Bloomberg Audio studios, podcasts, radio news, let's turn out to luxury time pieces and monthly Swiss watch exports have dropped the will since twenty twenty is demand seems to be plunging in key markets, including China and Hong Kong. This all has higher interest rates, shaky economic growth and geopolitical conflicts lead consumers to reconsider perhaps splashing out. Joining us now is yours Karen He's CEO of Swiss Watchmaker, writing thank you so much for joining us to orson out.
I left my risk there just in case, you know, but I see you didn't bring anything extra with you. No, do tell us, in all seriousness why this drop off suddenly after three years of booming Swiss watch sales.
What you have to look at is a long, long term trend and if you look at the watch industrial, luxury industry in general since the nineteen eighties has been booming and I'm convinced that this trend will continue. Of course, you have a bumpy road right now. You have political instability, you have inflation in many countries, and all this impacts what we call the consumer sentiment. So some people, especially I would say in the entrance luxury price point at
postponing their purchases. What is interesting to see though, that the high luxury is the readly expensive pieces are doing extremely.
Well, extremely well.
Well.
Your strategy over the last seven years has been working really, really well. So you tell us what does a Brightening with you in charge do at a time like this? Do you lean into the very high end.
You're right, we have been doing very well. But it's a package of elements which make a brand more successful than anults because in a crisis, what you need to do is to overperform the market. So be better than competition, and it's better products, nicer products, better marketing, communication, you know, being closer to the to the consumer through our boutiques for instance. And this is why you know we outperform the market.
So what does that mean if a retailer decides to discount, do you have any control over that? Do you want your brand associated with discounting? Is it fine?
No, it's not fine. No brand wants to have its product discounted. Thank god, we don't have that problem. Especially, the secondary market is much more structured, what we call certified pre own. You have much less what we call gray market. People selling watches because they need cash. So I think the market is much more structured. And no, I think we are strong brand and the retailers respect our pricing policy.
So obviously you mentioned China. You know we can. Demand from China has been pretty much a big drag. When do you see China luxury demand coming back? Given that we all better than next growth, But it does seem that the economy is not I.
Think nobody in the luxury we are nowhere in China. It's a one point six billion country. There are only two or three hundred million people in that country who have access right now to the luxury products. I just came back from China. If you look as a second tier city to your cities, cities you've never heard about it,
with ten million inhabitants, the potential is huge. Again, you know the market will grow into your future and sometimes there will be some dips, but the potential also in India, in so many countries is phenomenal.
Are you seeing it as a bit of a land grab opportunity then right now? Is that why you're just back from China?
Yes? Yes, and I'm flying tomorrow to India. So there are countries with phenomenal potential.
Yeah, what about the United States, because I imagine in the past you've depended on the wealthy bankers and the billionaires in the United States. How are they doing? What are theyking?
At the moment? Price the US is doing fine. You have this problem in the US because of the interest rates, in particular for housing, and you know, they have flexible interest rates and they have been raising and I think that's a big problem. I hope that the interest rates in the US will go back very soon and this will help. And we as a Swiss company producing a Swiss frank, obviously we have a problem because the Swiss
frame became so strong. So whatever we gain in the US, we might lose a portion of it because we obviously report in Swiss frangs exactly.
And you're obviously looking at what the Federal Reserve does just as much as everybody else. So when the market drops like it has for the last six days in the United States, does that concern you.
Indeed, we see also that there's a correlation between the market development and the consumption in luxury goods. Sure, but I'm still positive. I'm still positive.
Talk to us about your courts inclusion because it wasn't something that breaking typically did much of, and it seems to be a bit more popular now, is it because it's popular with the consumer?
Yes, we want to be approachable as a brand when we talk about exclusivity. Of course we talk about pricing, we talk about accessibility of the product, but intellectually, especially our sponsorship, our partnerships are all approachable. We're not engolved in tennis. We went surfing, for instance with Skelly Slag we are in triacline. We try to be approachable as a brand, but of course we remain exclusive because of our distribution enterprise.
But those are also very adventurous and sort of extreme type sports, right, That must be a little bit of a.
Strategy too, absolutely, especially after this COVID area where people are searching for freedom, carpe DM enjoying life and all these sports give that and the society changed a lot since COVID.
Where are you spending your marketing dollars? Facebook, Instagram? What's the new place to spend it?
Indeed, we spend nearly seventy percent of our marketing dollars in social media because it's there where people make their choice, It's where customers get the information but it doesn't mean that they buy online or through e comm They buy in boutique, so they get the information online, but they want the physical experience of the brand, and this is very different.
The pre owned market has dropped off quite extant. If that's the case, then what would you want to have as the price point that you sell us. How do you attract people who know that this is not maybe something that they'll resell in the future.
After COVID, everything boomed, and I think in both in the primary market and the secondary secondary market, the market has normalized. Let's not forget that we are far ahead of pre COVID. Of course, some brands suffered since last year, but the year after COVID was totally absolutely not normal and the market normalized. Also. The certified pre owned market now decrease a little bit, but it's still at a
very high level and has been normalizing. So we should We shouldn't compare it to the post COVID year, but we should compare it to the year before COVID, And here the whole industry is doing very well.
I'm a VP of Common SACS. We didn't do too badly last year. What's the works that I pick out.
Of britlingk for instance, this one it's a too Bion.
You told me that was twenty five thousand dollars, whereas.
Yeah, well you had Goldman Sachs squint afford it.
Okay, what is the most popular watch right now?
It's a NAVI timer. It's obviously it's a Navy timer line, which is our iconic product, and we just launched the forty one medi meter GMT and automatic and it's been doing very well.
Any plans for a smart watch, no, no, no, no doubt. It's Swiss after all, there's no way you're getting smart watches out of the Swiss. All right, don't forget to take your watch with you. Definitely don't leave it behind. That's yours, Karen. He's Brightling's CEO,