An exclusive virtual meeting between AWJ and Jean-Christophe Babin - Group CEO at Bvlgari during the LVMH Watch Week 2021 provides a unique opportunity to understand and analyze the market situation for Bvlgari watches and the watch industry at large during 2020 and also going forward in 2021. Excerpts from the interview:
Highlights
• We could manage growth in some critical geographies in 2020.
• Bvlgari sales will witness a double impact in 2021.
• Bvlgari is reviving Gerald Genta and this is already being done.
• The Saudi Market is a very strong market for luxury and we are opening boutiques in Riyadh and Jeddah soon.
1. 2019 was historically a record year for Bvlgari, and despite the pandemic and the lockdown, Bvlgari managed to score another outperforming year in 2020. Is this due to the product mix, or the E-commerce platform launched during Q2 in 2020 or the geographically balanced distribution of the brand?
We have always been very transparent. Globally, we didn't do so well in 2019. Like most brands, we did lose some sales. Even so, we managed to grow in some critical geographies. More importantly, the last quarter was in line with 2019, which for me is most important because the final quarter always capitalizes on initiatives that go into the succeeding first and second quarters. Despite the trouble with COVID in Europe, we have managed a historic achievement in December 2020, which was not expected, to be frank with you. This proved that Bvlgari jewellery is probably more desirable than ever, and makes me reasonably confident about 2021.
2. Okay, so moving with the second edition of the LVMH, Watch Week 2021, what was the impact among retailers and among the LVMH brands?
Well, as you know, it is continuing into next week. We started with the media, and as of the day after tomorrow, we continue with retailers, and it is a 10-day event. The only feedback we have so far is from media, and I know our friends, much like you, are experts in watches and with enough knowledge to understand what makes sense or what makes less sense. The media feedback we have received in terms of consistency with Bvlgari standards and market expectations is extremely positive and it makes me really enthusiastic and excited, because in 2021 we are sure to have a double impact. The most significant impact are the two novelties reborn in 2021. 70s Rotary was launched in October 19 but eventually it was stopped six months later and resumed only in October 20. The two models will be very vital in getting a substantial market share this year. I might as well say it will be probably be enough for us to grow better. But obviously our mission as a global gallery is far more than that. We aim to enter the segment of the top 10 luxury watch brands in the coming years and therefore we have planned our 2021 initiatives starting with jewellery watches.
3. Bvlgari succeeded in producing and building up on more than one icon, Serpenti, Octo, Lvcea and recently the reintroduction of Bvlgari Aluminum. What can we expect more in terms of designs and complications?
Firstly, we have a gold complication which is a famous Octo Roma tourbillon. We consider it as not only a technical innovation, but also a design innovation and I think in the field of complications it is probably the most contemporary ever designed. It is really setting a trend in Hong Kong as you will see, satisfying your daily lifestyle, your way of dressing, your interior decor, your arts and reactions even, which are more and more contemporary and less and less historic. Therefore, I feel the future of complications lies in very contemporary designs and this new Roma tourbillon is really opening the way to a new generation of complications, which are truly global. They capitalize on three centuries of excellence and at the same time, perfectly match with the present, whereas traditional complications look like a piece of old furniture in an ultra-modern loft. I think this fit is very important because we live in an aesthetically integrated world and long to be consistent with the surroundings. This is all there is about the new generation of complications Bvlgari.
4. Gerald Genta and Daniel Roth are substantial assets of the Bvlgari brand. With the current vintage reissue trend will you revisit the archives of these brands and continue to offer collectors and lovers a piece of history combined with the historically strong haute Horologie of GG and DR?
Right now the first priority is Genta, I think reviving the brand is very challenging and something that takes time if you want to do it properly and successfully. Therefore Bvlgari is reviving Gerald Genta and this is being done already in two steps. The anniversary 50 years edition, which was the kickoff has all been sold out. Of course, last year the Covid pandemic left us with no real space to promote the regular GG collection of the iconic Arena designs and so we should be really promoting them actively this year. The next innovation in the Genta range has been postponed purposively to 2022 as the priority this year is to focus on what we have launched but not promoted last year as planned. The objective is to create a pretty exclusive and limited collection, of not 100 watches, maybe five or eight which will be sold essentially online for around 15000 to 16000 euros, a price bracket which is covered by Bvlgari jewellery and jewellery watches. We are very strong online, I mean we have seventeen markets selling online. We are confident there is ample room in the market for such brands without competing against the mainstream Bvlgari brand. Our competition will be with other niche brands and we know that niche can be extremely profitable as long as we are unique, quite exclusive and very, very well crafted.
5. In the recent past some watch brands used, as part of the material of the watch, tantalum which is commonly used in the surgical industry. Does the pandemic inspire you to use any special material in your watches and jewellery, that could give more confidence to the customers especially when it comes to hygiene issues, because it seems we are here to live with the virus for some time?
You know we have been using pretty advanced technologies all along. We have used titanium already, and also carbon not so much for the sake of using fashionable or fancy material, but for functionality. I mean, titanium is a perfect material for a Minute Repeater in terms of acoustics, and therefore, by drilling the dial, we will eventually gain fantastic acoustics. When we use materials like steel and gold it is not for the sake of claiming anything but for value and economy. If we find a sense of purpose with any material, we are going to use it. If it is only for the sake of claiming a new material, most probably we won’t use.
6. How would you describe Bvlgari performance in the Middle East? How far are you from restructuring your distribution in the KSA? What projects do you hold for the largest market of 36 million habitants in the Middle East? Do you have any plans for 2021 for the Kingdom?
Well, last year we obviously suffered not having Saudi Arabia, at least directly. And we know that some competitors did extremely well performing in Saudi Arabia. There is a very strong market for luxury out there. So this year we have the alternative, and by this summer will be opening one boutique in Riyadh and one in Jeddah. Bvlgari flagship outlets in these two major cities will enable Saudis to rediscover the brand. Our existing boutiques operated by our suppliers are a bit old and not comparable with the ones you find in Dubai or Qatar, and our new boutiques will be the youngest and the most appealing in the region. We are aware of Saudi Arabia’s potential as a domestic market and are already revamping our marketing strategies which were kind of neglected in the past. The new initiatives will also be of advantage to our Dubai business. Many Saudis frequent Dubai and if the brand is stronger in Saudi it also gains stronger visibility in Dubai. Dubai is a favorite travel destination of the world and our excellent marketing team and infrastructure and our studies have revealed a strong potential for brand Bvlgari, especially among the European and Chinese visitors to the Middle East.
Coming back to Arabia with the activities, do you have any specific product trying to be integrated along with the boutiques?
We have in mind a similar product line that we presently have in the region. We are well aware of Saudi preferences, many of them are already buying our brand from Dubai Mall and our own boutiques in the Emirates and many are buying in large volumes. We might add a few classic specials as tribute to Saudi Arabia as we do in Dubai, but I would say 99% of the collection will be very similar to what we have in the Dubai Mall, or in any other country in the region, because there is uniformity in customer tastes across the region.
7. In Q2 2020, you launched your e-commerce platform, how do you see e-commerce developing? How is Bvlgari benefiting from it? Do you think it will have a negative impact on the traditional shop retailing?
Not in the least. It is a mixed bag in well developed countries like USA, where e-commerce share is around 15%. In countries like Italy, where we started three months ago it is only 4%. So an overall number makes no sense, I think it is more prudent to see market by market, in accordance with the years of existence and size of investment. It would be worthwhile to learn from the most mature and most interesting markets like USA, but also Germany, which is doing very well. I would safely put a share of 20% as possible with our range of high profile luxury brands. Conventional marketing channels and e-commerce portals are here to stay side by side in the future, and we have to see that some countries have better infrastructure, some customers are more loyal and some are still unsure about new avenues of marketing since the country does not offer exactly the same kind of safety one would expect. I think 20% is normal and you can be the number one player. We have a good presence in seven markets and are number one already in five of them. We are young and growing good and by 2023 expect to be the first in all the countries. True that the pandemic has led to closure of many major stores but what is more important to see is that post–Covid era will be a key period for growth. With the 24/7 connectivity and capability of e-commerce, buyers and sellers are able to interact instantly, while many buying decisions could be slept over in conventional marketing. It often happens that you have the longing to buy in the weekend but Monday morning when you wake up, you don't think about it any longer. So e-commerce is a new opportunity for luxury brands and for Bvlgari in particular.
Will you continue to develop the e-commerce platform or is it just a reaction to the COVID disclosure we had last year?
We had planned the initiative already in some countries, but not for 2020, it was scheduled more for 2021 and 2022. But when we saw that coronavirus will disable the market for months we invested heavily in Customer Care Centers, so that we could prepone 2021 and 2022 rollout already during the summer of 2020. The only major country we left out was Russia where we will be operational by March and this will help us tap 85-90% of the world luxury market potential effectively. So then it will be all about enhancing the experience and the service. We are always innovating using new tools and technologies that are more and more customer friendly and seamlessly developing. We have a virtual store now, with impressive display of models but we need more facilities such as brand experiences for which we have to develop separate apps. Our goal is to bring the trial facility for regular jewellery and watches so that you can figure out from your screen how you look with a new watch or with a new pendant. There are many additional features that we are working on so that the experience is very similar to that in store in terms of emotions. The two are interlinked however, because even if you buy that watch online you may have to go to the store to adjust the gold bracelet to fit your wrist.
So physical experience is a must at the end of the day.
We should not mix the two. When I say 20% e-commerce, it means 80% is still conventional boutiques.
8. Just to wrap up, 2020 has been very challenging year to say the least. And obviously in 2021 we will continue to have some challenges due to the second wave of the pandemic. What is your assessment of the current state of the watchmaking industry and since we always try to move forward, what do you expect for Geneva Watch Week during August 2021?
Firstly it is still a project that has not been confirmed yet. I believe a lot in its importance and will try to organize it this year. Hopefully, by August Covid will be quite under control and so the possibility looks good. Of course, we will maintain the digital dimension of the event. I believe we need this kind of event once a year at least in Switzerland. Many brands who participated in the previous event are already asking when it is going to take place and I find their satisfaction level is pretty high. Details are yet to be confirmed and we are working earnestly on the probable dates and venue and will certainly interact with the participating brands. The event will be open to the public which is what the clients want, so it will be a similar but bigger event once the pandemic threat recedes. A lot of brands that could not participate last year are definitely going to participate this year.
What do you expect the general scene of the watch watchmaking market in 2021, with many watch brands having some difficulties, and facing challenges? Do you see further product developments or will you be putting market developments on hold until you get more of return on investment? How do you assess the market situation at the moment?
Well, the market will be better than last year around the world as we can expect the massive vaccination drive to cause the virus threat to recede and eventually disappear. Also because of the pandemic people have been spending very little time last year on business trips, movies and dine-outs, so there is a lot of disposable income on hand. This is currently evident in the stock markets. People are sure to come out to enjoy life after a year-long hibernation and this will be particularly good for luxury products. An important factor in this regard is that brands that are reputable, consistent, and smart in their innovations will perform better under the circumstances. I believe in the case of Bvlgari Finissimo this is very relevant and I am sure that brand Bvlgari will be one of the winners of 2021. As to how much are we going to win, we will talk about it later. But for sure these brands will be driving the market recovery. And this is why we are talking today as early as January, because the sooner we do it the better.
Great, thank you very much for your time and cooperation. We always enjoy our chats and hope will be seeing you physically in Dubai soon.
As soon as I can I will be. Lilia will come soon, I think next week, and Vincent in a couple of weeks. I myself will be in by April or May because I'm missing it badly. It is even more important than before and I have so many reasons to come to Dubai, not forgetting the hotel, which scored a huge growth last year. We never speak much about the hotel, but it scored an amazing double digit growth last year, confirming that our brand was extremely resilient and desirable even in Covid times.
Will we see the hotel resort brand entering other markets in the Middle East like Saudi Arabia as well?
Right now, I mean, the last project we signed an agreement is in the US since we are not at all in the continent. Obviously, as a global hospitality brand, we want to be in all continents. So the first priority is to enter America and our Miami Beach hotel will be completed in 2024. We also plan to be in LA and New York as well. Saudi will obviously be on the radar screen, but probably after we are well settled in America, because if we want to do things properly, we need to take time, you know. Luxury market is a different kind of challenge. So far we are a leader in every city where we are present, and we must remain the leader because we are a quality jeweller at heart, and as a jeweller we must be able to offer the best experience and satisfaction to our customers, and to do that we have to proceed slowly and with caution.
You are definitely on the right track. Thank you very much. All the best for the future, and look forward to seeing you soon!
