goop are going against the trend and are in fact turning to print. By extending their digital operation to the physical realm, Goop Wellness brand in collaboration with Conde Nast, are returning to the ‘luxury’ of print magazine. As glossy magazines turn to digital, there is a desire to return to the traditional, to a print magazine that is seen as something unique and appreciated. Goop magazine will be designed as a collectable edition, acknowledging the power and enjoyment of touch for
their customers.

Marcia Kilgore, founder of her new venture Beauty Pie, has created a concept for customers to buy their skincare and makeup at factory cost, cutting the traditional steps in the chain such as the marketing, distribution, extra warehousing and packaging costs. Kilgore believes she makes the market “fairer” for people, especially women, so they can afford good skin care at a more reasonable price. Her shop is online and the benefits of its pricing strategy targets Beauty Pie members, who shop at a fraction of the regular price by paying a monthly or yearly membership fee.

In manufacturing the evolution is ever-changing, with a particular focus on materials that are environmentally friendly and are made from sustainable components. As Miroslava Duma, founder of Fashion Tech Lab, explained – “We have a very real need to come up with ecological goods, especially since the fashion industry is the second largest waste contributor, after the oil industry, in the world.” Fashion Tech Lab is a point of union for the Fashion world to get in touch with Tech labs and financiers from around the world. Bentley is also trying to cater to those who want to have a smaller footprint. Design Director Stefan Sielaff spoke about creating the vegan Bentley, which uses laboratory made synthetic leather that feels like the highest quality hide.

Another key element of the luxury world is bespoke products. They include, as part of the enjoyment of their merchandise, a custom-made category. From diamond paint for a McLaren car to bespoke suits and dresses or to a uniquely designed jewelry piece. Custom made from a craftsman has become a key element in many of these products and part of the renewed definition of luxury. Asia was another recurring theme of the conference, as it is slowly becoming an ever-bigger portion of luxury sales. Brands are having to adapt to a whole new market with a different consumer culture that is constantly evolving. Adapting to the Asian taste and the concept they have of a luxury service has been part of the strategy of most major houses.

Because of these forces of change in the luxury market, there is always the possibility to make new alliances amongst players. Financiers, Francesco Trapani – former CEO of Bulgari and now Executive Vice President of Tages Holding; Luigi de Vecchi – Chairman, Corporate and Investment Banking in continental Europe for Citi and Daniel Piette – Chairman of First Founders, agreed that there are many opportunities in the market to merge companies. One of the biggest challenges however is how to give a tangible value to the internet and its effect on revenue. There is consolidation in the market due to the digital impact because it creates an instantaneous global presence but it is costly and fast moving and therefore the brands with the most available resources tend to be the ones benefiting most from
these advancements.

The developments and trends in the luxury market create new spaces whilst also destroying old spaces. Companies are able to either grow into these new areas or they find themselves contracting. It has been a very interesting summit with brands discussing the different ways luxury companies have seen their strategies adapt and react to these changes. Whether it is by communicating, delivering a new experience or by simply holding on to their core values that stand the test of time they all have had to work in the new world of luxury.

BASELWORLD

Santiago Watch Stories May 5, 2015

If you attend Baselworld you are signalling your position in the ever moving constellation of  haute jewellery. Around the excitement of seeing brilliant design, it’s the place to expand your social network and to form new business relationships.   

One of the venues that everybody agrees is a good place to be seen and heard is the elegant Hotel Les Trois Rois. Its two star Michelin restaurant is almost impossible to book during the fair, but if you can’t get in, try the cocktail bar.

At Basel this year, Hublot splashed out on its Big Bang collection: a move timed to coincide with the iconic watch’s 10th anniversary.

It was, of course, Jean-Claude Biver who presided over the launch of the first Big Bang. He loved to talk up the associations that were embedded within the name – pointing up the excitement of creating a watch whose existence was forged from many different metals and materials including: gold, ceramics, carbon, rubber, steel, titanium, tantalum and magnesium. Since then, the Big Bang has lived up to its promise of explosive impact, pushing frontiers in all sorts of extraordinary ways.

One milestone many recall, for instance, is the remarkable Big Bang Ferrari made out of what the company refers to as Magic Gold. The magical element being the fact that 25% of the material changes the composition of the gold to an astonishing hardness – up to 1000 Vickers from the normal 400.

The other consistent element is the long-standing association with the sports world in its infinite variety and glory. So far, for example, there have been over 10 Big Bangs dedicated to the Ferrari car and its drivers. And, as it happens, it is the electrifying associations of fast cars that the design team have decided to reference in their anniversary edition.

At the prestigious fair, Hublot unveiled two exclusive new models developed with Ferrari. The first, Big Bang Ferrari Black Ceramic, plays on Ferrari’s legendary red colour, while the second, the Big Bang Ferrari Grey Ceramic, pays tribute to the historic NART (North America Racing Team) livery.

The details, however, go a great deal deeper than this. First, the sporty design of the new Big Bang Ferrari models has a profiled aerodynamic dial. The movement, for its part, is fronted by a miniature replication of Ferrari’s distinctive grille: a blackened criss-cross mesh.

Other flourishes are in the tiny details. Ferrari’s prancing horse is found at 9’o clock; while opposite, at three ‘o’clock, the minute counter and date window display the colours of its shield. Meanwhile, the oscillating weight of both watches ape the racing car’s five-spoke wheels.

Last but not least there is a rush of strap and colour detail. Wearers, for example,  can opt for a leather strap that features a red or grey livery with the stripes seen on racing cars. In fact, in the end, they can have both. For it is equipped with the innovative “One click” attachment system inspired by car seat belts, making it easily interchangeable.

The new Big Bang Ferrari is available in two versions – black or grey ceramic – each numbering 250 pieces. They both have a 72-hour power reserve.

WOMEN

For a long time women were seen as second-class citizens in the watch world.

However, more and more companies have worked hard to dispel this perception in the past decade. In Hublot’s case, the true moment of enlightenment probably occurred with the release back in 2007 of Tutti Frutti. Clearly the idea was to put colour centre stage, enabling women to team their watches with their wardrobes.

Today, the perception of what women look for has changed, possibly matching the strides that women are making the world over. Certainly it seems that way.  Hublot’s new brand ambassador for women is Israeli born Bar Rafaeli.  In her first appearance on behalf of the brand, she wore the whimisical, all new black and silver Big Bang Broderie. Unveiled at SIHH in January, it was on of the star draws at Baselworld.

Ricardo Guadalupe A MAN OF OUR TIME

Santiago Watch Stories April 28, 2015
 Destiny

My fate was possibly sealed by the fact that I was born in one of the birthplaces of luxury watch making, Neuchâtel!

In all seriousness, it’s a universe that has fascinated me since I was a boy. Watches were part of my childhood as my father was head of manufacturing for automatic watches. My childhood dreams and ambitions became reality after Bulgari – which was a small enterprise at the time – took me on as their product manager.

Looking to the future

There are some values that I think bind one generation to another. In work terms, you have to be willing to test frontiers and boundaries. Be as creative, innovative and knowledgeable as you dare. Hublot attributes a great deal of its success to the use and combination of innovative materials. If something isn’t possible, yet, then my ambition is that we make it so.

Iconoclastic

Every brand and company has to stay alert to what is happening.

I’m lucky in this respect. I travel constantly and attend events around the world – which, in turn, keeps me up to date with the zeitgeist. Pretty well, wherever I go, I encounter people of all ages and cultural backgrounds who are steeped in the world of arts, fashion and sports

These encounters often lead to new relationships. A good example of this is the work we’ve done with Romero Britto, the neo-pop Brazilian artist. It was obvious that his experimental ideas fitted in with Hublot’s philosophy. We first asked him to design our packaging for our World Cup Brazil watches. Later, we suggested he paint a picture on the face of a limited series for this year’s Baselworld.

Similarly, it’s been extraordinary to collaborate with a personality like Lang Lang. You can’t but be amazed by his virtuosity. The way in which he used an ipad to play Nikolai Rimsky-Korsakov’s ‘Flight of the Bumblebee’,  as an encore,  was inspirational.

Hublot and philanthropy

Watches are an amalgamation of many separate parts. When they come together they have a new and special force. It’s the same with the interaction of our brand ambassadors with our watches and with the charities that we become involved in.

I’ve always been keen to lend our support to the charity, Water. I see water scarcity as one of the gravest threats facing humanity. One out of every nine people lack access to safe drinking water. To create the right environment for this collaboration we have paired up with Depeche, creating special editions for them to auction at celebrity auctions.

Our collaboration with Diego Maradona and the Child Hematology and Transplantology Institute also show the way in which Hublot loves to inject a little bit of playfulness into our philanthrophy. Our marketing team and the charity worked together to create a fun event in Moscow where Maradona and myself took it in turns to kick a ball at 10 pictures of footballs. Behind each ball was a specified sum of money. The total prize fund made up 1 million dollars, and all proceeds were transferred to the Institute. Around this time, we also launched  a limited edition in polished pink gold of “Big Bang Maradona 2”, at the Hublot Boutique in Tsum.

A third and last example I’d give of the wider values Hublot embodies – is our championing of charities that support the empowerment of women. We’ve been involved since 2007 with the Womanity Foundation (formerly the Smiling Children Foundation). They work with young girls in Afghanistan, Brazil, India, Israel, Morocco and the Palestinian Territories.

Hublot and start ups

In an interview I recently did with Forbes, I drew an analogy with the championship league. We’ve moved from the fourth to the first league in a very short time. In 2004 when I first arrived, Hublot had an annual revenue of 26 million CHE. In 2014 we made over 490 million and in 2015 we expect to exceed the 500 million mark.

A company has the same dynamics as a team. Creativity only happens if people feel free to express their opinions. I may not agree with all the opinions expressed, but voicing them is of critical importance, otherwise new ideas get stifled. On the other hand, everyone has to have the capacity to pull together when required.

My proudest moment…

I am particularly proud of the workmanship behind the UNICO (our in-house chronograph movement) and  the development of Magic Gold, the only scratch-resistant 18K gold. I’d also single out the launch of the Big Bang in 2005 and the celebrations that Hublot organised in 2014 around the FIFA World Cup.

Dress sense

At the moment, in my daily business life, I wear The Big Bang Unico which is the perfect fusion of the company’s skill in design and innovation. The UNICO chrono is unique in the industry with its column wheel  & dual horizontal coupling visible on the dial side. It is a 45 mm, which is a good size for men, and made of titanium which is extremely light and resistant to the shocks. I also love to wear the Big Bang Ferrari in Titanium. It is the perfect symbol of our collaboration with Ferrari.

Art of  fusion and our brand ambassadors

Our brand ambassadors are almost always already clients and friends of Hublot.

After this, when deciding whom to select, we follow our Art of Fusion philosophy – looking for personalities who mix tradition with modernity.

We also realised there was a terrific opportunity to associate ourselves with popular sports such as football and cricket. The passion people show for these sports is truly exciting and matches the enthusiasm that I see at Hublot every day.

You see this philosophy at work when we created a football watch. It’s much more than a timepiece that is beautiful and tells you the time. It also does something that is central to the football experience. When you use it during a match there’s the possibility of being in sync with the proceedings of the match at the same time.

For cricket we have made a special edition of Classic Fusion with uniquely shaped hands. This has hands on both counters shaped like cricket bats and organised key events around the competition in Australia.

New  frontiers and markets

There is a young generation of open-minded, trendsetters who through their love of what is new and different are creating a fertile market for new brands. This is why I love opening boutiques in emerging markets.

At present, Mexico continues to grow in double digits. It is a very sophisticated market in terms of watch culture. Brazilians are also very fashion conscious and seem to love what we stand for.

Looking eastwards, India is a future market for us. Even though we already have a presence there, the potential for growth is high.

With us, you know that you have the genuine article. We do not worry too much about the grey market because only official points-of sale can activate a Hublot watch, and once you bring a watch to another dealer, the watch will be designated as used and pre-owned.

Our warranty period begins as soon as the watch is activated. That way, we at Hublot can also see what sells well or not, and that helps with logistics and planning – there’s still an 18-month lead-in period.

We also have worked hard to make people feel part of the Hublot community. Our Hublot owners club is known as Hublotista and it is a communication platform for our clients to share views, opinions on products and get advices from Hublot.