Guest columnist and New York Times contributor Robin Swithinbank looks at the future of Switzerland’s biggest watch fair
In his closing press conference last week, Baselworld’s show director Michel Loris-Melikoff looked like a one-man fire brigade trying to put out the Great Fire of London. As he stood in front of slides detailing a 22 per cent drop in show visitors this year and tried to pour water on questions about the 2020 event’s clash with Ramadan, you could almost see the flames licking around his feet. How long, you wondered, before they overwhelmed him?
Mr Loris-Melikoff, to be clear, has taken one hell of a hospital pass. Nine months ago, the lawyer and former private banker assumed the helm of the world’s largest watch and jewellery show knowing it was already flatlining. At the turn of this decade, there were more than 2,000 exhibitors at Baselworld. This year, he told the conference there had been 520, down 20 per cent on last year alone.
Behind the scenes, there is worse. During the show, MCH Group, Baselworld’s parent company announced 2018 losses of CHF190.4m (the Swiss franc is level-pegging with the dollar at the moment), to follow losses the previous year of CHF110m. Much of this, MCH reported, was due to a ‘value adjustment to the exhibition halls in Basel’, while it offered no breakdown of how each of its shows was performing (it has around 40 in its portfolio). This week came news the group’s share price has hit an 18-year low and that the company’s value has shrunk by around CHF 400 million since 2017.
It’s no stretch given the data we have to suppose that Baselworld, the group’s flagship event, is now a major drain on the coffers. This year, with Swatch Group trousering the $50m it’s estimated to have spent on the show in 2018, it’s hard to see the figures improving.
This leaves Baselworld, the 102-year old watch show, in serious trouble. Mr Loris-Melikoff has admitted that his show has to be at rock bottom now. Unless things improve, Baselworld will die.
This is no exaggeration. Nick Hayek, Swatch Group’s chief executive, said the week before the show that there was ‘no need’ for Baselworld any more and promised never to return with his 18 brands. Rumour has it Breitling will follow next year, leaving Rolex, Patek Philippe, the LVMH group brands, Chopard and Chanel as the only big name exhibitors.
The direction of travel is clear. Mr Loris-Melikoff has the unenviable task of reversing it. Can he do it?
In the same press conference last week, he introduced his rescue plan. Baselworld 2019 was a transitional year, he said. From now and into 2020, Baselworld begins a metamorphosis that will take three years to complete. He said the show will become a 365-day live event covering the physical and digital spaces, outlining better hospitality, a retailer summit, pop-ups around the world, experiential online and offline activity (AR and VR got a mention), and the invention of a ‘digital community for 52 weeks’ of the year. It will no longer be a B2B bricks and mortar fair. Instead, he said, it will be a catch-all for brands, retailers, distributors, press, bloggers, influencers, end consumers – everyone.
But is this enough to prevent Baselworld from burning to the ground? Or is it too little, too late?
Initial reaction to the announcements was dry. Perhaps not tinder dry, but the mood around the watch show concept is so glum at the moment, there will need to be a lot of seeing before there’s any believing.
What there is, for the sake of the watch industry, is a despairing hope that Baselworld – and by extension SIHH, which is also losing brands – isn’t finished.
I count myself as one of the industry observers arguing that the shows give the industry momentum. Like a thermostat, they set the temperature. Even if the shows don’t paint the bigger picture as they once did, they still provide the frame to hold it in. Likewise, the collective is stronger than the individual. No one group or brand can replicate that momentum on their own.
The shows also give the industry its shape and rich tapestry. Rolex and Omega, Chanel and Louis Vuitton, Laurent Ferrier and MB&F, Reservoir and March LA.B, Casio and Swatch – they all have a place. Take away the shows and you create a petri dish where only a small monopoly of superbrands big enough to sustain powerful global marketing and retail programmes can thrive. For want of a less nuanced phrase, the watch industry is better together.
I can’t speak for retailers, for whom the business has changed so that far less buying is done at the shows than it once was (although according to Swiss investment bank Vontobel this year’s buying numbers were mostly up), but as a member of the press, what I can say is that the shows are a convenience, too. Like a ready meal, at Baselworld and SIHH we can cook up a year’s worth of column inches in one hit.
The alternative of replacing the shows with dozens of mono-brand and group events will alienate cash-strapped, under-resourced media outlets, and probably retailers, too. That means many brands will be starved of oxygen, and no coverage equals fewer sales. Instagram can’t do it all. Already some of the outliers are falling off the radar. Few of my colleagues have taken time to visit Maurice Lacroix, Raymond Weil, Corum et al since they jumped from the good ship Baselworld.
Baselworld is far from without fault in this. It has sleepwalked into its current predicament, fuelled by greed, complacency and myopic management. With its price gouging, the city of Basel is to blame, too, ramping up hotel and restaurant prices, and giving its (now whingeing) taxi drivers licence to charge airline prices for short journeys.
To his credit, Mr Loris-Melikoff has admitted all this and his new course is designed to extinguish exhibitor and visitor gripes and redress the balance. As he begins implementing his vision over the next few months, the time will soon come for the brands to respond – the ball is swinging back into their court.
Next year, Baselworld and SIHH are scheduled to run back-to-back over a 10-day period at the end of April and into May. No shying away from the fact the Ramadan clash is bad news, but the principle of bookending the show season so visitors only need travel to Switzerland once is sound.
It also paves the way for a show merger. Watches and Wonders Miami, which had 28,000 visitors in February this year (more than SIHH, also organised by the Foundation de la Haute Horlogerie) and where Swatch, Richemont, LVMH and Kering group brands sat alongside one another, shows the various factions can get their act together when they put their mind to it. Why not put on two or three big cross-group, multi-brand, multi-platform fairs a year in locations around the world? If you build it…
Baselworld’s future, the future of the watch fairs, and long-term maybe even the industry’s future, hangs in the balance. Can the show be saved? Mr Loris-Melikoff will be hoping his vision upgrades his water bucket to a fireman’s hose. Otherwise, Baselworld, and maybe much more besides, will turn to ash.