Yves Meylan is the director of international retail for luxury Swiss watchmaker Jaeger-LeCoultre. Executive caught up with him to get the latest trends in high end watches, from design to the sales floor.
Tell me a little bit about yourself. Your job is a big responsibility during these very volatile times, especially since 2000, when most probably the luxury brands had to redefine their approach.
I am in charge of retail for the brands’ development of all our boutique networks. Today we have 65 boutiques around the world. We have seven in the Middle East. I am also in charge of the ‘after sales services’ which is another hot topic in the watch industry because all the watches that we sell, after three to five years, need to be serviced, you know, cleaned and such. So the more watches around the market, the more we will need watchmakers to train people to service them.
Jaeger-LeCoultre has been enjoying a very strong growth over the last ten years and we just finished our fiscal year in March. We are very positive and bullish for the future.
So basically all our indicators are green and moving forward.
Can you give us growth figures of the region?
I cannot because [Jaeger-LeCoultre’s parent company] Richemont Group discloses growth per region for the total business and growth per category. So if you go to the annual report of Richemont, you will see the jeweler maison or the watchmaking maison to which we belong but we have five or six brands with us and they don’t disclose per brand or segment to the public.
The watchmaking industry is a pretty secretive industry and this is the same for other groups.
What about shareholders, if they want to read information on the commercial performance?
You will get the performance results of the Richemont Group but not at the brand level.
So what have been the main global challenges that you have been facing?
A challenge, which is also a driver, is the strength of the Asian customers, especially the Chinese after what happened with China last year with the clampdown on corruption and gift giving. Maybe we are not the brand that was the most affected because we are not a gift brand, or not the brand the Chinese used to buy as gifts, but still we all suffered because suddenly China was not as booming as it has been for the past few years.
It is also a challenge because today you have Chinese everywhere. Maybe Lebanon is one of the few exceptions since you don’t have tourism because of the political situation and maybe you don’t have a lot of Chinese investors in Lebanon but if you go to Abu Dhabi, the hotels are pretty much relying on the Chinese and if you go to Dubai Mall, it’s Chinese everywhere.
So it’s a challenge in our boutiques and our retailers because they have to serve Chinese who have a different culture and it’s not the same as serving locals. So the whole luxury industry had to embrace how to deal with Chinese clients, how to recruit Chinese staff because if you don’t have Chinese speaking staff you might miss a sale: the whole business is around Chinese tourists.
Would it be fair to say that this Chinese phenomena, representing 50 percent of customers, is applicable worldwide or only to the UAE?
It’s worldwide. Probably less than 50 percent worldwide because in Europe you still have a lot of local customers and in Latin America you don’t have Chinese, so worldwide it’s not 50 percent. But we are starting to see Chinese everywhere in our boutiques.
Even in Saudi, we have Chinese and they’re not tourists but investors in telecom and construction who shop for themselves and for gifts when in Saudi to take advantage of the lower prices due to lower taxes.
Another market which interests me is the Japanese market which has been growing relatively faster than other parts of the world?
It was funny because the year of the tsunami, we thought the market would be dead for a long time and in fact you had this national effort with the idea to help consumption to help the businesses.
The Japanese market for us is underrepresented because it’s still a small market. But there is a lot of potential and even if the population is growing older, you also have Chinese coming to Japan even if the sentiment between them is not always good. Japan is a big influencer in Asia, along with Korea, and anything that is hot in these countries, the Chinese like it. So when you do good marketing in these countries, you also get the benefit in mainland China.
So how do you integrate this into your marketing or commercial strategy? Would Korean or Japanese stars become your brand ambassadors?
Unfortunately, we don’t have those big budgets that allow us to take the rising star in Korea and make it.
But, you know, we have been around for a 181 years and when we do a new model it takes from two to three years from the idea to the delivery so we cannot stay with the trends. It’s impossible: when you do a plastic watch you can say, “The trend for this season is green, let’s do a green watch,” but for us even when we identify the trend by the time we have developed the product, manufactured it and delivered it, the trend will be over.
So we don’t like to follow trends or to be on the edge of everything. We do classical watches, we do fine watches: we have a lot of ideas and let’s say that in the last ten years we really well identified what the market needs.
Speaking of that, ultra-thin movement watches from back in the 80s are back in style. Is this part of a trend?
Exactly, that’s the trend in the market. A few years ago, everything that was big was the ultimate cool but today its back to beautiful watchmaking, elegance and purity. You know sometimes you have excess periods and sometimes you go back to simplicity.
It is also the learning curve; when you wear a thin watch like this, it’s not a very highly recognizable watch. While it is quite expensive, if you wear it your friends will not say, “Wow! You have this much on your wrist … ” so it takes some education and some self-confidence for one to wear this.
What are the latest creations for Jaeger-LeCoultre?
If you take the ultimate in watchmaking, this year we introduced the Minute Repeater, which is the thinnest minute repeater watch ever made with a special tourbillon, only held from the bottom, which was never done. There are a lot of world premieres in this watch and its part of what we call the Hybris Mechanica collection, the grand complications and its number 11.
At the same time we revisited this Hybris Mechanica in an artistic way and presented eleven pieces which are called Hybris Artistica. We then combined what we believe is the best in watchmaking with enamel, gem-setting, engraving … all the methods that we have.
One of the key things of Jaeger-LeCoultre is that we are true manufactures with all the skills, so the best is to combine everything. We wanted to show that we are not just technical and when we put all our skills together we can make artistic things. But these are €2 million watches so they are the crème de la crème. They contribute to the margin but they are difficult to produce and market and we don’t have a higher margin on this when compared with other watches.
Reverso has continued to grow but we added the Master line which is taking the significant share of our business and we also introduced a lady’s line, Rendez-Vous, a new design which was done from scratch only for women with a very distinctive look which includes diamonds on the bezel and new complications for women.
Also being sold in the Middle East is the pink gold with the mother of pearl model of Rendez-Vous because it fits the taste and size of women here, while the smaller ones are sold in Asia.
So we have kind of rebalanced the brand which was, maybe ten years ago, 60 or 70 percent Reverso. Today it is much more balanced and we have an engine that works on many cylinders and not just one.
The last three years have been very difficult for Lebanon economically especially with the absence of tourism, yet you decided to keep your flagship shop and at the same time you added to it. How is this doing? What is going on in Lebanon knowing that it is too small to be on the charts?
That’s the strength of [Lebanese luxury merchant] Atamian, you know when the sea is going down you see who is good and who is not good. At Atamian they know very well how to treat their customers.
Maybe they had a lack of traffic but if you wait in your boutique and wait for people to come to you, it’s not going to work: this was maybe the job of the retailer ten years ago and might be the job in Dubai Mall which attracts millions of people but here Atamian works very well on their connection with the VIP people so that when there are Lebanese coming to visit they can grab them. They treat their customers and feed the loyalty: they are super active and that is the only way to keep the business running.
So we did a good job, it’s not super work but we were able to maintain our numbers and sell a few very important pieces which could compensate for the lack of volume. That is the strength of a local partner like Atamian and of course the brand is attractive.
Is Lebanon still the trendsetter of the Middle East or has the trendsetting positioning which we always had moved somewhere else in the region?
Honestly I wouldn’t be able to tell you and maybe we should ask the local team. But what I feel and understand is that all the locals in the Gulf used to have this habit of going to Beirut or Paris for the summer and now this is changing. They are changing their visited countries and they don’t have these habits anymore, everything is moving today. So I’m not sure Lebanon is still a trendsetter for watches, maybe for other products.
If I want to get a good deal on a LeCoultre where should I buy it from around the world?
Today, probably Dubai or Hong Kong but then I don’t know the discount they give but price positioning is good. For discounts, no one will beat the Lebanese like Sfeir or Arige.
Any finals words?
At Jaeger LeCoultre we have three emerging pillars and the Middle East is one of them, so we have a growth strategy for the region to increase our presence and are being bullish about it.