On November 1, Jean-Claude Biver will officially step back from his day job of leading TAG Heuer and the LVMH Watchmaking Division, and take a non-executive chairman’s role instead. In his first major interview since that decision, WatchPro‘s Rob Corder spoke to the Swiss watchmaking legend about his plans for retirement, what he has learned over 45 years in the industry, and how the business should respond to the globalization and digitization of distribution and retail.
WatchPro: You recently announced you would step back from day-to-day control of TAG Heuer and the LVMH Watchmaking Division. How do you feel about that decision?
Jean-Claude Biver: If you retire before normal retirement age, it might be thought of as a defeat. If you retire after the age, it is a success. Retirement is also a success if you do not retire one hundred percent. For example, if you give up work and then start working for a charity or good cause that interests you, then that is a success because your retirement brings something to another field. If you use your retirement to share your ideas, your experience, your successes and your failures, then you are helping the next generation.
Retirement has to be looked at from lots of different angles. Where it helps your health, or helps you to prolong your life, then you should really be asking yourself why you had not retired sooner. I had this illness that made me think that the time has come to slow down.
WatchPro: Apple is today thought to be the biggest watchmaking company in the world; bigger than the entire Swiss watch industry, according to some analysts. Any yet, Swiss watch exports are having one of their best ever years in 2018. How disruptive do you think Apple and other technology companies’ smartwatches might be to the traditionalists?
Jean-Claude Biver: We cannot really compare, and yet I will say this: people were saying the same thing when Swatch watches became a must-have product. People were collecting them. Watches costing $50 were being sold at Christie’s $5000. They were fun, colorful, joy of life, and with a Swatch it did not look like a cheap watch. They were also rare. Some people could not get the chronographs and they were travelling to Switzerland on Swiss Air because on the flight they had that little trolley selling Swatch watches.
Other watch brands were asking themselves, how can we sell $5000 chronographs when Swatch is selling them for $50? Next Swatch made an automatic movement and again people went crazy.
But what did Swatch actually do? Swatch made people watch-conscious. There is nothing worse than when people do not care about watches and they do not wear them, which is what we have been seeing with the young generation today. They are not watch-conscious.
So if the new generation starts to wear watches — and I am not convinced this will happen — that is an opportunity for all other watchmakers because it is easier to sell a watch to somebody that is used to wearing watches.
The second point is that every product that we are surrounded by is becoming obsolete. Every product that we use in our lives is linked to technology. And technology only goes to the future by destroying the past. The new 3D colour TV set will destroy the older models just as the color TV destroyed the market for black and white TVs.
We are surrounded by obsolescence, and I believe people will search for a link to eternity. The more you are impacted by obsolescence, the more you need a link to something that will last. You have love that can be eternal, and you have art that can be eternal. Great artists have not died because they live on in their art.
What else is eternal? Not much. But watches: yes. If we are to promote this eternity then I think we have a great opportunity. This is a reality for Patek Philippe, for AP and for Rolex. Everybody that makes mechanical watches is selling this eternity. Patek Philippe’s marketing is explicit about this, but it is true for all watchmakers. This is a huge chance.
WatchPro: The obsolescence that concerns me more right now is the way that independent family-owned shops are going out of business as global watch businesses tighten their control over the entire channel; sell directly to consumers rather than through partners that have supported them for generations; and even appoint secondary market platforms like Chronext and Chrono24 as official partners.
Jean-Claude Biver: Yes, but they become obsolete these families only if they cannot adapt to competition. You have to adapt, not just to your time but to your competitors. If online is a competitor to multibrand stores, they must develop a strategy to fight against the online. If they offer the same as online, or in the worst case offer less than online, they are dead. But they can offer something different to online, and they must reinvent themselves. If they reinvent themselves, they can win.
It all depends how you react to competition. If online is your competitor, then write that on your office wall and ask yourself how you can beat online. Come up with ideas and test whether you can really deliver them. If one is impossible, come up with more ideas. Suddenly, businesses can find three or four ways to compete. Put those to work, and you will survive, but if you stay as you are or as you were in 1998, how can you survive?
WatchPro: Do you really think every shopkeeper can find their own solution? That is a bit like saying Blockbuster video would survive as a high street rental store when everybody moved from movies on VHS to satellite channels or more recently streaming. Surely some businesses will not survive the disruption. So many family businesses, three or four per town, that used to make a living from bridal jewellery and Citizen, Seiko or Casio watches, are under threat.
Jean-Claude Biver: These small businesses will face a certain re-organisation of distribution; for sure this will happen. But we have seen in the past that some can survive. Remember when all the small grocery shops were closing because of supermarkets. Now they are coming back because they have their own strengths like being more local, fresher, more part of the community. They are opening with a small place where people can stop for a coffee. People prefer this to supermarkets.
WatchPro: Do you not think there are too many doors, particularly in the mature market like the UK and the United States?
Jean-Claude Biver: Yes, there are too many doors, and one day we will say there are too many brands. It happens in every field. In Switzerland there are 600 or 700 watch brands, so you would say there are too many brands. We are seeing the number of brands shrinking.
WatchPro: Not as quickly as some have predicted.
Jean-Claude Biver: True, because new ones are coming so it is still 600. The market is in permanent evolution and there is always a way to survive.
WatchPro: Do you think we will see consolidation within the brands? We have seen more of it from Citizen Watch Company in recent times, but do you think more Swiss brands will be acquired by groups or merge to form new groups?
Jean-Claude Biver: There is not much more that can happen because every brand is part of a big group now. 80% of the turnover of Swiss watchmakers is in the hands of five companies: Rolex, Swatch, Patek Philippe, LVMH and Richemont. If you take the total annual Swiss export value of around CHF 20 billion, and you see how much each of these groups is doing, you will get close to CHF 18 billion or 90% of the market. The consolidation has already happened.
WatchPro: Another major disruptive force we are seeing at the moment is the emergence of very large, expert and well-funded players in the secondary market, be that Watchfinder, Watchbox, Chrono24 or eBay. These companies have huge global reach and are amassing enormous amounts of rich data about their customers’ behavior. How do you see the emergence of these players affecting the wider market? Do you think we will start to see brands adapting and developing their models for certified and warrantied pre-owned watches through their existing channels, as we see today with the new and used car market?
Jean-Claude Biver: I do see this coming. It is a trend for a new generation. They share cars and they are going to share watches, so the secondary market for watches for certain has a future. The more the secondary market is insured and backed by the brands giving their official certification and guarantee, and when customers know that watches are eternal, they will ask themselves why they should buy a new one?
Brands giving certification for watches selling on the secondary market — which they cannot stop — is a good thing for the brand. At least you make sure that the people who are buying your watches are getting the right goods.
WatchPro: Do you think that the secondary market will be dominated and owned by the big global platforms we see today, or will today’s retailers adapt and find a way to profit from the secondary market?
Jean-Claude Biver: I think [the platforms] will be bought by brands. Brands have already started to buy. Richemont bought Watchfinder, and that is the start. Other groups will start to buy too. I do not know the secrets of other groups, but I think they will buy.
WatchPro: You do know what is on the minds of executives at LVMH. Is there a chance they will buy a business like Chrono24?
Jean-Claude Biver: I do not know. It makes sense, but I do not know whether LVMH would buy it.
WatchPro: Do you think the rapid rise of the secondary market is positive for brands? There is an argument that sales of new watches could be blown away if customers are happy to buy second hand.
Jean-Claude Biver: It is positive. You can say that nobody will buy new cars because second hand are cheaper, but people do like new because they can choose the colour, the options, or the finish. Psychologically, people like to be the first person to drive that car and there will be people that want to be the first person to wear a new watch, especially if the watch brands have created something new that people desire to own.
WatchPro: What is your view of these digital platforms? Most people in the industry until recently would have attacked them for being grey marketeers. Now you have significant brands like Nomos signing Chrono24 and Chronext as official retail partners.
Jean-Claude Biver: Nomos did that? I did not know that.
WatchPro: Yes, and when Nomos signed with Chronext and Chrono24, Wempe ended its partnership almost immediately. Wempe said that without its support, Nomos would have been nothing, and now it has signed up these other partners without even any discussion.
Jean-Claude Biver: Wempe is angry? It is true that without Wempe, Nomos would have been nothing, so Wempe is right. It is not fair. Wempe cannot pretend that it created Nomos and the watch brand belongs to it. Nomos should be free, regardless of what Wempe did in the past.
But you need to show respect, and if what you are saying to me is true, Nomos has shown a lack of respect. That is rude just to go with Chrono24 and Chronext.
Chrono24 is just a platform where jewellers can sell their watches. This means that if Nomos had given Wempe a certain exclusivity, that exclusivity is now gone.
The behavior of Nomos is questionable from a gentleman’s point of view.
WatchPro: Not just from a gentleman’s point of view. From a business point of view it is a huge risk for a brand like Nomos to alienate its loyal partners for the potential gain of working with these platforms. What if Watches of Switzerland, Bucherer, Tourneau … any of the major retail groups, reached the same decision as Wempe? All Nomos would be left with would be the secondary market.
Jean-Claude Biver: It is not enough to be distributed by businesses like Chronext and Chrono24. Nomos needs to maintain a certain image with consumers. If it has zero status, why should people buy it even they find the watches on Chrono24? It is not enough only to have the distribution, you also need everything else. Customers do not buy something just because it is for sale. The customer buys because you are selling something that he has been dreaming about buying. Nomos cannot forget that Chrono24 and Chronext can do a great job, but they cannot build up desire, they cannot build up irrationality, and this is what Nomos needs. Who can build up desire and irrationality? Mr Wempe yes, Watches of Switzerland yes, but not Chrono24.
The thinking of Nomos is a bit short term and they might fall on their nose.