New Delhi: This year’s BaselWorld, the premier world trade show for watches, saw an industry largely confident of recovery. Watchmakers attended the show—held in March in Basel, Switzerland—in strength, several new models were launched and most manufacturers were optimistic of stronger sales after a tough preceding year. Stephen Urquhart, president of Omega Watches, spoke to Mint on the sidelines of the trade show. He gave his personal perspective on economic resurgence and on the significance of the Indian market for Omega. Edited excerpts:
Distribution focus: Urquhart says the company is thinking of a big launch and a couple of events in India this year. Courtesy Omega
There is a general sense at BaselWorld this year that the worst is behind us. That customers for premium watches are coming back. What has been your experience at Omega?
We weathered the storm well. Overall sales for the Swatch group was down around 7-8%, and Omega did slightly better than the overall group. There are two important things to say about all of this, about this scenario. First, the real trouble we had was only in two markets: USA and Japan. For reasons we all know. The so-called financial crisis, all it did was accelerate or emphasize intrinsic weaknesses in these economies. There were structural problems in the American retailing business. One of the chains went bankrupt and we lost 80 stores in one shot.
Japan has a very antiquated distribution system. The crisis just highlighted the need for reform.
What about the consumer?
That is the second point. During all those difficult months, the consumers didn’t abandon ship. This is contrary to what you might think. But we saw this in our own stores. Even in Japan and the USA. If you look at numbers for our own stores. Our 60 stores that are corporate-owned and operated by us without incentives and where watches are sold full price over the counter—sales were up 17%.
Everyone thinks the consumer ran away, he wanted bigger discounts. This is not true. Sure he had a little less money. But he didn’t run away. And things started picking up in October, November… right through February.
And are you seeing this recovery come from stronger US and Japanese markets?
You know, I hate this word “recovery”. You recover when you are sick. No one was sick. But if you must use that word… then yes the markets have to recover before we do. And so we are recovering also.
I must say that the good stores in the US are doing very well. The stores where the balance sheets are good, the staff is good and the training is good…they are doing well. The consumer today knows much more than the retail staff. He has the Internet, newspapers, magazines. So if the retail staff don’t know who the hell Omega is, (the) consumer won’t buy even at 10% discount.
In the past you could do with a salesgirl who didn’t know the difference between a mechanical and a quartz watch. Not any more. Which is probably why our corporate stores do so well. Customers feel at home there.
You had high expectations of the co-axial technology when you launched it…
That has definitely helped. It has added to sales. And also helped to give a new dimension to Omega. Till 10 years ago, nobody took Omega seriously. We weren’t one of the top mechanical movement watch brands. So when we launched the new technology, people were thinking: What the hell is Omega doing making movements?
They didn’t take us seriously.
But 10 years later I think in the consumer’s and retailer’s minds things have changed. They are taking us seriously. And now we have in-house movements and a new campaign (points at Omega posters on the wall).
It is part of a long process. I think we are in the early stages of what I like to call, in all modesty, the co-axial revolution. I know it sounds like corporate jargon. It sounds nice. But it is a serious idea. Today, except for two Omega lines, Speedmaster and one other line, all other watches use the co-axial movements. So it is not a niche product like so many other brands. We had to take this new technology and scale it up, industrialize it.
How difficult is it to get the consumer to get excited about something as technical as a type of watch movement or one element of a watch movement?
I wouldn’t use the word “excited”. That is a big word. But I think it is a subconscious thing for the consumer. For instance, just the other day I got an email from Hong Kong that made me very happy. A customer was looking at a Swiss watch brand, top of the line and not from our group. But at the very top end. He pointed at it and asked the salesperson if the movement was a co-axial! This is when you know that the idea and the campaign are working. This year we will make around 250,000 co-axial movements.
And we are not being big-headed in our promotion of the co-axial movement. We are being subtle. It is working. It means a lot for the future of Omega.
How was India for you last year?
India was good. I know this is clichéd but I would still call it a sleeping giant. We are building a strong foundation in India. We have good partners, five boutiques. We want to move faster. But it is not easy. Infrastructure is not so good. Malls are not doing so well. In China you can build a mall and overnight—poof!—you have 50,000 people coming overnight. In India, it is just not the same.
It is a different environment. I think we need to be patient. Go on building. None of the premium brands have really taken off. But the Indian consumer is interested. Especially when he is travelling. And taxes and duty structures are a problem. It is a flat world! People don’t want to pay 40% more for a small product they will get cheaper somewhere else.
Any special focus in India in 2010?
Distribution is key. The brand is well known in India. That is not a problem. But we need good partners. I don’t necessarily want to do it by myself in India.
Is the consumer in India any different from consumers in other places? Perhaps in terms of the products he wants?
No. Not at all. He’s the same as an Italian consumer or any other consumer. The Indian consumer is very knowledgeable, very sophisticated. He’s not looking for a flashy this or that. Nothing different. Not even in our communication.
And finally, what big plans for 2010? Especially in terms of associations and events?
Vancouver was a big event for us. I know the Winter Olympics is not a big thing for India. You had one guy, right? I saw the opening ceremony. There were 10 guys from the Indian federation and one participant holding the flag.
We are thinking of a big launch and a couple of events in India this year. But like I said, Omega’s focus will be on good distribution.