Executive Life sat down with Luc Rochereau, IWC’s regional brand director for Middle East, India and Africa, to discuss the re-opening of the brand’s local boutique in the Jewelry Souks section of Beirut Souks in October, their relationship with local distributor Atamian, and how the brand fares among other fine watchmakers.
E Can you tell us about the newly redesigned boutique?
LR: This is a very important moment for us. Next year, we celebrate our 150th anniversary. IWC was created by an American entrepreneur who traveled to Europe to find cheap labor, settling in a village called Schaffhausen in the German part of Switzerland. He brought with him the Industrial Revolution and the American way of working—everyone in one building working from 8 a.m. to 5 p.m. , with a lunch break—which completely changed watch manufacturing in Switzerland. We want to celebrate that as often as we can, and this was a good opportunity with our partner to renovate this beautiful boutique.
For the opening, we’ve invited our fantastic clients, who are very loyal to IWC. We’re not a very showy brand; we’re quite understated. Our brand is for discreet people, connoisseurs, and that’s why a lot of people in business love IWC, because they don’t want to show off, but people will recognize it.
E How do you win over new clients?
LR: We try to attract them with marketing, but I think most of the time it’s referrals. Our loyal clients are so proud that they talk to their friends and bring them to the brand—they’re our best salespeople. IWC is a very reliable brand, and when you offer an IWC to someone, it’s such an amazing gift because it’s about emotions. Fine watches aren’t about reading time—you can do that on your phone—it’s about emotions. A special piece on your wrist is an amazing feeling, especially for men because we’re not lucky like women to accessorize with jewelry and handbags, so it’s important to have a nice watch.
E Do you think smartwatches will ever be a threat to fine watchmakers?
LR: Not at all. It’s a different segment. Smartwatches are a gadget and evolve every few months, so you have to change it regularly. With fine watchmaking, you buy a watch to keep, and wear, during any time of day or evening. I play golf, and I have a smartwatch that serves a purpose, but I know it will be obsolete in a few months. It’s not at all a threat for us. On the contrary, it’s an opportunity because 85 percent of the population don’t wear watches anymore. So for a lot of young people it creates the habit of wearing a watch, and then they’ll upgrade to a fine watch at some stage.
E Tastes are changing. How does a company like IWC adapt to these changes in tastes and design?
LR: We evolve and follow the trends of design. Five years ago, the trend was to have bigger watches; now we’re coming back to a smaller size. We have designers, and we analyze the market for what the people are looking for. We have to adapt, but within our DNA. You can’t succeed if you create something that’s the opposite of what people like. It’s important to follow the trends and target the next generation. One of the biggest challenges of any luxury brand is to attract the next generation because otherwise, your brand will be associated with your grandparents.
E The world economy is changing. There’s the fast growth of Asia, while countries in the Arab world and the Levant have always been big markets but are facing economic difficulties. How do you adapt to fluctuations in the world economy?
LR: Fifteen years ago, our brand was not distributed like it is now. We had zero boutiques in the world eight years ago, and now we have 51. In the Gulf, we have six boutiques. We opened our second boutique in Dubai last year, and we’ll open two more in Saudi Arabia next year. So we are still growing. Demographically, in Asia, the Gulf, and the Levant, we’re growing because we opened more boutiques and our clients don’t have to travel to Europe to purchase IWC. We still have growth opportunity in the whole region. The export of luxury watches is decreasing by 10 percent, roughly, from last year. We’re growing in the region, and we’re not overpriced.
LR: The fastest growing market is mechanical watches. We’re not using quartz movements. Furthermore, we’re in haute horlogerie, which means we have specialized watchmakers assembling our movements, not machines. In Switzerland, a watchmaker goes to school for five years. If you’re good, you get an internship at IWC for seven years, and if you’re [really] good you stay after that. You start working on automatic movements and slowly upgrade to complications. These people are very skilled; that’s why the value is absolutely amazing. They work in a room with a red light, and if it’s on, you’re not allowed to enter because they need total silence. The best skills a watchmaker can have is dexterity because you’re working on micro-mechanics, and sometimes there are 500 parts to assemble, some of which you can’t see with the naked eye.
E If you compare consumer behavior, between let’s say the Gulf and the rest of the world. How would you describe the Middle Eastern client?
LR: I would say increasingly there are less differences among our clients because, especially in IWC, it’s mainly a man’s watch. Most of our clients travel around the world, they’re businessmen, entrepreneurs, and they have quite similar tastes. Our collection is available around the world, and while every client is looking for a different watch, a lot of watches are also bought as gifts. We have this amazing selection of offerings in our different ranges, and that’s one of the key factors of our success.
E Can you tell us about your relationships with your agents, especially in countries where there are economic difficulties. What are the KPIs?
LR: We’re not in a short-term business. We have a long-term vision and luxury is a long-term business. I make plans for the next five to 10 years because we know what will happen this year, next year—if there is no big economic crash. What we don’t want is to have partners who will be overstocked and not sell. We have our boutique here, so we know what they are facing. Retail is a very complex, difficult business. Everyone thinks it’s simple—open a boutique and sell—but not at all. We follow sales all over the world. IWC is a Swiss German brand—we are very, very careful and everything is planned properly. Our way of doing business is the same as all the details of the watches. We have a very strong, long-term relationship with our partners, and we are very happy with Atamian: They know what they are doing very well, and they’ve been in this business for many years.
LR: Our price difference worldwide for IWC [fluctuates] only 5 percent due to VAT or import taxes. We react very quickly to price differences even when there is a forex devolution. We hedge against the currency. IWC is a big brand, and it’s very easy to make a decision, so I have one phone call to make, get confirmation, and I do it immediately. I don’t have to wait to get approval from many people. It’s not possible to get a big discount [because that seller] would sell at a loss and it’s not healthy business.
E We’ve heard rumors that when some agents feel oncoming economic distress, they resort to dumping. Can you notice if an agent is doing that?
LR: We belong to the Richemont Group, so we have a department that [monitors this]. Every watch is unique, with a serial number, and they will know where the watch is coming from and at what price it sold, etc. The business is a win-win relationship for us and our partners. That’s why when we start a partnership we express our values, what we do and how we do it. We’ve been in the business in many countries for many years and it’s a success. So when we find a new partner we say, ‘This is our business model. Do you understand it? Do you agree? Yes? Let’s go.’ Then we go step by step. Like in any relationship, you have to communicate and explain a lot.
For example, three years ago we decided to have a local trainer based in Dubai. Before, our trainers were based in Switzerland and would come to the region for a few days and go back. In the retail business, you have to train people on a regular basis, so now we have a local trainer based in Dubai, fully trained by IWC. Before, clients would say they don’t want to buy watches locally because they get better service in Europe. It’s very important for us to also raise the level of what we can offer. One of our big missions is also to give a high level of service to our clients in the region. A mechanical watch needs to be serviced like a car, every seven to eight years. We have a dedicated watchmaking center based in Dubai, and watches are flown out from Beirut to Dubai to get serviced—it’s much quicker than to go to Switzerland.
LR: The risk is if we think the job is done. We always have to challenge ourselves to find the best way to communicate with the next generation and adapt quickly to new media: social media, using influencers, etc. The biggest risk in many businesses is if you don’t adapt because we’re in a world where everything is changing so quickly.
E What do people look for in a watch?
LR: Usually, the motivation to buy a watch is the design—complications and movements come after, and only for a few people. Most people don’t really know how they work; they like the magic, they like to have something that is design. This year we’re launching the Pilot model tribute to Mark XVIII, which is a replica of the first watch IWC created for the Royal Air Force. It’s a fantastic watch for young people because its price is entry-level. A watch is a very sensitive thing, and it’s on your skin. You change your clothes, but wear your watch daily. There’s also an interesting idea around time. Time now is the ultimate luxury, so part of it is wanting to control that.