In this interview, Georges Kern explains why Smartwatches are not a substitute for analogue watches and how this connects to the beverage industry. Further, find out why watch customers are divided into two distinct communities and what implications this has on a market entry in Asia.
In an interview with the Handelszeitung, you stated that you approved every watch, every catalogue, every campaign and every text at Breitling. How would you describe your leadership style?
This is a complex question with many facets. As CEO of a company, you have to have a vision that is communicated unmistakably. If the team does not know where to go, an uncertainty arises that is toxic for the business. A company needs a leader, especially in times of crises. Employees need a certain support, certain guidelines. Therefore, it is much worse not to decide at all than to make a decision you might have to adjust. Especially in a luxury goods company, where taste, trends, etc. are at stake, someone is needed who sets the tone. When we introduced the transformation process at Breitling, for example, we were in a situation where there were many opportunities that needed to be aligned. We had to establish an unambiguous new communication and advertising campaign, a product policy and many other factors. Setting these boundaries is my responsibility. With a luxury brand, it is particularly important to be able to set trends, and this can only be done with a clearly defined and uncompromisingly pursued strategy. Of course, it’s not a one-man show. A CEO needs a highly competent team to be successful. The Breitling team is certainly one of the most competent teams I have ever had the opportunity to work with. My team is able to complete, adapt, refine, improve and implement my ideas. Leading such a process is the most important thing I can do in a position like mine.
Have you ever changed your leadership style in your long career as CEO?
Of course, I did, and I still do. But I’m staying true to myself and my principles. I have gained a lot of experience and now know better how everything works. This confidence made me faster over the years. It’s a ripening process you go through as a manager. By the way, I don’t solely mean this on an intellectual level, but also on a human level. I hope to have become a better manager as a result of this. However, a person’s character cannot be changed.
Today, we could argue that the trend is moving away from goods as bare status symbols towards an experience-oriented lifestyle, especially in regard to the generation of the millennials. What challenges will arise for Breitling and how will this be dealt with in the future?
That’s a good question. Every market changes fundamentally. The automotive industry has changed a lot with Tesla; the film industry has changed a lot with Netflix; the hotel industry has changed a lot with Airbnb, etc. Due to digitalization, every industry is disrupted every day. This requires companies to be agile. In our industry there have been changes due to the Smartwatches. This sometimes results in major questions and problems. In distribution, for example, the question arises as to how a company can become ‘omni-channel’. Or how do I become ‘consumer-centric’ instead of ‘company-centric’ and how do I implement this new strategy as a company? This gives rise to new questions, such as which channels I use to communicate with the customer etc. A company must be aware of what it is selling. Is it a clock that indicates the exact time, or is it an object that gives me something on the emotional level e.g. beauty or statement? As your question suggests, what was true for the watch industry 100 years ago is no longer true today. We have to adapt to that. At Breitling I notice two main changes: ‘How’ we communicate and ‘what’ we communicate has changed. Today we communicate with our customers via digital channels and convey dreams, stories and emotions, whereas back in the day we communicated via retail and the focus was strongly on technology.
How has the Breitling customer changed in recent years? Do you see a change from one customer segment to another?
I think it is important to look at the watch customer as such. In my opinion there are two big communities in the watch market. On one hand, there is the generation of baby-boomers who used to find it great to drive a car. This community still seeks the old values in the analogue watch industry today. The new clientele are the millennials, who will one day drive through world history in a Google egg while also buying analogue watches, but for completely different reasons. I think these customers are looking for an alternative to the overkill of digitalization. Analogue is the new luxury. That is the reason why analogue watches will never die out, just like jewelry and art never will. In contrast to the automotive industry, nothing changes in our product because the watch is not a commodity. The automobile offers transportation from A to B. Everything that concerns the emotions of the automobile, the smell, the roar of the engine, the throttle, is lost through this transition. In the watch industry, there is no such change as is being driven by autonomous driving in the automotive industry. The watch remains beautiful, it has a design and embodies a statement. The watch cannot and will not be reduced to its mere function.
Smartwatches are on the rise in all parts of the world. Meanwhile there is also the possibility to make only the watch straps smart with technology. Would this be a compromise to connect the Smartwatch customer and the customer of analogue watches with each other and serve them with one product? Are there any attempts by Breitling that go in this direction?
First of all, I have to make something clear. From all sides I hear that digital watches are now more successful than traditional watches. For me, this statement is totally misleading. Nobody would even think of saying in the beverage market that Coca-Cola sells more hectoliters of its product than Château Lafite. Apple sells Coca-Cola, we sell Château Lafite! Would you make this comparison?
That’s right, you would not. The second thing is this: 99% of the buyers of an analogue watch want the experience of an analogue watch: the classic design, the craftmanship of the watchmaker in the Jura and the beautiful handmade leather strap. They don’t want Twitter on the wrist. A smart watch strap, although there may even be a market for it, is to me like someone installing a modern engine in a vintage car. Such a car does not increase in value. Smartwatches definitely have their right to exist, I don’t question that at all. I do not see the benefit of a Smartwatch as a substitute for an analogue watch, but rather as a supplement to it, for example, in sports or for health purposes. By the way, this is also the path Apple has taken in the meantime. When I go out somewhere in the evening, I don’t want to have a watch on my wrist that lights up or vibrates with every message. It’s enough for me to always be online with my mobile phone, I don’t need that on my wrist.
Swiss watches are exported to various countries all over the world. However, the expectations of a luxury watch in China are completely different from those in Europe. How do you react to this in your China offensive and how important is the Asian market for Breitling?
There are several aspects to this. Breitling was never really strong in Asia, except in Japan, for reasons I am not familiar with. By contrast, Breitling is traditionally extremely strong in the USA, England and continental Europe. The Chinese market has been open for 15 years now. The first buyers bought the traditional watch brands in the beginning. Today we see that the new clientele no longer wants to buy the watches their parents were looking for. In addition, digitalization has made the market much more transparent, people now know which brands are ‘in’ in different parts of the world at any given time. A market like China can thus be opened up much more quickly. This is the reason why we have come up with a strong cooperation with Alibaba. The problem in China is that physical distribution is still relatively important. This means for us that we have to find the shopping centers where we want to be present and then build boutiques there. By its very nature, this process is extremely slow. However, penetration of the market itself is very rapid.
In my view, however, there is no purely Chinese market for our products. The global market is divided into communities, no longer nationalities and religions. The customer in Shanghai is the same customer as in Paris: he is well educated, travels a lot and communicates in the same way.
The demand for vintage watches has increased enormously in recent years. Also at Breitling you can observe a return to the original values and retro designs (e.g. the Breitling Superocean Heritage II, the new Navitimer Ref. 806 1959 Re-Edition or the new retro logo). How do you react to such trends when developing new models?
You have to distinguish between ‘vintage’ and ‘retro’. Our approach is called ‘modern retro,’ not ‘vintage.’ The new Navitimer Ref. 806 1959 Re-Edition, which we recently introduced, could be called a ‘vintage’ edition because it is a re-edition of the original Navitimer 806 from 1959. However, we have developed this watch predominantly for collectors, therefore this is probably a special case. Basically, the Breitling corporate design, as well as our boutiques, are designed in the ‘Modern Retro’ look, in a cool inviting industrial style. This provides the customer with stability and serves as a tribute to the old values. We also live this philosophy in our office. In the middle of the office there is a large chimney, which dates back to the time when beer was brewed in this hall. We love that, the handiwork, the genuine, the history in ‘Modern Retro’. This is also the reason why we have entered into a cooperation with Norton. Norton Motorcycles is one of the oldest motor cycles company in the world and creates emotions that we want to embody as a brand. For the Capsule Collection of the Navitimer 1, we have produced three special editions to match this lifestyle of the Golden Age of Aviation: the Swissair, Pan Am and TWA editions. This was a completely different flying experience than with today’s no-frills airlines. People want the lifestyle of ‘Catch me if you can’ with Leonardo di Caprio, not the lifestyle of cheap flights with delays and excess baggage fees. We embody this with the ‘Modern Retro’ look. For us this means having an anchor in the past without being dusty and old ‘vintage’, but rather ‘cool’. Nevertheless, a brand should not have a single focus. We try to find a balance between our vintage designs, which ensures the customer that the brand has an identity, values and modern designs, which are rather hip and light.