In Case You Missed It - The Heritage Small Second 1938 COSC

From Tissot -

Courtesy of Tissot

Back at the turn of the century, I was, well, a younger man living and working in San Francisco. Although obsessed by watches, financially speaking I was not exactly in the Rolex demographic. Yes, I had walking around money, but let's just say I was only going a few blocks ; ) 

Over a three year period I acquired three different Tissot Heritage pieces that bore names connected to Portugal, where Wendy and I had lived for one year back in the 90s. The Lisboa, the Porto, and the (de) Janeiro. And they were quite nice. Situations evolved, desires changed, fortunes won and lost, you get the idea. 

But I keep coming back to the Tissot Heritage pieces as many of them offer a wonderful watch with a COSC certificate at a price that won't wipe out your "pin" money.

Courtesy of Tissot

And the Heritage Small Second 1938 COSC truly ticks all of the boxes. It is Goldilocks sized (just right) at 39 mm. The dial is clear and legible, and for once the date window wasn't squibbed by trying to have it, and the number 3 occupy the same space.

And the price is approachable at $1,095 (at least here in the lower 48).

Here are the pertinents, straight from the folks in Le Locle -

Technical specificities

• The Tissot Heritage 1938 pays tribute to Tissot's history. The 39 mm stainless steel case adds elegance and finesse. The vintage-inspired dial reinforces the watch's timeless aesthetic.

• SKU

  T1424281108200

  Collection

  Classic Traditional

  Weight (g)

  109.00

  Warranty

  3 Years of Warranty

  Country of manufacture

  Switzerland
• Length

  39.00

  Width

  39.00

  Thickness

  9.82

  Lugs

  20.00

  Water resistance

  Water-resistant up to a pressure of 5 bar (50 m / 165 ft)

  Case shape

  Round

  Case Material

  316L stainless steel case

  Case options

  See-through caseback

  Crystal

  Domed scratch-resistant sapphire crystal
• Energy

  Automatic

  Movement

  Swiss automatic

  Power reserve

  Power reserve of 42 hours

  Caliber

  11 1/2'''

  Diameter (mm)

  25,6

  COSC

  Yes
• Dial color

  Grey

  Indexes

  Arabic
• Strap/Chain reference

  T605049903

  Strap details

  Stainless steel

  Strap color

  Grey

  Buckle

  Jewellery clasp with safety, Standard buckle, Interchangeable quick release bracelet

  Buckle options

  Interchangeable quick release bracelet

Downsizing - Change Is Inevitable

Now it is not news at this point, SWATCH Group has made the difficult decision to permanently shutter several of its retail stores, and 2,400 jobs are now forfeit. More detail on this can be found in this Bloomberg article -
Swatch Cuts 2,400 Jobs as Watchmaker Trims Store Network

SWATCH Group is many things, and more than anything else, at this moment in time they are the canary in the coal mine of the watch industry as a whole. To put it simply, if SWATCH is hurting, how is everyone else doing? Well, the simple answer is that some brands are (at least by most accounts) doing okay - i.e. Rolex and Patek. But other brands (and sorry SWATCH, some of your babies are in this group) are suffering now from a lack of vision. 

And what do I mean by that? 
Back at the turn of the century, everyone was convinced that Hayek the Elder was the smartest man in Watch Town and (for the most part) incapable of error. And there were some very sharp ideas, and let's be honest, some that could have been better handled. And as it applies to the actions now being taken to close company owned stores, it underscores what had been a long simmering concern with the push to not only "control the means of production" but also to try and control the means of consumption. The amount of grey market products sloshing around doesn't exactly help. The move to exclusive boutiques was maybe (maybe) not the best advised. Here in Boston-Metro we have two pretty glaring errors, the Omega boutique in that (insert sarcasm here) highly visited Boston neighborhood - Natick! For those of you unfamiliar, Natick is actually a different town (yes, designated a town, not a city), in a completely different county, more than 20 miles away from Boston (depending on which route you drive, because... no convenient form of public transit goes from there to Boston unless taking two buses and walking just under a mile is convenient). Ironically, there was, and still is a lot of good retail opportunity in downtown Boston. 

And then there was the SWATCH boutique at Boston's Logan airport. Now logic would tell you that airports are natural choices. But... it was in the International Terminal, and another little factoid about flights in and out of Logan for the uninitiated?  A lot of international flights DO NOT leave from the International Terminal. Strange but true!

Curious to relate? There is a thriving (albeit, pre-COVID) retail neighborhood on Newbury Street, and a boatload of space in the Prudential Center as well as the adjoining Copley Place shopping center. My best sense of these two decisions is that they were taken by people who really did not understand Boston, and really did not put in much effort to do so.

And let's now connect the dots - the majority of watch retail is (for the foreseeable future) going to be online. Now also curious to relate - I can buy an Omega watch online from Omega, and I can buy a SWATCH directly from them. Come to think of it, I can buy a:
Tissot
Hamilton
RADO
but not a Mido, not a Longines... and both of those brands are priced more affordably than Omega. Why not join the 21st century?

SWATCH Group, it is time to pivot. 

How The Statue of Liberty Play Could Save BaselWorld

Now for readers not familiar with American (i.e. not Association or Rugby or Australian) Football, take a quick moment to view the clip below before moving forward -


For those of you who want even more detail -
https://en.wikipedia.org/wiki/Statue_of_Liberty_play

In soccer (Association Football) you would probably compare it with the Cruyff Turn -

And for those of you unfamiliar wanting more background -
https://en.wikipedia.org/wiki/Cruyff_Turn

Essentially, it is a sleight of hand or misdirection to create an opportunity when your opponent is looking the other way.

So what do trick plays in sports have to do with what was the world's most important watch show?

Well, imagine if you will, a world where MCH (i.e. BaselWorld) realized that desperate times would require desperate measures.  And then, imagine, if you will, a group that has not been as successful in recent times as it had in the past.  A group that would say jump, and other groups, brands, retailers and pretty much every journalist in the world would ask - "How high?" that now is isolated and on its own.  Switzerland is a pretty large Monopoly board, and even though logic would lead you to believe that the natural choice would be to head to Geneva, the reality is that Hall 1 could sufficiently host SWATCH and all of the other independent brands that have now been left behind. 

This would, of course, be the ultimate Statue of Liberty play.  It would require MCH to reach out to SWATCH and offer a true partnership.  Now the obvious argument would be that without Patek, Rolex, and LVMH there is nothing left in the fair.  Well, maybe yes and maybe no.  Consider other groups (Festina, Movado) who left the fair in the past, that if the environment was a bit more inviting, and the associated fees more realistic, they might consider coming back.  I have gone to a LOT of BaselWorld fairs.  There have been a LOT of brands that have been in and out and in the fair again.  A fair with just the folks left behind is not going to attract much of anyone, particularly if BaselWorld sticks to the proposed dates of January/February.  

But, what if Hayek the younger has been sitting in Biel, quietly calculating just such a move? Stranger things have happened.  And in truth?  We passed strange globally about 6 weeks ago.

I realize it's a wild, hare-brained theory, but what if?

February's Numbers

The export numbers are in for February, and if I am honest they are better than I thought they would be, but also indicate that things are heading south.  

Courtesy of the FH

Overall exports are down by 8.7%.  Keep in mind, as always, that a watch exported is not a watch sold.  Curious to relate, a lot of watches went out to the US, which if reports are to be believed saw an increase of 17.8%.  I'm calling bullshit on that one.  Yes, the number of watches leaving Swiss Cantons bound for a recipient in the US may indeed be 17.8%.  In reality?  A great majority are heading, ultimately, for trans-shipment to the grey market.

You see, some things are going to start happening pretty quickly.  Those of you who might occasionally purchase the odd bottle of wine will be pleased to know that there are some amazingly good deals to be had.  Why?  Pretty simple, with things on lock-down, companies are sitting on stock, with fewer customers and people getting nervous about spending money?  Let's just say that  if you thought the grey market was offering some staggeringly good deals in the past?  Brace yourself, there are about to be some stunningly good deals.  How good that is for the health of the watch industry is, of course, a separate conversation.

So let's see what happens.

Be well -

Repeat - Yogi Berra on Brand Management

I originally came out with this just over three years ago.  At that time I was in Malmo, Sweden for the launch of Kronaby.  After a fairly successful launch, followed by a strong BaselWorld 17, and  a BaselWorld 18 that was off the chain (the booth was jam-packed and I saw someone in front of the booth with with a can of grease and a crowbar trying to get more people in), shortly prior to BaselWorld 2019, word leaked out that Kronaby was, in fact, toast.  Now it's funny looking back, because at the time I was somehow thinking that maybe the folks at Kronaby (and let's say that's the four shot-callers and a few key employees that, in hindsight, never should have been anywhere near a watch brand), might be approaching things differently.  Shortly after launch, it began to become clear that, in fact, that was not the case.  Just prior to their first full-on BaselWorld (I'm talking about a week prior) the brain trust in the marketing department thought it made sense to cancel a large chunk of media appointments that had already been booked.  The result, a lot of press took that particular fuck-you at face value and not only didn't bother to re-schedule, but wrote Kronaby out of their collective consciousness.  Ironically, that BaselWorld found all four of the shot-callers hanging out in front of their booth, not unlike used car salesmen prowling the lot, looking for a possible mark.  Curious to relate, the next year was quite good, with people literally spilling out of the booth!  So what happened?  Well, a few things and some that parallel another fairly spectacular fall from grace, Klokers.  And if and when I am asked to deliver a Ted Talk I will endeavor to boil it down to ten minutes or so ; )

But for now, it seems like a good time to re-heat this one!

Yogi Berra on Brand Management

A late night (in Malmo) Face Time call came in waking me from a peaceful slumber.  Clearly I need to figure out some sort of "out of office" message for that when I am out of the country ; )

Worrying that it could be Wendy and there might be something important, I picked up.  At first, relief as it was not Wendy but a fairly senior fellow who works for a company in Switzerland that produces, markets and sells watches.  We had not spoken in 11 months and he was unaware that I had moved to Salem, MA and was no longer in California (and clearly he did not know I was in Sweden).  This turned into the semi-annual call where X (no names, so don't ask!) was on his latest talent hunt.  It generally starts out with some pleasantries:

X:  "How's Mary?"
Me: "Who is Mary?"
X:  "Your wife!"
Me:  "Well, that's news to me as I've been calling her Wendy since 1992."

So let's just say that X's memory is not razor-sharp, and therefore it is safe to say, he's not so good on every detail ; )

X:  "We're looking for a brand manager for  (no names).  Any suggestions?"
Me:  "What happened to (no names)?  You were so sure they were perfect."
X:  "Well, it turns out that (no names) was not a good manager."

And then X split open like an over-stuffed piñata.  And out it flowed.  X shared all of the problems and I listened.  And to quote that other great commentator on the luxury industry, Yogi Berra:

It's like deja-vu, all over again.
Read more at: https://www.brainyquote.com/quotes/authors/y/yogi_berra.html

"It's like de-javu, all over again."

You see, X and I have a very similar conversation approximately every 18 months.  It is not always exactly the same date, but generally tends to fall between the close of the year and JCK.
And every 18 months I tend to ask the same thing:
"Why do you keep hiring the same type of person and expect different results?"
Long time readers will know that Moneyball is my default reference, and I even gave a copy to X as a gift a year or so back.  I don't think he ever read it and it's pages were probably used to start a fire in his swanky ski chalet.  So I thought I would dumb it down in the hopes that he might get it this time.  So without further delay, here's some hiring advice from Yogi Berra himself -

"We made too many wrong mistakes"
As an English teacher, I realize that this sentence makes no sense.  But look a little deeper and you will find a kernel of wisdom.  Essentially it reminds me of the anxiety and fear of looking foolish that compels recruiters, hiring managers and even CEOs to go with the same type of candidate again and again.  Simply put, the belief when hiring a brand manager in North America (I honestly can't speak to the other countries) is that they (usually he) must be a sales person.  Now, in and of itself this is good because, you know, you need to sell watches.  But there are several other elements that oftentimes get overlooked:
Management/coaching/mentoring.  Sales is, by its very nature, a fairly solitary pursuit.  While sales people get managed, it is very seldom that they have been called upon to manage the diverse group of personalities that typically make up a brand's office.
PR/Marketing/Media.  Again, frequently a lack of understanding of ROI vs. money actually spent.  If brand managers had a better understanding of this, then certain magazines and "influencers" would probably stop attending BaselWorld as the gravy train would clearly be shut down.  In addition, certain brands would not be the watch world equivalent of "Christmas/Easters" (i.e. people who only go to church two days a year).  Some of us call them Basel/Vegas.  You will only hear from these folks just prior to these two events.
Customer Service. Again, dealing with angry customers is an alien experience for a lot of these folks.

There are some people who, if they don't already know, you can't tell 'em.
Simply put, X, and plenty of other shot-callers in the industry just can't bring themselves to believe that there might be a different way to approach things.  As a friend of mine who works behind the scenes as a very in-demand consultant in Switzerland put it -
"these guys at Richemont, Swatch, and a lot of the others?  They're like trains running on the tracks.  They only move one way, and that's because the 'station master' (i.e. senior management) is following the same schedule they always have.  Which works great in normal times, but quite differently in a heavy snow storm".  And that snow storm started a few years ago and is still screwing up traffic ; )  Perhaps it is time to invest in an alternative "vehicle"?
Now X will probably go out and hire another big group loyalist who is expecting a base salary of 6 figures, business class travel, and a very deep marketing budget.

X:  "But they worked for Cartier for 20 years!"
Me: "So they are still with Cartier?"
X:  "No, but they were there from 92 - 2012."
Me: "So, essentially you are telling me that they have not worked for 4 - 5 years?"

At the risk of sounding mean, there is usually a reason why these people are available.

Nobody goes there anymore.  It's too crowded.
At the risk of sounding crass, X has a boner for big name, fancy retail partners.  The logic being that If you are in "so and so's" store in Las Vegas, LA or New York you will have made it big.  Sounds good, but the realities are something very, very different.  Those stores will most likely be MEMO. (Our old friend of the watch retailer meaning the brand provides the watches and waits for them to sell, and then maybe the retail partner will pay for them.  Then again, maybe not.)  So essentially the brand is acting as the bank, as well as the "supplier".  And if you think that is the only expense, consider the travel to visit the retail partner to do the safe count, the money that will be demanded for co-op advertising, the POS collateral materials that the retailer needs.  In other words, a shit-ton of money that the brand will be putting out there without any confirmed sale in sight.  And once the brand is in the store, they are fighting for case space, because frankly there are just too many brands.

So my strong advice for X after a few hours of sleep is this -
If you come to a fork in the road, take it. 
This is a perfect opportunity to consider a different approach.  There are plenty of talented people (some of them are even female) who despite not being solo artist salesmen might have exactly the talents and more importantly, the temperament to steer the Good Ship Watch Brand through the stormy seas of North America.

Or, you can go ahead do the same thing again, hoping for a different outcome -
Even Napoleon had his Watergate.

There are some people who, if they don't already know, you can't tell 'em.
Read more at: https://www.brainyquote.com/quotes/authors/y/yogi_berra_2.html

It's like deja-vu, all over again.
Read more at: https://www.brainyquote.com/quotes/authors/y/yogi_berra.html

It's like deja-vu, all over again.
Read more at: https://www.brainyquote.com/quotes/authors/y/yogi_berra.html

Watch Assemblers - Some Inside Baseball

This is a topic that has been touched on here before, but it seemed worth airing out again in light of an article I just read on a popular retail-cum media outlet regarding the ongoing ETA saga. The article pointed to statements that Hayek the Elder made prior to the launch of ETA's one-way express trip to crazy town. His statement was, essentially, that any asshole could go to a white label company and create their own watch, and by golly, that was WRONG! He referenced a conversation he had with a fashion house who approached him to make a watch for them, and he pulled an Enzo Ferrari on him, essentially telling him to stick to making tractors (or, in this case, suits). Now history will note that the Zegna watch was realized with the assistance of Girard-Perregaux/Sowind, and it fared about as well as could be expected - not very. But I would also remind you, gentle reader, that this bluster came from the fellow who brought us the SWATCH phone, sunglasses, and...

Who could forget that unforgettable fragrance -


                                                                     Courtesy of Omega

Yes, you too can smell just like a Co-Axial escapement! So it would seem that a call is overdue from the kettle to the pot regarding its hue.

While it's easy to look down your nose at someone and tell them to "stick to their lane", it is a bit ironic coming from the man who had his finger in so many pies ; )

It bears mentioning that A LOT of the brands you see out there are using white label companies to assemble their watches. Some quite old and literally dripping in hyperbolic watchmaking lore. So, does this mean that those are no longer real brands?

Now for me looking back? Hayek the senior's hyperbolic characterization about the gall that some brands had in calling themselves, well, brands was a little disingenuous. When we talk about the world of modern (meaning in the last 20 years) watch production, marketing and sales, private label assemblers are responsible for a much larger percentage of the Swiss watch industry than you might think. And I will pick my childhood favorite (and red-headed stepchild of the SWATCH group) Mido as a case in point.

A little over four years ago I found myself in Switzerland on other business and I managed to arrange a visit to Mido HQ in Le Locle. Now curious to relate, the HQ occupied less than a full floor of an administration building that was (at least at that time) shared with Tissot. I had asked if it was possible to visit the factory to see Mido assembly in action, and I received a fairly evasive response that essentially made it clear that for whatever reason, this would not be possible. When I asked where the assembly took place, this again was not anything that anyone was anxious or willing to share with me. Ever wonder why the factory pictures you see for some of the SWATCH brands are all "old timey"? Ever wonder why you don't see other heroic journalists visiting brand production sites other than Omega, Blancpain, and Breguet? Ever see leading horological luminaries of the Fourth and Fifth Estate visiting and reporting on the production facilities of some of the smaller, more affordable, less sexy brands in the SWATCH stable?

Yeah, not so much.

A reasonable assumption would be that the SWATCH group relies on a large internal facility or facilities to assemble these more mass market watches for several of the group's brands. In essence, a private label - private label.  We would all agree that these are real brands, would we not? And for the record, if I am way off base and there is a shiny (or even not-so-shiny) Mido or Certina factory churning out watches in the Alpine hinterlands? Well, I will sit in the corner and wear a funny hat.

But taken with Hayek Senior's hardline stance on what made a brand legitimate?

Well...

Created for Macy's!

Okay, grab a cup of coffee, we're going to hop in the Way-Back Machine.

Back at the turn of the century, Wendy and I moved back to the US after several years abroad - just shy of a decade in fact, and in fairness it was almost like moving to a foreign country.  I spoke the language and I understood the currency, but things in the US had moved and evolved so quickly that I was frequently left scratching my head, not unlike Rip Van Winkle after a long nap.

We lived in the heart of San Francisco, right downtown, within walking distance of one of the largest Macy's I had ever seen.  And in the basement of the main store was a fairly sprawling jewelry department.  Now just as today, lots of necklaces, rings and earrings.  And there were Invictas, Seikos, Raymond Weil and Movado.  And in fairness, those are brands that even today you would reasonably expect to find there.  Now that is not merely due to the price.  At that time, Macy's had a fair amount of high end, luxury brands in pretty much every department.  You could also buy Tissot, Omega, and if I am not mistaken, Longines.  Not to mention that "all American" brand - Hamilton...

And then?  Well, things changed.  SWATCH group essentially made it clear that most of their watches were clearly of a higher level and would not be sold in locations such as, you guessed it, Macy's!  It wasn't a sudden change, but it was something noticeable if you were paying attention.
Now in fairness to the current shot-callers throughout the fleet at SWATCH Group, this was never said explicitly.  It was, however, made known to many of us in conversations with sales reps and others within the inner sanctums.

And in fairness?  This made sense.  I mean, after all, Elegance is an attitude, right?  It's hard to be elegant when your "timepieces" are jammed in a cabinet next to some off-brand watch, with the overwhelming presence of the latest Coco Channel spin-off fragrance wafting through the air mingled with the piquant aroma's emanating from Wolfgang Puck's cafe down the hall in the food court ; )

Long story short, it was a marked sea-change and it was consistent with SWATCH group's belief that the idea of containing every element of the watch buying (and selling) process was the answer.  Remember Hour Passion?  Yeah, most of the US doesn't either.  But I you are shopping for discontinued fashions at the Richmond Outlet Mall in Vancouver, BC Canada? You're in luck!  Needless to say, here in the lower 48 it became clear pretty quickly that we prefer peanut butter to Nutella.  The higher end group boutique, Tourbillon, appears to be soldiering on in Miami, Las Vegas, San Francisco and wait for it... Seattle.  No don't get me wrong, I love Seattle.  But I don't know if this is where you're going to catch the number of customers needed to move the needle.

So, following the departure?  Well, then the retail bubble burst, grey market sales soared (and don't show many signs of slowing down), and the jewelers who used to proudly sell many of these brands (in fairness, I don't think we can really count Mido in this group as it still does not seem to be taking off here in the US), either went out of business, got their doors closed, or got so tired of getting the fuzzy end of the lollipop that they decided to cut-bait rather than fish.

And then, suddenly, Macy's (and no doubt there will be other brands out there to jump on this, and also other department stores to partner with them) is proudly heralding, wait for it, EXCLUSIVE LIMITED EDITIONS!

Tissot, Longines, Rado, Tag Heuer and yes, MIGHTY MIDO!  Each brand, unless I have read the announcement from Macy's, offers at least one model that is "Created for Macy's".

Okay, but let's get down to brass tacks - essentially this means that there is a clear strategy shift.  Macy's has a large reach, and I say this with no disrespect, but I don't think you're going to be able to have an informed conversation with the person at the jewelry counter to discuss your frustration that your COSC timepiece is not keeping chronometer-level time.

When you have to walk halfway across the men's department to buy a pair of Ralph Lauren trousers, how likely do you think the person trying to sell you this "super-limited-made for Macy's" watch is going to be readily available to help you with your purchase?

What this tells us is simple, sales are down and not showing much sign of getting better.  And the brands are getting nervous, and rolling the dice on just about anything that will staunch the flow of red ink.  

Or to once again quote that other authority on the luxury business:

"Things are going to get a lot worse before they get worse".

Deja Vu All Over Again

Am I the only one who remembers the 70s and 80s?  

With the latest results from the FH, I am more and more convinced that maybe myself and a handful of other people are the only ones who do.  Right now according to the FH and some of the reporting from some very fine (sincerely) and respected writers in the industry it would be easy to keep sipping the Kool Aid and assume that everything is fine.

Shamelessly borrowed from the world-wide info web

Sometimes it is easy to go for and accept the simple answer without really looking in depth at what is hiding just below the surface.  So allow me to yank this particular band aid off.

To quote that other great commentator on the watch industry, Lily Tomlin -

Things are going to get a lot worse before they get worse

FACT 1 - Exports do not equal sell through.
Anecdotal evidence from several sources that I tend to put a lot of faith in report that the sell-through in Hong Kong has plunged in some stores by 80% over the past 8 weeks. Now the easy argument would be that this is the reason for the downturn in exports. But if you look at the graph from the FH over the past YEAR, you will note that the export numbers have consistently been trending DEEP SOUTH. That's right pals and gals, long before the protests started in Hong Kong. Now recent events have firmly planted the accelerator to the floor. So sorry great watch authority from Outlet X, you're not looking at the whole picture.

This is real boys and girls, and it will have a massive impact on future shipments over the next 6 to 12 months.
FACT 2 - The fewer watches you manufacture, the fewer you can sell (whether through authorized outlets or our old friend the grey market).
Based on the Swiss Federal Institute of Statistics and the Swiss Watch Federation the Swiss Watch Industry exported in 2014 28,582,190 MILLION watches. Now add to this quantity what was sold in the Swiss domestic market (which is estimated to 1.4 Million) and we're at around 30 million. 

Now for the Pepsi Challenge -

Shamelessly borrowed from the world-wide info web

Let's compare this to the current reporting of the Swiss Watch Federation. We are projecting to be slightly over 1/3 less in terms of manufacturing. 
Now, before you assemble a care package for your favorite CEO who treats you to that tasting menu each year during your visit... oh wait, that's right! You are NEVER going to be feted at one of these press carnivals.  Sorry...

At any rate, the CEO is covered, it's cheaper for the brand to keep paying him or her to do nothing. The sales manager and heads of pr and marketing will not have to start driving used cars or shopping at the Salvation Army. But let's talk about the people actually making those watches in (most typically) assembly houses, and some who work for the big brands. Believe me, those folks will get the axe long before brand x cancels their America's Cup partnership, their Wine Country press junket, or their brand ambassador from the Marvel Universe. You might not hear too much about these people in terms of the Swiss employment statistics. Why? Well also curious to relate, a lot of the people who assemble your watch in Switzerland are not, by actual definition, Swiss. Italian and French citizens cross the borders every day to work for Swiss companies making Swiss watches. It's not to say that they don't count, but in terms of Swiss employment figures, let's just say it tends to skew the graph plot.

As one Swiss insider stated, "the tissue is melting away!" But according to the Swiss Watch Federation, and the reporting of some tail waggers out there, things are even better now than ever before because, wait for it, the export value is increasing! 

Now I am 51 years old, and in fairness, I was not exactly engaged in the watch business at 11 years of age. But I do make a point of trying to understand the past and how it has influenced where we are now, and I also try to pay attention to where we're heading.

FACT 3 - And the one reality that should have the management at the SWATCH group up late nights and shitting themselves? Low priced Swiss watches where the big volumes are in production and (it stands to reason) sales are dramatically dropping again. While Hublot Big Bangs and Vacheron Constantin Overseas are sexy, they are not exactly owned and worn by the masses. And the Swiss watch industry is, well, industrial - meaning it involves thousands of people with thousands of jobs making (ideally) millions of watches. But just like 40 years ago there have been, and continue to be, warning signs that are being ignored.

Think about this basically, we‘re talking about millions of pieces that are not manufactured and assembled anymore. This inevitably leads to thousands of jobs lost already and thousands more that will be lost in the near future.
The shit's about to get even realer.

The Forecast Calls for Pain...

As that other great commentator on the watch industry, Alfred Tennyson might have mused -

In the Spring a young man's fancy lightly turns to thoughts of... pain.

Courtesy of the FH

Now apologies for the fuzzy condition of the image, but in fairness, the statements from the FH regarding the purported growing strength of the Swiss watch industry are somewhat fuzzy in their logic when viewing their own graph.

Let's make this pretty simple.  As the graph above shows, export numbers have been slowly, but steadily dropping off since August.  Now taken in context of previous years?  Yes, things are somewhat better.  But while I think that this is a "glass is half-full" point of view, it doesn't necessarily mean that there is no water in the glass at all.  But it does mean that the water is rapidly evaporating.

In speaking with a friend how knows about these things, he has informed me that the HR scalpels are out, and as the fat has already been trimmed, the next step is happening - assembling companies are starting to cut hours.  More than that, several other assemblers are simply letting staff go.  And that's the part that should be most concerning.  You don't hear about people like assemblers getting let go.  Let's face facts, they are not brand employees.  Owing to this, the leaders of these big groups, and even the smaller brands can claim that all is well!  But it isn't.  This is yet another canary in the coalmine.  

In reflecting back on the incredible shrinking fair that is BaselWorld, and whether their over-inflated egos can admit it, SIHH as well, let's be very honest - this is a symptom of a larger problem.  The fairs, the number of attending brands, retailers and enthusiasts are merely a reflection of the overall health of the industry.  And right now?  The industry is still paying the price of playing with Confederate money for so many years.

 

 

 

A New Year Repeat - Here's To The Crazy Ones...

I first put this out back in July 2017, but with the twists and turns of 2018, and with a new year upon us, it seemed like a good time to re-heat some leftovers.

Sunday, July 9, 2017

Here's To The Crazy Ones...

One of the great privileges of writing about the watch industry is you get to meet some genuinely nice and interesting people who are working to create a brand, maintain one, or in some cases?  Bring it back from the dead.  

These are folks that have never sought out the spotlight.  They come in early, they stay late.  They answer the phone when a call comes in.  These are the people you don't read about, you don't see them on the red carpet.  But they are there.

These are also the people that, had they been dealt a better hand at the big poker game?  Or (if we are honest) had a more mercenary approach?  They'd be running "big boy" brands, rolling in cash and swimming in champagne.  

These are also guys and gals that tend to do whatever it takes to ensure that even in bad times, employees will be taken care of.  But these are also the folks that when they put down their chips and place their bets?  They tend to do it with their own money first.

I have a great, great deal of admiration and respect for these brand owners.  It is no small feat to be a mid-level director or employee for a watch brand.  I do not make light of that.  But to gain that experience, then to find a struggling brand, put your money on the table to buy it, and make a go of not just running it, but saving it from certain extinction?  That's some pretty salty stuff!

I realize that these are not the people you will be seeing at the GPHG, they will not be featured by the "elite" watch journalists because, well, it's not like they are going to spend any REAL advertising money, are they?

And that is why it really sucks when despite all of the effort, the reality of the business steps in.  Even with their best efforts, new investors coming in, a LOT of enthusiastic customers and potential customers out there, they just can't make a go of it.

With the big boy brands and the big boy egos involved in this business, I talk a lot about the "Transfer Window".  This is mostly due to the way that the industry has hyped up the image of being the CEO of a watch brand to similar levels of being a professional football player.  Seriously - have you ever seen a consumer magazine for toothpaste?  We all use toothpaste (hopefully) but it doesn't tend to lend itself to the passion and fan worship that exists out there for the leaders of the watch industry.  

But there is a parallel watch industry reality.  One where brand owners and CEOs are not worried about finding a new car partner so that they can have a sexier company car, or making enough in bonus to finally pay off their third home in the south of France.  This parallel watch world is filled with normal people, leading normal lives.  People working hard trying to make a dream come true without the benefit of multi-million dollar investment funds.  People pursuing what in then end turns out to be an unfulfilled dream.

But I hope that some of these dreamers that have been "transferred out" will dust themselves off and get back in the game.  This is a business that can lead to some extremely cynical behavior on every side of the BaselWorld booth.  Trust is hard to come by, and motives are frequently questioned and doubted.  The industry needs some more dreamers, and a few less egos. 

I'd like to leave you this morning with a quote from Steve Jobs that is often re-shared by my friend Rod Hess:

Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

Steve Jobs

We Sail Tonight For Singapore - Part the Third

From Singapore, by Tom Waits - 

We sail tonight for Singapore
Take your blankets from the floor
Wash your mouth out by the door
The whole town is made of iron ore
Every witness turns to steam
They all become Italian dreams
Fill your pockets up with earth
Get yourself a dollar’s worth
Away boys, away boys, heave away

So the November numbers are in, and because it appears to be my lot in life to be (if not the lone) one of the few contrarians out there in the watch world, here goes -

Courtesy of the FH

Again, the image is sort of fuzzy, and I do apologize for that.  But truth be told, the results are more than just a wee-bit fuzzy themselves.

The first thing to notice is that the numbers are going rather retro.  Now in fairness, they are much better than this time last year.  But if we are looking at them objectively, it is safe to say that they have been slipping the last 3 months.  And it is also safe to say that the only reason that they are as good as they are, is the push to shove as much product across the borders of the various cantons before the new regulations go into force.  

But then it gets more interesting when you factor in the countries that are "up" versus "not-so-up".

Curious to relate?

Mighty Singapore is once again back with one of their semi-annual market surges this time of (wait for it) +9.5%.

Now in the interest of total transparency, the closest I have ever come to Singapore was when my girlfriend (at the time) left Japan to return home to the UK and spent a week in Singapore and sent me postcards and letters from the Raffles Hotel in, you guessed it, Singapore.  Well, needless to say that relationship did not stand the test of time, nor do I suspect that the recent (again, semi-annual surge) of watch exports to Singapore, truly signals their emergence as a world hub for buying watches.  Now as a source to "source" grey market watches for global "discharge"?  Sure!

Even stranger, the US is apparently the darling of the industry with a mighty surge of + 17.6%.  Curious to relate (again) this export figure does not nearly match the (granted anecdotal) evidence provided by several US retailers that I have spoken with.  Of those I have spoken with?  Sales are pretty flat.  

Once again, at the risk of being, well, honest?  If the export numbers don't correlate with the "on the ground" feedback about actual sales, it tells you one clear thing that further informs other points -

1.  Watches are being exported to subsidiary offices to get them off the books at Swiss HQ.

2.  Watch sales are flat in North America.

3.  The grey market has PLENTY of product to sell.

The industry has not recovered.  Sorry, but it hasn't.  On the positive side?  Several brands have reduced their production to match real world demand.  The problem?  There was way too much product sloshing around that had to be flushed through the system.  And short of crushing watches?  That means our old friend the grey market.  The good news?  Lot's of affordable (let's call them price adjusted to reality) watches will now be available!  And hey, don't worry about the warranty!  You'll get some chicken-shit after market warranty for your pennies on the dollar purchase.  

It is a tired, skipped record from this d-jay, but simply put.  If you buy a grey market watch at a bargain price?  Don't lose your shit when that watch is worth even less than you paid for it when you are hoping to re-sell it.  Along with the grey market?  The Sunk Cost Trap is alive an well!

Enjoy your watches, and spend your money carefully!