Omega, the Swiss watchmaker with more than 250 years of history, is currently, like most luxury watch brands, at a crossroads. The demand for Swiss watches continues to fall, with a 16% decline recorded in October, the biggest such in the past seven years, according to a study by Bloomberg. It could be a time for reflection for the official timekeeper at the Olympics since 1932, the brand whose model was the first one to land on the moon. Even James Bond ditched the Rolex Submariner for the Omega Seamaster, to become its ambassador .
Last year at the annual BaselWorld fair, it launched the Omega Globemaster with the world’s first master co-axial chronometer movement, arguably the most accurate and precise movement till date.
It is certainly not the first time Omega is facing a crisis. In the 1970s, it was among the worst hit by the quartz movement and was subsequently acquired by what is known today as the Swatch Group.
Jean-Claude Monachon, Omega’s vice-president for product and customer service, has been in the watch business for almost 37 years, the past 19 of which he has spent at Omega, heading a team of 50 people in charge of design and new movements.
Monachon, 59, was in India recently. He spoke about the future of the watch industry, innovations and the possible smartwatch threat. Edited excerpts from an interview:
When and why do you develop a new watch?
Innovation has been our legacy. So, when we do a new product, we take the brand’s DNA and adapt it with the latest technology. I have products planned till 2020. We have a new product every three months.
As to why, I think all the luxury brands have to come up with new products to be relevant. You can have some iconic products, like the Omega Speedmaster we launched in 1957. The model that has been to the moon, we call it the “moon watch” and it has been with Omega since 1969. It is still there in our collection because an incredible story is behind it. But so many innovations happen today. So, you design new products. We launched the Master Chronometer last year. Now, we have to put movement in other collections. The plan is to eventually use this movement in all the mechanical watches.
What is the next big thing for Swiss watchmakers?
Omega was No. 1 in the world in the 1970s. And then the Japanese came to Switzerland with electronic watches. We went in head on for the concept, but what happened then? The prices went down. The quality went down. Had (the late) Mr Nicolas Hayek of Swatch Group not bought these brands facing difficult times, they would have been bought by the Japanese and I don’t know what would have happened...
At the time of the quartz revolution, I remember some people saying that there will never be mechanical watches anymore. Look where we are today.
But those people were not fools. Look at the cars today. They are full of gadgets. Imagine the latest BMW car today and think of it 50 years down the line. Will it survive? I think not. A mechanical watch, on the other hand, will still work. And remember, we don’t need watches today. Everything from the phone to the microwave can tell you the time. It is strange. I think it is the emotional connect. In the future, especially in the Swiss luxury watch industry, the key issue will be customer service. If you can exceed customer expectation, you win.
How much of your business is mechanical and how much is quartz?
In terms of turnover, it is 70-30 in favour of the mechanical.
What are your biggest markets and where does India sit in there?
China is No. 1. Then there is the US and Hong Kong, followed by Japan and Europe. India is 12th on our list.
Did the demonetization drive have any effect so far on your Indian business?
I think the idea is good. The implementation, I don’t know if they needed to do it with such a short notice period. But it will not affect us much.
What are your views on the goods and services tax?
What I have heard about it is that all the regions in India will have the same tax. It will be simpler to do business and move products from one part of the country to another. As for the quantum of tax, it is something we have to live with. Yes, we will make less money for one cycle, but we will all get used to it. In Switzerland, for example, we have low tax and we enjoy it. But in France, where the taxes are much higher, about 22% on luxury goods, people are still buying luxury products.
Are smartwatches a threat to the industry?
Well, no. I could imagine a smartwatch as an accessory in a bracelet, but not as a replacement for the mechanical watch. It has no soul. I have friends who have bought Apple watches. But they are already in the drawer. It is like a phone. I might not have the same phone the next year. Where are iPhone 1 and 2? The technology becomes obsolete. What happened to the old IBM computers? You can’t do anything with them. But our pie pan dial will never get old.
What is more important, the brand name or the price you pay for a brand?
I think the money that you pay for a brand. You want the top of the line products, you have to pay for them. But at the same time, there are brands that are pricing some products more than they are worth. So, it is about knowing the amount you need to pay for exactly what you want. Image is important, but at the end, the quality of the product and its pricing has to be rational.
What is your favourite watch outside Omega?
A Breguet or a Jaquet Droz.