This week the watch world has seen Watches & Wonders and Baselworld cancelled and Swiss watchmaker Romain Jerome filing for bankruptcy. What were the true causes behind these events and what do they mean for the industry?
The final week of February 2020 was one to forget for the watch industry. During this week, both major trade shows in the watch world, Baselworld and Watches & Wonders, were cancelled or postponed on the grounds that the threat from COVID-19 (Coronavirus). To add to these blows to what was due to be the beginning of a return to form of the horological trade show, watchmaker Romain Jerome (officially RJ Watches) declared bankruptcy.
Watches & Wonders and Baselworld Cancelled
Across all industries, the trade show is an ever-declining affair. In the automotive industry, for example, the International Motor Show Germany saw 560,000 visitors in 2019 by comparison to 810,000 in 2017 and 931,700 two years before that.
Similarly, taking the most widely publicly attended watch fair, Baselworld, the figures make for tragic reading. In 2019, only 520 exhibitors appeared for the fair — virtually a third of the attendance in 2017. However, it is cancelled this year not for a reason of nonattendance but rather due to the concerns of the spread of the COVID-19 virus.
After announcing its first case last week, 27 people are now reported to be infected whilst measures have been put in place to limit large gatherings. As a consequence, both Watches & Wonders and Baselworld were announced to be cancelled for the year.
The effect of the COVID-19 coronavirus on the watch industry is, as with most industries at the moment, severe. Even amongst the most ‘Swiss’ brands, components such as dials, crystals and gaskets are made in China whilst the cases for most affordable European brands are made there too. Due to this, many components are not available to complete watches in Switzerland and elsewhere in the industry.
With that being said, one has to recognise that much more is at play than simply this outbreak of disease. Most noticeably over the last five years, these very trade shows have changed profoundly. If we take SIHH, the previous name for Watches & Wonders, we used to have an event accessible only by invitation and designed to present the watches of independent and Richemont Group-owned brands. In a media-driven market where each release depends upon coverage, releasing all at once to a select press group resulted in watches inevitably slipping through the net.
Baselworld was similarly afflicted with a gross imbalance of cost for attendance with the access given. The daily entrance fee for Baselworld was CHF 60 per day whilst the access given to a casual visitor was limited to observing new releases in windows. In hindsight, it is perhaps more obvious that the sheer number of brands present aided the event to be more attractive to visitors: this was a lesson demonstrated by the exit of the Swatch Group in 2018.
From a brand’s perspective, attendance was similarly challenging. Insider information shows that brands with a comparably modest presence such as Sinn invested in the region of CHF 1,000,000 for the week. Assuming that the non-commercial visitors to the show were of little consequence to the brands’ profit for the year, consider the saving of simply putting on a plush press event at a different time of year for full media saturation.
In this light, the Swatch Group as well as Breitling and all the other brands no longer attending these shows are perhaps presenting the future. Inevitably, Watches & Wonders and Baselworld being cancelled does pose an inconvenience for the plans set for this year amongst watch brands, but it may form an interesting experiment in the selection of new opportunities for this industry.
Romain Jerome Goes Bust
Aside from the events involving Baselworld and Watches & Wonders, this week also heralded the end of one of horology’s most eccentric manufacturers: Romain Jerome. Also known as RJ Watches, this brand was known for its distinctive and eccentric watches including the ‘Titanic’ models which appeared to have been rusted as well as pieces featuring such cultural icons as Pac-Man.
However, after several changes of management over the last few years, they found themselves with the Saudi royal family, or more specifically Prince Faisal Bin Fahad Bin Abdullah Al Saud, as controlling shareholder. Bankruptcy has been announced following the immediate retraction of investment in the company from this controlling shareholder.
With such an uncommon aesthetic, Romain Jerome were never going to be a widespread brand and, with the last few years holding challenges for the watch industry, it is perhaps unsurprising that they were amongst the first to go.
If we include the recent collapse of De Grisogno in the casualties of the year, it seems that the last few months signal a difficult time for the watch industry. However, they also show a time of change and, once the current situation with coronavirus has been resolved, one of potential growth. Tell me what you think in the comment section.