How some of the world’s leading independent watchmakers are navigating the Covid-19 crisis

Could Netflix serve as an inspiration to the luxury watch industry? It can, or at least its co-founder Marc Randolph and his book about the genesis of the streaming service This Will Never Work already has, says Maximilian Büsser, the founder of avant-garde brand MB&F.

“Last year, I read Randolph’s biography. The one thing that he has learnt is that you have to try something. Try small. Don’t put your whole company at stake. If that doesn’t work, try something new,” says Büsser.

MB&F is one of the Swiss watch industry’s leading independent brands and its boldfaced MAD Gallery concepts, one of which can be found at the Dubai Mall, is full of ‘kinetic art’ as Büsser refers to them.

Independents do not have the same marketing budgets, interconnectedness or safety net that conglomerates offer brands within their portfolios – yet that can in itself be a distinct advantage.

“You have to basically think David vs Goliath,” says Büsser. “You cannot implement the same weapons as Goliath. You have no chance whatsoever.”

Those chosen weapons often include simple business decisions that are at the discretion of the owner of the brand, and not at the mercy of sometimes bureaucratic board members within large groups.

One of Büsser’s weapons that has come handy during the crisis is that he always kept the market hungry for his creations. “The lessons that we must learn from this crisis are the same lessons that we must learn from non-crisis situations. Produce fewer quantities than the market wants. We’ve been doing that for six years.” MB&F makes under 250 timepieces a year, with each of them priced at an average of Dhs300,000.

Being a nimble David has been an advantage to other independent watch brands too. Take, for example, Breitling. It certainly is much larger in scale compared to MB&F and has more resources at its disposal, but it still hasn’t blinked when it comes to rapidly altering course.

It is led by Georges Kern, who has spent a considerable time at the helm of IWC – part of the Richemont Group that also has other brands including Cartier, Vacheron Constantin and Panerai within its portfolio.

Kern has worked within the trappings of large groups, and now with Breitling he has reinvented the way he operates the brand’s business model. “You know, when you are an independent company – alone – it’s always different than when you’re in a group. But the beauty is, you can be extremely quick. And that is what we have been doing in the last 18 months. It’s unbelievable when I think about what we have achieved in this short period of time. Probably in another context, it could have taken five or six years,” Kern told Gulf Business.

He explains that one of the direct outcomes of the Covid-19 crisis was the decision to implement a Webcast Summit in April where instead of a traditional elaborate on-ground affair across major markets, Breitling decided to take the digital route to unveil its novelties. A key reason he cited was to “stay in contact” with consumers.

It’s a sentiment that resonates with other independents like the British watchmaker Bremont. “People still want to connect to your brand and product. Don’t go off their radar, because [otherwise] once you get through this you will be forgotten,” explains Giles English, co-founder of Bremont, while urging independents not to drop out of sight even if they’ve been hit hard by the pandemic.

Independent brands have traditionally had a more direct reach and connect with fans, generating small-batch cult-like interest in their creations.

“Don’t shut up the shutters and keep being proactive both in design, manufacturing and marketing,” adds English while saying that the impact of the virus on Bremont’s business has been “considerable”.

Keeping up a brave front though for Bremont hasn’t come without deliberate effort. “All our own stores and wholesale stores have been closed and that has been the bulk of our traditional sales. We have been lucky that we have a strong military business that has not been affected and also we have a strong e-commerce business that has grown considerably in this period. This, however, does not make up for such a retail loss in turnover,” says English.

But the pandemic hasn’t had a calamitous effect on all independents across the board. Büsser says that in April, although 24 of his brand’s 26 retailers were closed, they did a sell out that was only 30 per cent less than a normal month. “In May, we had our second-best month of May in history,” noted Büsser.

“Unprecedented” was the word the Federation of the Swiss Watch Industry (FH), which tracks revenues and sales of the sector, used to describe the effect that the Covid-19 pandemic has had on the industry as a whole.

As recently as January, the Swiss watch industry could pat itself on its back. Exports to key markets including China, Japan, Singapore were all on the up and the value of Swiss watch exports globally increased 9.4 per cent year-on-year.

By April, the FH revealed that Swiss watch exports decreased 81 per cent in value and 79 per cent in units compared to April 2019.

The UAE market for Swiss watches took a proportionate hit, though has still managed to stay among the top 10 markets.

In January, the UAE accounted for CHF86m in watch exports, a 9 per cent year-on-on-year increase and placed it at ninth position ahead of other markets such as France, Italy and Saudi Arabia.

By April, the UAE accounted for only CHF7.2m worth of Swiss watch exports. Even though that was a whopping 89.2 per cent dip year-on-year, it still was the tenth biggest market by value in April, and its imports were more than double the value of that of mature markets like the UK.

Speaking from his MAD Gallery in Dubai, Büsser adds that he has had to rethink his initial decision in March to cut the year’s production in half. “By the end of June, we would have more or less delivered our previous year’s budget with a 100 per cent sell out,” he says, striking an optimistic note.

Büsser says of his sales in the UAE, “By the end of June, the sell out here will be close to 50 per cent higher than the whole of last year. Of course, the 15-piece limited edition we did for Seddiqi is part of that.”

The watch that Büsser is referring to is a special limited-edition LM 101 MB&F x H. Moser with an aqua blue fume dial that he created for Ahmed Seddiqi & Sons, a retailer who backed him from when he conceptualised the brand 15 years ago.

The watch is also noteworthy because Büsser teamed up with another independent watchmaker, H. Moser & Cie, headed up by the dynamic Edouard Meylan.

The family-owned Schaffhausen-based H. Moser & Cie makes 1,500 watches a year and is one of the very few watchmakers capable of producing hairsprings through its Precision Engineering division. “We’ve been working with Moser for 10 years. All our Legacy Machines, all our integrated movements have got hairsprings from Precision Engineering,” explains Büsser, adding that the 101 features a double hairspring.

MB&F have also worked on another limited edition recently with Moser – the Endeavour Cylindrical Tourbillon H. Moser x MB&F – that features a cylindrical hairspring.

“We’re both family-owned companies and around their same size. They’re very strong in markets where we aren’t and the other way around. For example, they are very strong in China,” said Büsser.

Pandemic or not, China has still managed to retain the top position as the biggest market for Swiss watch exports.

In April, China accounted for CHF110.3m of all Swiss watch exports, down only 16.1 per cent year-on-year, and was bigger than the next three markets – Hong Kong (CHF42.2m), US (CHF27.9m) and South Korea (CHF25.1m) – combined.

“There will be an even greater rush to China as the Chinese stop travelling as much,” predicts Bremont’s English.

But just as MB&F found a bright spot in the Middle East, Breitling also says that the market here has potential that cannot be taken for granted. “The Middle East ranks fifth globally [for Breitling]. In the first quarter up until March, Dubai boutiques were among the leading boutiques in the world.”

Breitling has already rolled out its spring novelties across boutiques in the Middle East and part of the proceeds from the new Superocean Heritage ’57 Limited Edition sold here are being donated to charities supporting the frontline healthcare workers in some of the most affected countries.

Will the luxury watch industry in general, and the independents in specific, go all out on e-commerce going forward? “Of course not,” retorts Büsser, adding that while he still doesn’t believe that MB&F’s timepieces would be best showcased online and added to a “basket”, he has decided to introduce very few of its watches on a rotation basis every two weeks on the brand’s online platform.

There will be one watch from MB&F’s headquarters in Geneva and another from one of its retailers globally. It’s a clever way for MB&F to bat in the retailer’s corner while also fueling the buzz around some of its most iconic models.

E-commerce though is being more vigorously implemented by other independents. English says that he expects a big push to direct to consumer e-commerce and that they have “jumped forward by five years in a couple of months.”

One of Bremont’s recent initiatives was to introduce a new online configurator that allows customers to choose their own version of the Bremont MBII timepiece from over 1,000 possible combinations to customise the case finish, colour of the barrel, dial, case back, strap and even the buckle. “We had been growing our online for a couple of years and the MB configurator was always part of our plans, but we did fast-track it as a result of Covid. What the crisis has done is to focus us more online and to do that better, but also we will be opening more boutiques. There are great retail deals to be had,” offers English as a counterpoint to the rise of e-commerce.

Resonating Gile’s enthusiasm about physical retail, Breitling’s Kern adds, “I do think physical retail will remain number one. While digital can replace a lot in the decision-making process, in the buying phase, the act of visiting physical stores will remain huge. Despite the fact that 70 per cent of the [purchasing] decision process happens online, people want the physical 360-degree understanding of the brand.”

Breitling isn’t relegating its e-commerce business to an afterthought. “We have now introduced e-commerce in the US, UK, China, Japan, Australia, Canada and Europe. And in addition, the products are also available on the retailers’ e-commerce sites. The share of online sales will most certainly increase. But will it go up to over 10 per cent? We will have to see,” says Kern.

Here in the Middle East, Breitling is pushing forward with its boutique expansion strategy. “We are in the final stages of production for our new boutique in Mirdif City Centre set to be open by July 2020,” says Kern. “2020 will also see a particular focus on Saudi Arabia with three new boutiques in Jeddah, Riyadh and Al Khobar.”

Büsser emphasises that the really successful retailers going forward will be those who have cultivated deep-rooted relationships with their clients. “For retailers, it’s no longer about having great brands and a great location anymore – it’s about having great relationships with clients that trust them.”

There are key takeaways to be learnt from this pandemic. For companies like Bremont, it is about being more resolute, decisive and reducing wastage. “I think if you are a small or large brand the effects have been the same, it’s all about whether you have the resources to get through it and the ability to cut costs. If you can, the future may be very positive. One big positive is that there is a big wastage of resource in the watch industry so there are big efficiency savings to be made across the groups and independents. If you were weak going into this, you will really be struggling,” cautions English.

For MB&F, this period has been one which Büsser admits has shaken himself and his team from a creeping sense of complacency that resulted from the success MB&F has enjoyed over the last decade-and-a-half of its existence. “Success is your biggest enemy. When you’re successful, you start becoming complacent, you start believing your own narrative and you lose creativity. I’ve learnt [from this crisis that] the only thing you can be sure of, is that you can be sure of nothing. Once you’ve understood that, whatever plans you create, you’re going to reevaluate them in a week or month. What you need is a long-term vision of the brand and your values. All the rest, you adapt.”