Louis Erard doesn’t like to dwell on its near 100-year history of watchmaking. It helps to build confidence but the Swiss watchmaker is looking forward and says its strategy is future-driven.
Its current owners bought the business in 2002, and have concentrated much more on a fresh start rather than getting stuck in its past.
Manuel Emch, former head of Jaquet Droz and RJ (Romaine Jerome), has been appointed as a delegate board member of Louis Erard after consulting with the brand for a number of years on its positioning and strategy. He has also invested in the business.
He is driving a dramatic simplification of Louis Erard’s portfolio of watches down from roughly 350 references to around 15.
There will only be two lines in the core collection: La Sportive sporty chronographs and the Excellence family of more classical styles.
Under the umbrella of these two styles, Louis Erard is creating limited editions in each reference, often in collaboration with artists like this Louis Erard x Alain Silberstein watch on sale for CHF 2,900.
It made another limited edition in partnership with Leeds United Football Club, which celebrated its centenary last year.
The number 178 must be important to Louis Erard, because it is also the name of its network of retail partners around the world, which it has called the 178 club.
The aim is to work with the best possible 178 retailers, which will share in the opportunity and reward of building the brand.
Ahmed Seddiqi and Sons, the Middle East’s biggest luxury watch retailer, and Hour Glass, a giant of South East Asia, are already on board.
Mr Emch makes no secret of his ambition to work with Watches of Switzerland Group in the UK and United States.
That may not be as far-fetched as it appears, because Louis Erard has an interesting model for its wholesale business.
It aims to generate half of its revenue per year through retail partners and half through its own ecommerce site. This will mean selling in the region of 2,500-3,000 watches online and 5,000 through its retail partners where it will share the margin on each sale.
Competing with a brand’s direct to consumer arm is rarely attractive to multibrand retailers, but Louis Erard does have a couple of ideas that should appeal.
First, it only expects retail partners to stock a small selection of around 15 references at any one time, and to turn that stock two to three times per year. That is not too much of a draw on cash flow for watches that retail in the $1,500 to $4,000 range.
“Our position is above Apple and below Tudor,” Mr Emch describes.
Unlike many brands that keep their desirable limited editions for their own boutiques or ecommerce sites, Louis Erard is doing the reverse and encouraging retail partners to create their own limited editions, some of which they keep to sell and some that can be sold on the Louis Erard site.
The overarching tactic is to keep supplies low and demand high by creating interest and buzz in every fresh edition. This ties up less cash and makes it less likely that overstock will spill onto the secondary market and damage prices.
“You cannot build a brand if you do not control the secondary market for your watches,” Mr Emch insists.
Rather than the secondary market becoming a dumping ground that undermines the competitiveness of authorised Louis Erard retailers, the company wants to make it a place where certified pre-owned watches can be traded at robust prices that may sometimes be over retail because of limited supply.
To strengthen the CPO potential, Louis Erard is working with a company called Qiibee on a blockchain-based loyalty scheme.
Each watch is sold with an incorruptible digital signature so that its history, ownership and service record can be tracked throughout its life. This takes the risk of trading the watches because they are digitally tagged as authentic.
Mr Emch is a passionate believer in the power of specialist retailers and, even though Louis Erard is a retailer as well through its ecommerce site, he does not believe he can build the brand without the support of his so-called 178 Club of retailers.
“We can only fully represent and present the brand at retailers,” he suggests. “We believe in omnichannel so customers might research for watches online but want to try them on in store. We have a model so that at least half our watches are always sold through brick and mortar, but will never open our own boutiques,” he explains.
“Retailers are long term partners. Brands should not dictate to them. We have to build a community; a virtual and physical ecosystem with everybody benefiting from strengthening the brand,” he concludes.