Speaker 1: Bloomberg Audio studios, podcasts, radio news, let's turn out to
Speaker 1: luxury time pieces and monthly Swiss watch exports have dropped
Speaker 1: the will since twenty twenty is demand seems to be
Speaker 1: plunging in key markets, including China and Hong Kong. This
Speaker 1: all has higher interest rates, shaky economic growth and geopolitical
Speaker 1: conflicts lead consumers to reconsider perhaps splashing out. Joining us
Speaker 1: now is yours Karen He's CEO of Swiss Watchmaker, writing
Speaker 1: thank you so much for joining us to orson out.
Speaker 1: I left my risk there just in case, you know,
Speaker 1: but I see you didn't bring anything extra with you. No,
Speaker 1: do tell us, in all seriousness why this drop off
Speaker 1: suddenly after three years of booming Swiss watch sales.
Speaker 2: What you have to look at is a long, long
Speaker 2: term trend and if you look at the watch industrial,
Speaker 2: luxury industry in general since the nineteen eighties has been
Speaker 2: booming and I'm convinced that this trend will continue. Of course,
Speaker 2: you have a bumpy road right now. You have political instability,
Speaker 2: you have inflation in many countries, and all this impacts
Speaker 2: what we call the consumer sentiment. So some people, especially
Speaker 2: I would say in the entrance luxury price point at
Speaker 2: postponing their purchases. What is interesting to see though, that
Speaker 2: the high luxury is the readly expensive pieces are doing extremely.
Speaker 1: Well, extremely well.
Speaker 2: Well.
Speaker 1: Your strategy over the last seven years has been working really,
Speaker 1: really well. So you tell us what does a Brightening
Speaker 1: with you in charge do at a time like this?
Speaker 1: Do you lean into the very high end.
Speaker 2: You're right, we have been doing very well. But it's
Speaker 2: a package of elements which make a brand more successful
Speaker 2: than anults because in a crisis, what you need to
Speaker 2: do is to overperform the market. So be better than competition,
Speaker 2: and it's better products, nicer products, better marketing, communication, you know,
Speaker 2: being closer to the to the consumer through our boutiques
Speaker 2: for instance. And this is why you know we outperform
Speaker 2: the market.
Speaker 1: So what does that mean if a retailer decides to discount,
Speaker 1: do you have any control over that? Do you want
Speaker 1: your brand associated with discounting? Is it fine?
Speaker 2: No, it's not fine. No brand wants to have its
Speaker 2: product discounted. Thank god, we don't have that problem. Especially,
Speaker 2: the secondary market is much more structured, what we call
Speaker 2: certified pre own. You have much less what we call
Speaker 2: gray market. People selling watches because they need cash. So
Speaker 2: I think the market is much more structured. And no,
Speaker 2: I think we are strong brand and the retailers respect
Speaker 2: our pricing policy.
Speaker 1: So obviously you mentioned China. You know we can. Demand
Speaker 1: from China has been pretty much a big drag. When
Speaker 1: do you see China luxury demand coming back? Given that
Speaker 1: we all better than next growth, But it does seem
Speaker 1: that the economy is not I.
Speaker 2: Think nobody in the luxury we are nowhere in China.
Speaker 2: It's a one point six billion country. There are only
Speaker 2: two or three hundred million people in that country who
Speaker 2: have access right now to the luxury products. I just
Speaker 2: came back from China. If you look as a second
Speaker 2: tier city to your cities, cities you've never heard about it,
Speaker 2: with ten million inhabitants, the potential is huge. Again, you
Speaker 2: know the market will grow into your future and sometimes
Speaker 2: there will be some dips, but the potential also in India,
Speaker 2: in so many countries is phenomenal.
Speaker 1: Are you seeing it as a bit of a land
Speaker 1: grab opportunity then right now? Is that why you're just
Speaker 1: back from China?
Speaker 2: Yes? Yes, and I'm flying tomorrow to India. So there
Speaker 2: are countries with phenomenal potential.
Speaker 1: Yeah, what about the United States, because I imagine in
Speaker 1: the past you've depended on the wealthy bankers and the
Speaker 1: billionaires in the United States. How are they doing? What
Speaker 1: are theyking?
Speaker 2: At the moment? Price the US is doing fine. You
Speaker 2: have this problem in the US because of the interest rates,
Speaker 2: in particular for housing, and you know, they have flexible
Speaker 2: interest rates and they have been raising and I think
Speaker 2: that's a big problem. I hope that the interest rates
Speaker 2: in the US will go back very soon and this
Speaker 2: will help. And we as a Swiss company producing a
Speaker 2: Swiss frank, obviously we have a problem because the Swiss
Speaker 2: frame became so strong. So whatever we gain in the US,
Speaker 2: we might lose a portion of it because we obviously
Speaker 2: report in Swiss frangs exactly.
Speaker 1: And you're obviously looking at what the Federal Reserve does
Speaker 1: just as much as everybody else. So when the market
Speaker 1: drops like it has for the last six days in
Speaker 1: the United States, does that concern you.
Speaker 2: Indeed, we see also that there's a correlation between the
Speaker 2: market development and the consumption in luxury goods. Sure, but
Speaker 2: I'm still positive. I'm still positive.
Speaker 1: Talk to us about your courts inclusion because it wasn't
Speaker 1: something that breaking typically did much of, and it seems
Speaker 1: to be a bit more popular now, is it because
Speaker 1: it's popular with the consumer?
Speaker 2: Yes, we want to be approachable as a brand when
Speaker 2: we talk about exclusivity. Of course we talk about pricing,
Speaker 2: we talk about accessibility of the product, but intellectually, especially
Speaker 2: our sponsorship, our partnerships are all approachable. We're not engolved
Speaker 2: in tennis. We went surfing, for instance with Skelly Slag
Speaker 2: we are in triacline. We try to be approachable as
Speaker 2: a brand, but of course we remain exclusive because of
Speaker 2: our distribution enterprise.
Speaker 1: But those are also very adventurous and sort of extreme
Speaker 1: type sports, right, That must be a little bit of a.
Speaker 2: Strategy too, absolutely, especially after this COVID area where people
Speaker 2: are searching for freedom, carpe DM enjoying life and all
Speaker 2: these sports give that and the society changed a lot
Speaker 2: since COVID.
Speaker 1: Where are you spending your marketing dollars? Facebook, Instagram? What's
Speaker 1: the new place to spend it?
Speaker 2: Indeed, we spend nearly seventy percent of our marketing dollars
Speaker 2: in social media because it's there where people make their choice,
Speaker 2: It's where customers get the information but it doesn't mean
Speaker 2: that they buy online or through e comm They buy
Speaker 2: in boutique, so they get the information online, but they
Speaker 2: want the physical experience of the brand, and this is
Speaker 2: very different.
Speaker 1: The pre owned market has dropped off quite extant. If
Speaker 1: that's the case, then what would you want to have
Speaker 1: as the price point that you sell us. How do
Speaker 1: you attract people who know that this is not maybe
Speaker 1: something that they'll resell in the future.
Speaker 2: After COVID, everything boomed, and I think in both in
Speaker 2: the primary market and the secondary secondary market, the market
Speaker 2: has normalized. Let's not forget that we are far ahead
Speaker 2: of pre COVID. Of course, some brands suffered since last year,
Speaker 2: but the year after COVID was totally absolutely not normal
Speaker 2: and the market normalized. Also. The certified pre owned market
Speaker 2: now decrease a little bit, but it's still at a
Speaker 2: very high level and has been normalizing. So we should
Speaker 2: We shouldn't compare it to the post COVID year, but
Speaker 2: we should compare it to the year before COVID, And
Speaker 2: here the whole industry is doing very well.
Speaker 1: I'm a VP of Common SACS. We didn't do too
Speaker 1: badly last year. What's the works that I pick out.
Speaker 2: Of britlingk for instance, this one it's a too Bion.
Speaker 1: You told me that was twenty five thousand dollars, whereas.
Speaker 2: Yeah, well you had Goldman Sachs squint afford it.
Speaker 1: Okay, what is the most popular watch right now?
Speaker 2: It's a NAVI timer. It's obviously it's a Navy timer line,
Speaker 2: which is our iconic product, and we just launched the
Speaker 2: forty one medi meter GMT and automatic and it's been
Speaker 2: doing very well.
Speaker 1: Any plans for a smart watch, no, no, no, no doubt.
Speaker 1: It's Swiss after all, there's no way you're getting smart
Speaker 1: watches out of the Swiss. All right, don't forget to
Speaker 1: take your watch with you. Definitely don't leave it behind.
Speaker 1: That's yours, Karen. He's Brightling's CEO,