Swatch Group Quits Basel World (Reuters)

Indeed, great point Syrte. I especially lament the demise of book stores. With watches we still need to see them live, at least until we get to a significant improved simulation capability with augmented and virtual reality, and even then I will still prefer the old school feel of metal on the wrist😀 ADs and boutiques still have value as a location for trying out watches. We constantly tell the newbies on the OF that they need to try out the watch to see if it will sing for them, well we still need to do that somewhere, right?

So perhaps Hayek is right, the concentrated location annual trade show model for watches is no longer as relevant, why not diversify to location specific events?

Based on reported H1 2018 revenues, Swatch might be projecting US$8 billion in annual revenue for 2018. I would guess the estimated 2018 revenues for Omega: 2.5 billions, Longines: 1 billion, Tissot 1 billion. Sharing the US$50million Basel fee by brand revenue, Omega could have an additional US$15 million in marketing budget for events during the year. For example, they could invest in a big event together with NASA for the Apollo 11 50th during July and other local events worldwide.

Living in Rio, I do get a bit frustrated that Omega does not bring the Basel novelties down to South America. I end up seeing the new release watches only when I travel on business to US and Canada. I think the main reason is that South Americans purchase luxury watches abroad, especially in the US, so the volume of sales locally might not justify the event. Still it does seem a bit odd with Brazil currently ranked as the 8th largest economy in the world. When summed with Argentina, the two countries together would be equal to UK's GDP (5th in the GDP rankings). Surely there is enough financial clout in São Paulo, Rio and Buenos Aires to justify at least some sort of Basel novelty event in SA? I don't think security would be a big issue...it is not exactly a huge amount to insure.

The industry is definitely changing. I've walked into AD's/boutiques where the well dressed sales staff behind the counter basically looked me up and down and decided whether it was worth their time to acknowledge my existence based on how I was dressed. Makes me wonder how many pieces these impressive brick and mortar locations have to move a month to pay the overhead. I'm gravitating more towards buying online.

Actually it is a bit more complicated than that.

Omega local pricing in Rio has been pretty good in the past, as they were only marking up watches every 1-2 years, independent of local currency fluctuations. My Omegas were were purchased at the Rio OB at 5%-12% discount on the equivalent US$ retail pricing at time of purchase.

I also think Omega were willing to reduce their margin locally pre-2016 Olympics to generate momentum, and since 2017 their pricing has not been as competitive, but still reasonable. For example, this Railmaster 60th LE, right now I can buy it retail US$6.600,00 locally (photo taken last night, trying out a combo with SM 60th LE strap...and every thread needs pictures😀).



I think the Brazilians purchase abroad for the following reasons:

1) Many affluent Brazilians have hidden non-declared income, so they prefer to pay in cash and not leave a paper trail. I think this is pretty appalling, but it does happen.

2) Many affluent Brazilians often have a second home in Orlando, Miami or New York, so I suppose they hang around long enough in the US to be able to purchase direct from the grey and pre-owned market.

I do not fall into any of the above categories so I suppose you are right that Swatch don't need to spend a nickle or dime locally, but I can't see what harm it does for the brand...even if the purchases occur in other locations. The issue might be that Omega simply does not keep track of its true final consumer. Granted, right now they seem to be just focused on pushing the watches out to distribution, but just about every modern company tries to create mechanisms (e.g. loyalty programs) to identify consumer behaviour patterns by demographic and location...but as this thread itself shows, Swiss watch industry executives are not exactly on the bleeding edge of retail😀

3 Michelin stars?

It sounds like more three of those self adhesive glow in the dark stars you put on your bedroom ceiling...