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THE BIG INTERVIEW: Zenith CEO Julien Tornare on positioning the brand for a post-pandemic boom

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Julien Tornare.

Despite having one of the most celebrated histories of any surviving watchmaker in Switzerland, Zenith was drifting before Jean-Claude Biver brought in Julien Tornare to run it in 2017. Four years on and a modernisation built on a futuristic interpretation of historic references is complete with two tent pole collections, Defy and Chronomaster, driving the entire business forward. Reflecting on these product innovations and the roller-coaster of the past year, Mr Tornare spoke to Rob Corder ahead of last month’s Watches and Wonders.

WatchPro: What were the very early days of the pandemic like within Zenith and LVMH watches?

Julien Tornare: In early March last year, I went to my final overseas event in New York to launch the Land Rover limited edition. On my way back, I stopped in London for a private gathering and came back to Switzerland at the weekend. By the time I got back the mood had totally changed in Geneva. We went from relatively normal to a very concerning situation in which we had to make a very quick call to shut down the manufacture.

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On Sunday night in Geneva I got a cough and could not breathe well. I had a fever as well so I went to hospital on doctor’s advice. They tested me and asked me stay in hospital so I had to make the call to shut down the manufacture from my hospital bed. That shut down lasted six weeks.

From one day to the next we had to make plans for how we were going to work from home and how we were going to digitise our operations. That would be our new normal. I have to say that my team has been incredible at adapting to the new environment.

That is how it began and, as we went into April, that was even worse. Everything was closed. In Asia they were beginning to recover, but Europe and the US were a disaster. That was the month when the industry dropped by around 80%.

That was the bottom, but we started to slowly recover from around mid-May. We went into a pretty OK summer and autumn and that was the year. We were like most of the brands, which were down 25-35% down, but to be honest we feared it would be much worse.

WP: You didn’t finish part of that story. Were you diagnosed with covid when you were in hospital?

JT: No. I was negative, but I was not feeling too good and because of my cough and fever, they were nervous about my condition. I only stayed one night. The day after I got the negative result and they let me go. All that had happened was I was suffering from some allergies that I get in the spring.

WP: How quickly were you able to react and change your strategy for the year?

JT: On day one I asked my executive committee to set up a daily call. Every morning at 9am we had a virtual meeting. Some of them were questioning whether we would have anything new to say every day, but I said it did not matter.

Even if we were just sharing a cup of coffee, we should talk because we were missing out on the social interaction we get at the workplace.

The second thing we did was to make sure the team could continue to do their jobs while the building was closed. Digitising sales and marketing was vital and we immediately accelerated our ecommerce plan, which was supposed to be rolled out over 18 months but we did it in six weeks for Europe and America. For marketing, we switched from physical events to video presentations and zoom meetings.

There was obviously not much we could do to digitise manufacturing. After four or five weeks, we sent back the production team: the watchmakers, the master watchmakers, the polishers. Without these people doing their jobs, we could not produce watches.

We are lucky at Zenith because we have several buildings, which meant we could spread people out and keep a safe distance between them so we were able to resume production activity pretty quickly. All the admin staff remained at home until early June.

“I had my own ups and downs and concerns about when it might all be over, but I could not show that to my staff”

WP: What were you hearing from your retail partners at that time?

JT: Most of them were in a similar situation to us and what they appreciated is that we stayed very active at Zenith. Some businesses sort of fell asleep at that time, but we said we needed to double our energy and activity online.

We created a lot of videos that we sent to retailers. I called them as much as I could. We organised training presentations online with our retailers, followed by a drink, which was very nice and helped everybody keep a positive mind set.

Zenith’s modern day A385 Revival.

There were plenty of people at Zenith who were sceptical about working from home, but it was better than anybody expected. People were sometimes more productive at home, which was interesting to learn.

We supported our retailers as much as we could. In good times, you do not really see who your true partners and friends are. You find that out in tough times, and that is what we focused on. We did everything we could to help retailers.

If they needed to return watches or get a new model, we worked out ways to do that. We had to be very cooperative and step by step we saw business return to a decent level because of the work we and our retailers put in.

WP: Were you able to be quicker and more responsive than the giants of the industry?

JT: For sure. It is a small world and we do not have huge distribution so we were able to keep in touch with our partners and work our way through the situation together.

Yesterday I was in our manufacture and they told me that they really appreciated the fact that we kept a board level presence there even when the rest of the administration teams had to work from home in those early weeks, and that I had immediately gone to see them.

Sometimes they could feel lost and isolated. It is the same for retailers, you have to be in contact all the time. It is super important.

WP: Almost every watch brand lost sales last year, but that is not the same as losing market share. Do you think your actions have led to Zenith gaining market share during the pandemic?

JT: Yes, I think we did gain market share because we have been pushed to be more dynamic; we have been pushed to do things in a few weeks that might have taken months. At the end of the day, when you are very strong as a brand, you tend to fall asleep a bit more during such circumstances. You feel you can wait.

That is not our situation. We are relaunching the brand, we have been working on the fundamentals of the brands. We had to do 200% of the activity we had planned. The mindset of the Zenith team was unbelievable. I was super-impressed. I had my own ups and downs and concerns about when it might all be over, but I could not show that to my staff. They were so resilient and strong.

Zenith’s Chronomaster Sport is arguably the most important launch of the last 10 years.

WP: I can say the same about my team. You learn a lot about who is made of the right stuff at a time like this.

JT: You do learn a lot about people and it helped me to see certain people differently. Some were always strong and remained strong. Others were a bit lost and frustrated. It was a big part of my job to make sure we were all together and still executing on the plan we have been working on for the past three years.

I was frustrated because 2020 was supposed to the year that Zenith kicked into a new gear. We have fixed the brand platform, we have created the new store concept, and we were ready with great new products like the Chronomaster Sport and another Defy that we had to move from last year into 2021.

It was right that we did delay those great launches until this year because it was too messy in 2020.

WP: You had a bit of luck because you had LVMH Watch Week in Dubai in January 2020, so you were able to show a lot of your key launches to retailers and press before the pandemic hit.

JT: That was very lucky and I thanked my friend Jean-Christophe Babin [CEO of Bulgari] for inviting us to take part in Dubai because that was the only real watch show in 2020. I personally realised close to one third of our yearly turnover from that event and we launched some great product.

A few weeks later the whole industry was hit and there were no more shows. This year we have held LVMH Watch Week, but it had to be digital.

Julien Tornare with CEOs of Bulgari, TAG Heuer and Hublot at LVMH Watch Week 2020 in Dubai.

WP: What are your feelings about all these online launches and events?

JT: It is necessary and important to have announcements early in the year. That gives us more time to turn watch stock twice or three times for retailers in the year. Of course I am disappointed not to be meeting you in person. It would be so much better if I could show you the watches and you could try them on your wrist. It is better than nothing.

WP: Everything is still virtual for the first half of this year and we have seen some great launches already, but are you holding back anything for the second half of the year when we may see physical events again?

JT: I hope not. I try to work two to three years in advance so I know exactly what I am going to launch in 2022 and a few products for 2023. The objective is to catch up what I missed in 2020 this year in addition to everything we already had planned for 2021.

It is not so much about what we launch, it is more about our production capacity because by moving 2020 launches into 2021, I am creating an issue with production. That means I have to be more careful on other products we might have launched this year.

My main objective right now (speaking in March) is not to close the manufacture for a single day. That is the advantage we have this year compared to a year ago. We know how to keep the manufacture open safely, and we have vaccinations increasing. That gives us hope we are coming to the end of the crisis. Compare this to [the first wave] last year and we were totally lost. This year will for sure be better than 2020.

WP: Can you tell us how much of your production capacity you lost last year and, assuming you are not forced to close, will you be at 100% this year?

JT: Yes we will be at 100%, and it is mostly about the Chronomaster line. This is a great product line and a second major pillar alongside Defy. Of course Defy was a great success in 2017 when I took over as CEO and Jean-Claude Biver helped me to launch it.

I always knew Chonomaster had to become an important pillar for us, but I needed time to get it right. Defy gave me the time, because we did good business with it.

Chronomaster was a little bit lost in the past because of too many references, too many shapes, crowns, bezels — it lost its identity.

NFL star Aaron Rodgers is the biggest brand ambassador Zenith has signed in the Julien Tornare era.

Now I have a very clear vision and strategy for Chronomaster and three sub-pillars. The first one is the Revival watches, which are iconic watches from the 1960s and 70s. The second category is the Chronomaster Sport, which we have just launched. That is more of a contemporary style in a slightly larger size with a ceramic bezel. The third sub-line in Chronomaster will be a more classic, slim, elegant interpretation. It will be a very casual, easy to wear watch.

With those three pillars, the Chronomaster is perfectly established and positioned so that we can now work with Defy and Chronomaster as the two strategic lines. Pilot and Elite, on the side, are more niche and tactical.

It is all coming together now as I envisioned, and that is why I say we are ready to move up into a new league. Between marketing, trade marketing, people and product we are really where we want to be. We have been delayed by the crisis, but I am happy about the fundamentals. We see 2021 as a recovery year and in 2022-23 we will move up fast.

WP: I am looking forward to seeing the Chronomaster Sport for real.

JT: You need to. You have to touch it and try it on your wrist. It is also a one-tenth of a second chronograph, so from a technical point of view it is unbelievable.

I have to tell you 24 hours after we launched it online it had a fantastic reaction in terms of buzz and sales through ecommerce on our own site and in our boutiques. We had 10 pieces in our Singapore boutique and they sold out inside the first day.

The same thing happened in Malaysia and Indonesia. That is a very strong start, which is not always the case. We do not have pre-sales as strong as we have [for Chronomaster Sport] with every watch we launch.

WP: You touched earlier on 2020 being a year when you hoped to roll out a new in store design, both for boutiques and in multibrand retailers with corners and walls, etc. Is that work going to be a focus this year alongside work to keep momentum through ecommerce for yourself and your authorised dealers? In a post-pandemic world, how do you see the balance between your sales channels changing?

JT: It is not going to change too much. The only major change is that ecommerce has been a high growth area and is now a real player in our mix. Swiss are conservative and some have believed that we will never sell luxury watches online, but today we realise that we can sell online. Ecommerce is really becoming like a new market for us. That is something we will continue for sure.

Zenith Defy Extreme launched at Watches and Wonders.

WP: Your retail partners have also accelerated ecommerce and clienteling while stores have been closed. Now you are rolling our your own boutiques and direct to consumer ecommerce, do you expect your wholesale business to account for as high a proportion of overall sales as before the crisis?

JT: We have to keep a balance. I am not a retail guy historically, and I know that retail is extremely important for brand building and influencing consumers. I still believe a lot in our wholesale business, which is not the case for all of my colleagues.

Yesterday I had a zoom with a group of Swiss watch collectors and they told me that they appreciate going to an expert retailer. Of course, if a customer goes to a monobrand boutique, they are going to be told that the brand is the best in the world. But most people need impartial advice, which is what they are going to get from a multibrand retailer.

A customer could go into a showroom and say they are looking for a really nice chronograph. I hope the salesperson will put a Zenith on the tray, but it could be a Rolex, an Omega or many other brands. Then it is the customer’s choice with some help from the salesperson.

In our industry there can be arrogance from certain brands that say they do not need retailers anymore. I do not like to hear that because in most cases it is retailers that build brands, so we should respect that. Secondly, I strongly believe that clients still want a multibrand experience. That is my philosophy and I shout it loud and clear to our retailers. We will not shoot them in the leg, no way.

WP: You have boutiques in Asia, but do you have plans in the UK and the United States?

JT: Yes, we need boutiques. When I used to work for Vacheron, people were very scared about me opening boutiques, but I said that I would only open the right quantity of boutiques to reinforce brand building and awareness.

Retailers always react the same way when brands open boutiques. First, they shout at you, complaining that we are competing for their clients. After a few months they see their business picking up and they realise that our boutique is actually helping them attract new clients.

At the end of the day is it a win-win, but you always have to go through the same process. I learned that in the past.

We will go through that with Zenith. I would love to have a boutique in London and New York. We should be in Hong Kong. We just opened up in Dubai Mall in December.
The key message is that we have no intention to take business away from our partners.

We want to grow the brand for everybody. When I look at brands that have moved away from wholesale, I think they will eventually go back and reopen accounts with multibrands because we sell complicated items and customers want advice from neutral experts.

WP: If you do open boutiques in places like London and New York, you have the option to open it on your own, or you can open in partnership with one of your existing retail partners. What’s your preference?

JT: I am glad you asked this because it is super important and I have experienced this before in China. As a brand, you can open your own boutique in Shanghai and Beijing because they are huge cities with millions of people coming and going all the time. But, when you start to go into second tier cities more of a domestic market, you must not under-estimate the power of local retailers that have been taking care of their clients for decades. The retailers are members of all the right clubs and know everybody with the money to buy a luxury watch.

In smaller cities, it is so much better to open a franchise with a local retailer that really knows their customers. It is much more efficient.

Zenith is reminding collectors about its rich history through a programme of acquiring, restoring and selling iconic watches.

WP: The Chinese market has really saved the Swiss watch industry over the past 12 months, but do you think major groups like LVMH will work to maintain a balance between East and West and we do not get sucked into relying too heavily on China in a way the industry did 10 years’ ago?

JT: Another good question. It is crucial to keep a balance because brands that put all their eggs in one basket — and you are right that it has often been the Chinese basket — they might find themselves in a tough situation that backfires.

If you have a crisis in China, like there was in January and February last year, you can lose 60, 70, 80% of your business.

Secondly, we are seeing a second generation of Chinese customers who, unlike their parent’s generation, have grown up traveling the world; they may have been educated abroad and speak good English.

They are only interested in brands that they see in the best cities around the world. If they do not see you in these cities, they will consider the brand to be only made for the Chinese, and they do not like that. It is super important to be global.

WP: Do you think that when Chinese start traveling again, do you think they will return to buying their watches in major European capitals like London, Paris and Geneva, or do you expect a much higher proportion of sales to Chinese customers to take place in China?

JT: I think they will do both. They were locked in China in 2020 and spent there. A lot of people are speaking about Hainan Island as a holiday destination where Chinese can travel and shop, but Chinese people are very curious. They want to discover the world. As soon as they can travel they will do it again and they will spend overseas again. I am convinced of that. There is no way of replacing places like London, New York and Paris.

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