Swiss luxury goods company Compagnie Financière Richemont SA, which owns more than a dozen luxury watchmakers and jewelers, including Cartier, A. Lange & Sohne, Vacheron Constantin and IWC Schaffhausen, opened its first office in India recently. Maxime Ferté, regional director of IWC, the 140-year-old Swiss watchmaker and creator of the iconic Pilot and Portuguese range of watches, was in India to announce the opening of the office. Ferte, 38, spoke in an interview about the brand’s association with India and the Swiss watch industry as a whole. Edited excerpts:
1. What took you so long to come to India?
Even though we are big names, we are actually very small companies. In Switzerland, we have 600 workers, 400 of which are watchmakers. So the growth is a step-by-step process. First, we have to open subsidiaries in big countries like the US, Hong Kong and others. We opened our Shanghai office only in 2007, which is considerably late. India was always taken care of by the office in Dubai and there was always a shortage of resources to open yet another subsidiary with a full team. But now that we have grown enough, we are doing it.
At Richemont, we are at the higher segment of the pyramid and for that reason we are smaller in terms of production and customers. When you talk about the competition, like the Swatch Group, they cater to a bigger population and are bigger in terms of volume and so they need to be more visible and it is more urgent for them.
2. How has the Indian market been for you?
To start with, the Indian customer is very knowledgeable. Indians are much more well travelled... And they are socially very active. They have connections everywhere, London, New York, Shanghai, you name it. Also, in India there is this fast-growing middle class which is eventually the consumers of luxury goods.
3. Which is your biggest market?
Our biggest market is Hong Kong. Until very recently our biggest markets were Switzerland, Italy and Germany. But after the economic slowdown of 2008, the Far East has grown faster than most and Hong Kong has become our biggest market.
4. So you agree the economic crisis has hurt business.
Actually, for IWC, the economic crisis was a blessing in disguise. First of all, it was the opportunity for us to differentiate from the competition. Because, honestly, before the crisis almost anything worked. But the consumer became choosy after the crisis. They started to question what they were buying. And that presented us with the opportunity to tell the world our origin, authenticity and values.
From the retailers’ point of view, they also needed to invest in new stock and a range of watches across price points and interests. And, they found that range with IWC because here we have watches starting from a few thousand euros to a hundred thousand euros.
And lastly, and this may be surprising, some suppliers that did not have the time for us before the crisis, started to take us seriously. We were able to show them that we may not be huge but we are consistent.
So we were able to consolidate our presence with some of the retailers.
5. You sell through retailers in India. Are there plans for single-brand stores?
We have to. But when, I don’t know. It depends on finding the right opportunity, the right space and of course, we need a local partner and certainly better infrastructure.
6. What change would you like to see in India?
The main challenge in India is the infrastructure. To house luxury brands. It would be nice to see more options in terms of locations. Bigger malls or even concepts like fashion streets.
7. The Indian currency has fallen some 20% this year. Has it hurt sales?
Yes it has, but not too much. And that’s why we try and keep the US dollar as our base currency in all the markets. We then suggest a selling price to the retailer and make a point that we might have to change in case there is a major fluctuation in the local currency, say more than 10%.
And generally, we don’t jump off the bed as soon as a currency falls. We wait but if the situation persists, we have to make adjustments.
To give you an example, when the prices of precious metals rose, we did not have an option other than to adjust the price points worldwide.
8. Swatch group recently decided to restrict its movements to in-house brands. What impact will this move have on the industry?
It’s not exactly that way. The Swatch Group has said that they will not supply the spare parts. They will, however, continue to sell finished goods, which, of course, will be costlier. And that is the catch. There also might be some legal issues as well.
9. What are the current trends in the watch industry?
In the past few years, classic is back in fashion. Because when the going gets tough, people don’t want something fancy. They are going back to the tried and tested.
10. Are you saying the boom days are over and the industry is in the consolidation phase?
That we already know. Since 2008 we are feeling that. There is still some growth left in the world. It’s just that it doesn’t come from Europe any more.
P.S. And you are looking at the Far East for that growth?
Yes, we are looking at the Far East, south-east Asia, the Middle East, India, everywhere. Because again it is dangerous to look at only one region for growth...
Big Pilot Top Gun Miramar (reference 5019): Rs.11 lakh
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