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Salvatore Ferragamo - Shoe Shops in Knightsbridge, London, Sloane ...The prestigious Hall 1 of Baselworld may have more empty space than originally planned as four fashion watch brands are the latest to drag out of the 2017 edition of the world’s largest watch and jewelry show.

The Timex Group Swiss Luxury Division—which manages the watch business for luxury brands Salvatore Ferragamo, Versace, Versus and Nautica through licensing agreements—is the newest to announce that it’s leaving the annual fair held in Basel, Switzerland.

Paolo Marai, president and CEO of the division of the Timex Group, in an exclusive interview, said the $3 million investment into the show could be better spent in other areas of its global business. The four brands occupied Hall 1.1, the second floor of the hall dedicated to “globalwatch and jewelry brands.

“I think that Baselworld is a large investment for everybody and is for my part losing some effectiveness,he said. “It was once crucial in numerous levels. First, it was a good opportunity to satisfy journalists but they’re coming less and less to Baselworld. And even those who come are reducing the time they’re staying—running from one appointment to the following./p>

He continued, “Second, in the past we used to fulfill quite a lot of retailers. This year not one single country sent retailers. So what you meet in Baselworld are distributors. But we all know the distributors. I don’t need to go to Baselworld for that./p>

Baselworld Hall. 1.1 (Photo Courtesy of Baselworld)

Marai says the changing luxury business demands that luxury brands, particularly fashion brands, should be closer to the consumer. He argues Baselworld isn’t an efficient way to do that.

“Baselworld is becoming more of a place to exhibit. I’m there because I would like to indicate that I’m at Basel rather than doing something that is de facto effective toward the tip consumer,said Marai, a native of Milan who now lives in Lugano, Switzerland, where the Timex Group Swiss Luxury Division is located. “We need to move the needle and be near the tip consumer I can put in the same amount of cash to be closer to the tip consumer and be more effective It is a cost I do not believe we will afford anymore.

He added, “I’m not the only one (leaving) Baselworld. Loads of brands have decided to step out of there. When the market is suffering I believe it is advisable to try something new. It is worth it for us to do something different./p>

In May, luxury watch brands, Ulysse Nardin and Girard-Perregaux, announced that they were exiting Baselworld to exhibit on the Salon International de Haute Horlogerie (SIHH), which is held January in Geneva. Both brands—owned by Kering, the French luxury goods holding company—occupied probably the most prestigious space at Baselworld, Hall 1.0, the primary floor of the global Hall where the most prestigious independent and company-owned watch brands are located.

Watch, jewelry and gem companies have been leaving Baselworld since the trade show unveiled its $454.5 million upgrade to the Messe Basel fair complex in 2013. The new renovations came with hefty price increases for exhibition space because the trade show began positioning itself as a luxury event. In response, in 2013 there have been 355 fewer exhibitors, primarily smaller players and people who provide services and products within the trade. However, just a few large brands also balked at the brand new asking price. International jewelry brand, David Yurman, was perhaps probably the most high-profile company to leave the fair in 2013.

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The change did attract some luxury brands, most notably Graff Diamonds, which began exhibiting at Baselworld in 2014 at Hall 1.1.

Baselworld Hall 1.0 (Photo Courtesy of Baselworld)

Meanwhile, UBM Asia established “Jewellery & Gem Fair Europein 2014 in Freiburg, Germany. The dates and placement line up nicely with Baselworld. Freiburg is lower than an hour away from Basel, Switzerland. Most of the jewelry, gem and watch trade companies that used to exhibit at Baselworld now exhibit at the new show.

Despite the problems, Baselworld remains the world’s largest watch and jewelry fair. It’s also the most important watch and jewelry show on this planet for brand spanking new product introductions and for international exposure. Show officials said in 2016 attracted 145,000 attendees—who include representatives from exhibiting companies, buyers and other visitors—a 3 percent decline from 2015. There have been approximately 1,500 exhibitors. The variety of journalists covering the event increased 3 percent to about 4,400 from 70 countries.

It’s not just Baselworld. Large and small jewelry and watch trade shows throughout the world have been struggling to seek out their footing. The September Hong Kong Jewellery & Gem Fair, the world’s largest fine jewelry trade fair, reported attendance declines for 2 consecutive years. In the U.S., JCK Las Vegas (the biggest jewelry trade show in North America and at one time the most important in the world) has never fully recovered from the 2008-2009 global recession. SIHH, known for its exclusivity, has opened its doors to more watch exhibitors and buyers.

Marai says driving this move is a change in the best way that consumers relate to brands. This has prompted his push to seek out new ways for his company to get closer to its customers through its marketing practices and sales. The seek for these new practices is further complicated by the varied economic and geopolitical issues throughout the world which can be affecting distribution and sales. This ranges from the steep decline in sales from the once booming China and Hong Kong marketplace, to the continuing conflicts within the Middle East, the Western economic sanctions imposed on Russia and the surprise victory of Donald Trump as U.S. president.

He says the brands he manages through the Timex luxury division are doing better than most because they’re a smaller and newer to the industry. The Versace and Versus part of the business was founded in 2004 and the Ferragamo and Nautica business three years later. However, he says it’s essential to be proactive.

“In tough moments it’s a must to be more active. The market is suffering, the economy will not be perfect everywhere. We’re still very satisfied with what’s happening this year but I must admit the market shouldn’t be doing well,he said. “We’re still showing growth because we are relatively small. We will still grow but usually the market shouldn’t be performing well./p>

Part of being active is embracing what Marai calls the “new digital revolutionwith a “shop now, buy nowmentality.

“Everything goes digital at this moment and we’ve been struggling the past two years trying to embrace it. Because we work under license so we’ve some constraints. The brands cannot go in that direction only for watches. But an increasing number of all luxury brands need to know this digital revolution and must manage it./p>

This requires a more direct relationship by brands with consumers through social media and through the availability of their products. This approach, in and of itself, shouldn’t be new to those within the luxury market. However, achieving this relationship has been difficult for established luxury and fashion brands.

“Those who have the money in the subsequent 10 years need to be reached in a totally different way,he said. “Traditional communication is over. Those with the capacity to understand and to translate this into the market might be simpler./p>

Marai is concerned with using the Internet as a tool to communicate directly with consumers and present their products and brand. As an eCommerce tool, he still says traditional retail will still be primary source of sales, noting the data indicates that that eCommerce will account for 20 percent of total luxury sales in 2025.

“There is a long approach to go still. I’m pretty sure traditional distribution is frightened by the Internet they usually should not be because it is used more as an information tool rather than only a purchasing tool. (However) it’s the perfect approach to present your products. You possibly can have your best show, your best shop where you’ll be able to present your entire products exactly as you want them to be presented./p>

Marai is also aware that online shopping is a quick and convenient way for consumers to buy products.

“Through digital you may supply your customer with whatever he wants so when he comes to us for a different dial or different strap it’s very simple (to fulfill that order). We have to attempt to create a bridge between the traditional distribution and the new tools which might be offered through eCommerce with a view to be simpler with the tip consumer./p>

Often overlooked Marai says is that more than 50 percent of watches are purchased as a gift. “This means the presentation needs to be more luxurious, more than the product itself sometimes./p>

As well as, he says watches from fashion brands are considered an accessory and a vehicle of self expression and should be further addressed by luxury watch brands.

“Brands comparable to ours, fashion brands, the design is more relevant than the movement inside. We’ve got a superb opportunity at the moment. Who cares today what’s inside? The new generation they don’t consider watches high-end technology./p>

One piece of technology that muddled the watch market was the smart watch, Marai says, which after their initial success have failed keep the interest of consumers. However, it did cause damage by creating confusion with consumers and throughout the industry. He said the rush by traditional watch manufacturers to create their own digital watches was a mistake.

“Apple was an enormous success in the initial phase but people who bought it don’t use it,he said. “It has created confusion for the end consumer and the distribution channels. Everybody wanted to be the first to provide the product and I feel it was a mistake. It was a bit bit too early./p>

Marai says the luxury watch industry remains to be a “relatively rich market,meaning that compared to other industries the margins are high. But he hinted that this may occasionally change down the road as brands continue to market and sell on to consumers.

“The distributor buys the product from the industry after which sells it to the retailer. (This) is just not something that will last forever.

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