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THE BIG INTERVIEW: Baselworld bounces back

Michel Loris-Melikoff2

The number of exhibitors to Baselworld has plummeted from over 2000 in 2009 to 520 earlier this year. It looked like the ultimate hospital pass when Michel Loris-Melikoff took over as managing director of the show last year, just weeks after Swatch Group announced it was pulling all of its brands for the show. But, a year on, Mr Loris-Melikoff says exhibitor numbers will rise to over 600 in 2020 thanks to fresh initiatives that aim to lower the cost of participating, attract more consumers to the event and make the whole week far more enjoyable. Rob Corder met the show supremo in Basel for an update on progress.

WatchPro: Last time we spoke in the summer of 2018 you were just a few months into the job and it was a tricky time, to put it mildly.

Michel Loris-Melikoff: I think I was in the middle of the Swatch crisis so a year on I am rich in experience. Now we know the problems.
In the mean time we presented the vision during the closing press conference of the 2019 show and now it is time to go into details so we know exactly here we want the show to go in 2020 and 2021. We have a very clear direction for Baselworld.

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WP: You mentioned recently that your team is now in sales mode rather than just fielding incoming orders. How has that changed the culture of your organisation?

MLM: Employees realize that everything is changing. The market has changed in the past few years and we did not change. So it is now it is up to us to change. That starts with our mindset. It has to be very clear to us that our clients pay our salaries, and everything has changed for these clients. If we sit here and wait for the phone to ring, we will never do any business, so we are travelling a lot to meet clients. I think I have had around 1400 meetings since I started. We go to most other shows to see clients, find inspiration and decide what is working and what is not working. All of this input helps us to create a new show.

To create our new vision, I started in a very simple way with an Excel sheet with 20 key points that seem important to all of us. I made one column for the watch industry, one for the jewellery industry, one for gems, retailers, journalists, collectors, etc, and then listed what I think is important to each of them, and what that means we need to deliver.

WP: Can you tell me what you put in the retailers’ column in terms of what you think is important to them?

MLM: For retailers, one thing we realized was that we had to improve the quality of their stay. It has to be much easier. In the past, retailers were invited by the brands. I made a simple calculation that if it is the brands inviting retailers, then each brand will have around three or four people per brand taking care of their retailers. That means if we have 520 or 650 exhibitors, we have something like 2000 people from all over the world taking care of retailers. We asked ourselves, why don’t we take care of these retailers ourselves?

We agreed with the brands that we will take care of the retailers. We will invite them, we take care of badges, etc, so we know exactly who is here. That makes it easier for the retailer and it is also very important information for us to know where they come from.

What we do not organize are their meetings with the brands because that is their business. Brands do not want us involved, and I respect that.

The second point is the whole travel and accommodation issue. We will have an e-concierge service that will go online in a few weeks where you can book your journey. You can say which airline you want to fly with, what hotel you want to stay in and your budget, whether you need a shuttle from Zurich, etc. We have a team that will take care of all that.

WP: I spoke to a number of retailers this morning to get their views on Baselworld. The first thing I asked them was, have they heard from you? I don’t think it will surprise you to learn than every single one of them said they had not. I am talking about some of the biggest retailers in the industry worth billions, and they have never been asked for their views.

MLM: Not yet.

WP: How can you come up with new plans that are supposed to benefit the most important people in the industry if you have not spoken to them? Are you a mind reader?

MLM: The biggest problem was that we did not know who they were because they were invited by the brands. We could not communicate with them. Retailers got their information through the media and through the brands. I want to talk to them directly, but we have to create a database. We know some of them, but not all of them. In the past, we only took care of our exhibitors. But now we need to not just take care of our direct clients, we also need to take care of their clients. If they feel good in Basel, that is good for our direct clients.

This is new, and we have to get started.

Since I started last year, I have had a lot of direct contacts with Mark Udell [owner of London Jewelers in New York] and I listen to them because it is so important that they come to the show. From November, I will include meetings with the most retailers when I visit cities all over the world. But you will also understand that first I have to concentrate on my exhibitors.

WP: I think it would have been pretty easy and efficient to plan a meeting with retailers any time you have had a trip planned to any city.

MLM: I have a trip to New York in two or three weeks, and I will have a dinner with 10-15 retailers. This is just right. I do not want to do huge dinners with 200 people. A personal meeting is much better. I have done it in a few places with journalists when I traveled to Tokyo and Shanghai, which was extremely important.

WP: Taking care of journalists is easy. All we want is access. The reason I am such a fan of Baselworld and want it to remain successful, is that I can see so many people at the same time. As long as the show delivers that, I am less interested in the hotel rooms, podcast booths and the cost of food. We are used to roughing it, but the retailers I speak to live in a world of luxury. Most are multi-millionaires and they dread coming to Basel as a city because they are used to much better in their professional and personal lives. They will keep coming to Baselworld if Rolex tells them to but they want to enjoy it as well.

MLM: That takes us to the question of what is luxury, and you said something very important when you said they do not want to come to Basel. If I had to come to a show like Baselworld for business and was given the choice of it being in Tokyo or Manhattan, of course I would choose one of these destinations because all of the things happening around the show are more attractive. After work or even for work, meetings can take place in nice areas. Luxury here has a different dimension. Luxury here [in Basel] is about making it as efficient and effective as possible to meet the right people, knowing that we do not have all of the advantages of other cities.

 

 

WP: I remain of the firm belief — and I said this to you a year ago — that Baselworld has to move out of Basel because I do not believe it can survive if it is an experience that people do not look forward to. That is an absolute fundamental. There is nothing you as an individual or Baselworld as an organisation can do to make Basel a great destination.

MLM: Yes, but if people have to come to Basel, we have to do everything we can to make the stay better. But Basel is Basel.

WP: I fear that Baselworld will not exist if it is in Basel in five years’ time. When I look at what Breitling did in Los Angeles last week with surfing demonstrations to launch a new dive watch, what Swatch Group did in Zurich last year, and what LVMH is planning in Dubai, these are events that people want to attend and enjoy attending.

MLM: That is a reason why I announced during my press conference this year that Baselworld has to go to where the market is. We are working very seriously on this issue. I am in the lucky position to have a show not only for watches, I am also playing in the jewellery and gem market. I can combine these three in a way that makes sense. That means, for example, if I want to organize a pop-up activity in Abu Dhabi during the Formula 1 race, I can do it for the watch and jewellery industry. I can choose whether I do that B2B or I can do it for collectors or influencers.
I have a very nice instrument, and I can make music any way I like with this instrument. That is exactly what we are looking at and we will make announcements at Baselworld 2020.

Since the show this year, I have been in Dubai, Abu Dhabi, Tokyo, Hong Kong, Singapore, etc, etc. There are a lot of opportunities but the show where you find everything for the whole ecosystem will, for the next year, remain in Basel.

Next year we are going to present details of the first destination for a new show; that is for sure.

 

 

WP: Will there be an event in Basel for the entire ecosystem in 2021?

MLM: I think so.

WP: You do not sound certain.

MLM: Only death and taxes are certain. We have a very clear vision about what direction Baselworld has to go. For me, it is an experience platform. For some exhibitors it is more of a communication platform and less of a business platform. That does not mean that we are going to stop doing business in Baselworld, but we have to create an experience for collectors as well as retailers. Maybe they have different expectations. For me it is clear, Baselworld has to be an experience platform, and every participant in the ecosystem will use this platform for their individual needs.

WP: Do you think you can create an event that is attractive to collectors here in Basel?

MLM: Yes.

WP: Really? When I speak about retailers being wealthy and used to the finer things in life, collectors could be even richer and even more demanding when it comes to a luxury experience. Not only are the hotels and restaurants not good enough, the crowds in the show are going to put them off. They are unlikely to be able to buy the watches they see, even if they can get onto stands. They are used to being taken by brands to their manufactures where they can be wined and dined as part of their experiences.

MLM: Yes, but they know that coming to Baselworld is not the same as going to a watchmaking manufacture. By coming to Baselworld, we are going to show them things they have probably never seen before.

WP: Retailers are telling me that the timing of Baselworld in 2020, April 30 to May 5, is too late for them. They are concerned that, with lead times of six months, they may not be getting new watches next year until November or December. I understand the changes of dates for SIHH and Baselworld so that they run back-to-back was designed to make it easier for people to attend both shows in one trip, but by addressing one issue, you appear to have created another problem for both brands and retailers.

MLM: I mentioned it three times in the video we made to announce our plans: “you spoke, we listened”. I am not doing things just for my own purposes. When we started discussions with SIHH, the key objective was coordinating the shows. Everybody told me since I started that it did not make sense to have two different dates that make journalists and retailers come to Switzerland twice. It was clear to me and Fabienne Lupo [managing director of SIHH, now renamed as Watches & Wonders Geneva] that the key objective was to coordinate.

Finding a date for both shows was not easy. There is the car show in Geneva, there is another show here, then there is Easter, carnival holidays. January would be the best month for the watch industry, but not for jewellery. February would be fine, but that is the Chinese New Year. There is Easter, May Day, Ramadan, the Golden Week. It was a nightmare.

When we announced the new dates in December, there was no negative reaction. We knew it was late, but everybody we spoke to during the negotiation accepted that coordination was more important than the fact that we were five weeks later.

Now we hear from some people that, yes, it is late, but that is not a catastrophe. Others say they will not come again. Who is right? In a perfect world I know that the end of February to early March would probably be the best period.

WP: Can you plan for future years to deliver those perfect dates?

MLM: We have negotiated until 2024 and we are soon going to publish dates for 2021 that are a few weeks earlier. It is not easy to move the dates because it is not just six days of the show. The biggest stands like Rolex’s take six weeks to build. If I shift just one or two days, it has a huge impact on other shows, and in Geneva they have the same issue. It is a wonder we found the date at the end of April and only now we are told that it is too late. We have to find a solution, and that is a big job for us between now and the end of the year. It is very complicated.

WP: The biggest brands, and your biggest exhibitors, are really long-term thinkers. So when they make a decision to invest in Baselworld, with all of the cost and complexity associated with having such huge stands, they must be making those decisions with a view to getting a return on the investment over five years or more. At the same time, things are changing so fast with the industry now that it is less likely they will simply sign-off on a similar cost that can be amortized over a similarly long period. Will they now want a plan that will allow them to be more flexible and make changes year-to-year?

MLM: That is why the terms and conditions for construction rules have been changed. We suggest to exhibitors that, if they rebuild their own booths, they ask themselves if they really need three or more storeys. We are convinced that in the future they will want fewer storeys. If you take more square meters on the ground and build only one or two storeys, it is much cheaper. As we all think about return on investment that has to be realized in a very short period of time, you have to make construction cheaper.

WP: SIHH manages to be luxurious, despite the stands being more modular and on a far more manageable scale. It looks like a show that could be installed in a week rather than the six weeks some of the biggest stands take to build at Baselworld. Being less expensive, less complicated and more modular would mean that the show could move to a different city, if SIHH so chooses. It does not look like exhibitors would be locked in for five years to stand a chance of getting their money back, it might be possible in one or two years.

MLM: Yes, SIHH is a different concept. We could consider it in a positive way and copy them, but everybody would accuse us of being so boring. I am not going to do that. They know, and I have said it to their management, that their concept is interesting. They just have a uniform façade, and behind that every company brings its own structure. That is very interesting. When I arrived at Baselworld, I found a completely different concept and to change it I have to go step-by-step. It would not be fair if I arrived and immediately told the likes of Rolex that six-storey booths are out and they have to change it. I am not going to tell companies they have to change immediately.

But I think everybody now realizes that to reduce the cost of the show, the square meters is only 15% of the overall cost. The biggest cost is the construction of the booth. Overall this is between 45% and 55% of the cost, so we need to address that.

 

A new Community District in the heart of Hall 1.0 will provide space for exhibitors that want to avoid the cost and complexity of completely building their own stands.

 

WP: Does the show’s owner MCH Group, only make money out of that 15% of the cost that goes on the square metres, or are there other significant revenue streams from a show like Baselworld?

MLM: We have a stand builder, but most exhibitors do not work with it so most of our revenue comes from the space. In the past, we made money with additional services like, for example, the catalog that everybody hated being forced to pay 10,000 francs to be in. There were other services they were obliged to book, even if they did not pay for them.

We are changing the business model so that they pay for the square metres and then only pay for additional services that they want. If they do not want them, they do not have to do them.

WP: So, broadly speaking, for every dollar an exhibitor spends, Baselworld is getting 15 cents?

MLM: Yes, that is right. My biggest concern is to find solutions to reduce the other costs. We are working very hard with a booth construction company to find a solution that makes sense. We are looking to offer the choice to exhibitors so that they can buy a stand and own it for two to three years, or they can choose not to buy the stand, and only pay for it when they use it. I think this is the future.

As the market is changing so quickly, none of us knows what is going to happen in three years. Maybe a company will decide they want their main focus to be in China, for example.

WP: Hypothetically, if a brand is spending 15 cents on the dollar with MCH Group for their space in Baselworld, they might want to spend an additional 15 cents on the dollar at another MCH Group show elsewhere in the world. As long as you offer a concept that squeezes the other costs, exhibitors could end up doing two shows in different parts of the world for the same cost as doing one today in Basel.

MLM: Maybe in the future it will be that when a visitor checks in here at Baselworld, which we know is expensive, they will automatically be registered to attend another event in Miami or Manhattan.

WP: Having additional shows around the world makes sense now that brands are less focused on launching their entire annual collection in one go. They want to make announcements throughout the year.

MLM: I had a really good discussion with Georges Kern when he announced that he will not come to Baselworld next year. With the idea of the summits he is doing around the world, we are totally aligned. He talks about experience, we talk about experience. He talks about putting on really nice, cool events for retailers; that is what we want to do.

If we do something abroad, maybe it will not be like we have here in Basel with all the booths. It could be something completely different.

WP: In which case you really need to make Baselworld into a brand that stands for something, and stands for something that is strong enough and attractive enough to travel to other parts of the world. What does the Baselworld brand stand for?

MLM: The USP of Baselworld in the past was that, on a very high level, three parts of the industry: watches, jewellery and gems meet here in Basel together. That is not just a high level in terms of the quality of products, but also the quality of the show. You cannot compare the style of a Baselworld to a JCK, for example. People realize there is a real different of quality that this show provides.

 

Rolex remains the biggest draw at Baselworld. It is rumored to be demanding all its authorized dealers attend this year’s exhibition as a show of support for the event.

 

WP: I would say the major USP for Baselworld in the past was that visitors knew they were coming to see all the main players in the industry in one place and time. But with Richemont, Swatch Group, Breitling, AP and others gone, you might still be 60% of the industry because you still have Rolex, but that is not a safe position to be in. Bringing the shows together, even if they are in Basel, Zurich and Geneva across a week would be a prize worth having.

MLM: SIHH’s Fabienne Lupo and I are totally aligned on that. We both serve a single industry and it is hard to explain to a retailer from Shanghai why they need to come to such a small country twice or more to see all the brands at different shows. We have to come together to show the whole Swiss watch industry in one week. They might go to different parts of Switzerland in that week, but it should be possible to see everything.

WP: Are you fairly convinced that Swatch Group will be aligned with the timing of Baselworld and SIHH?

MLM: If Mr Hayek organized his show in that period, it is important to be aligned with the dates. For all of us to be successful, we should coordinate to be at the same time and the same area. Zurich is just 86 kilometers from Basel. That is nothing to somebody that has traveled 10,000 kilometers to come to Switzerland.

WP: But you do not know whether Swatch Group will be aligned in terms of dates next year?

MLM: I do not know, but I hope so for everybody’s sake.

 

Mr Loris Melikoff says he has something new planned for the plaza outside Baselworld in 2020.

 

WP: I know you are not able today to talk about which brands are in the show in 2020 and which are out, but are you confident that next year Baselworld will be as big or bigger than it was in 2019?

MLM: We will have more exhibitors than in 2019 by a clear margin. The question now is whether we will be over 600 or over 650. This year was exactly 520. People have started to realise that things are changing.

The days of setting out a strategy and expecting to stay on that same strategy for five years — those days are over. We have to re-evaluate every year whether we are on the right track or not. There will be changes every year, maybe not major changes, but we will get better and more efficient. We need the bravery to drop services that interest nobody, we need much more flexibility. We need motivation to change all the time and modify the concept. That is the only certainty.

WP: As I understand it, the centrepiece of the show, as people walk into Hall 1.0, will be the same with LVMH brands, Rolex and Patek Philippe the first booths we will see.

MLM: There will be a few changes. The press area might still be in 1.0 but in a different location, or it might be on another floor. The press is important to us.

WP: The press may have some influence, but retailers are the greatest influencers of all in this industry. They have the prime locations in every great part of the world, they are speaking directly to customers, they are making choices that have the greatest effect on brands.

MLM: Yes, I have the greatest respect for retailers that have been successful for generations. I do not believe they are going to be replaced by digital. It is important we take care of them and make them feel comfortable. That is a big concern for me personally.

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Rob Corder

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