The Baselworld Syndrome
The number of visitors at the premier trade shows in Europe, America and Hong Kong is dwindling. The walkout of Swatch Group from Baselworld, the prestigious watch and jewellery show should therefore serve as a wakeup call for the industry as it raises the questions about the relevance of trade shows in a digitally connected world. Anil Prabhakar traces the history of Baselworld, its contribution to the industry and future prospects.
Baselworld completed 100 years in 2017. The fair had a modest beginning in 1917. With just 29 exhibitors, the watches and jewellery section was a small part of the Swiss Sample Fair, Schweizer Mustermesse Basel or MUBA as it was then called. Tissot, Longines and Revue Thommen were among the first three manufacturer exhibitors. By 1931, the number of exhibitors had already grown to 70, and for the first time they presented their wares in a dedicated pavilion. After a year, the fair management officially declared the watch section to be an autonomous specialist fair and named it as Swiss Watch Fair.
In the year 1972, the fair opened its door to exhibitors from other European countries. In 1984, the watch and jewellery show split off entirely from MUBA and was given a new name ‘Basel 84’. At Basel 86, exhibitors from non-European countries were also admitted and from the year 1995 the tagline “World Watch & Jewellery Show” was added to its name. The Basel fair became one of the industry’s most important events anywhere in the world. The name Baselworld was coined in 2003.
In 2013, the fair completed a 430 Million CHF reconstruction of Hall 1, the main watch building. A third storey was added to the building, enabling watch companies to build glittering new triple-decker booths on the ground floor and double-decker booths on the second floor. The new exhibition complex was designed by the architect duo Herzog & de Meuron.
Presently, Baselworld is fighting for its life. In the past two years, approximately 850 exhibitors have left the show. The biggest drop came in 2018 when 650 of last year’s 1,300 exhibitors did not return. Among them were 90 Swiss watch exhibitors, whose numbers shrank to 130 this year from 220 last year.
In addition to the Swatch Group, the brands that made exit in recent years are the Kering Group brands Girard-Perregaux and Ulysse Nardin. Hermès and the Movado Group that has Concord, Coach, Tommy Hilfiger, Ebel, Hugo Boss and Juicy Couture in its brand portfolio are other brands that quit. The exit of Swatch Group’s 18 brands proved to be the proverbial last straw.
Some of the reasons for exhibitors leaving the show are:
Chinese Government’s clampdown on gift giving to curb corruption. Swiss watch slump of 2015-16 – the result of a slowdown of watch sales in Asia – which clobbered watch company sales and profits forced companies to cut the costs. Swiss Franc shock of January 2015, when the Swiss National Bank eliminated the Franc’s peg to the euro, and sent the Franc soaring. That made the notoriously expensive Baselworld unaffordable for many brands and buyers. The exhibitors are also extremely unhappy with Basel city administration. The city with a population of 1,71,000 attracts 1,50,000 visitors during Baselworld. The city is unable to cope with the demand for rooms during this period. Instead of providing better facilities, hotels and transporters resort to profiteering by jacking up the rates by as much as 300 per cent. Chairman of Movado Efraim Grinberg announced the decision last November to quit. Justifying his move he said that the company saved $10 million in costs that included all Baselworld-related costs (booth, travel, accommodation, staffing, food, hospitality, etc.) for the eight-day show. Swatch Group reportedly spends around $50 million (8 per cent of its annual marketing budget) on space, building its stands and relocating its staff to Baselworld.
Salon International de la Haute Horlogerie Genève (SIHH)
Most visitors prefer to visit Geneva for the SIHH fair due to the superior experience that it provides. The SIHH Geneva fair was started as an offshoot of the Basel fair in 1991. It started as an initiative by the Richemont Group with just 5 brands. However, it has grown in size and scope ever since. Originally, SIHH ran right after Baselworld but in the recent years it has moved up to January, making it the first major international watch event of the calendar year. Over the years, the show has become more accommodative. During its 28th edition, SIHH kept one day open for the public and watch enthusiasts. The total number of brands went up to 35.
The difference between Baselworld and SIHH services is quite prominent. SIHH provides free transport for visitors to and from their hotels while on the other hand the city of Basel allows taxis to ramp up fares during the Baselworld week. A shuttle bus from the airport into Basel city centre used to be free until two years ago. Restaurants and bars have menus made especially for Baselworld week with higher prices than the rest of the year.
Despite the superior experience, SIHH cannot match the sheer scale and vibrancy of Baselworld. It is vital that Switzerland retains its role as watchmaker to the world. It would be regrettable if the industry as a whole is not able to demonstrate its incredible scale, skill, creativity and watchmaking craftsmanship at an annual event. The Basel fair is a major revenue earner for the Swiss Government as during its heyday, 20 per cent of the Basel fair visitors would bring their families for a holiday.
There was a time when 70 to 80 per cent of the industry’s sale used to happen during Basel & Geneva fairs. However, Baselworld, like other trade shows, is being disrupted by technology. “Digital technology has changed the rules of the game. Many brands no longer rely on the fair for sales. The process of ordering and reordering is done digitally. Major global brands have their subsidiaries in top markets and selling happens there,” says Rajiv Popley, Director, Popey & Sons. The Popley group has 13 watch and jewellery stores in India and Dubai. ‘When I am in touch with the brand managers on a daily basis, there is no need for visiting Switzerland every year,’ he adds.
“The current Baselworld fiasco is the result of selfish interest of large watch companies. They live in ivory towers. The purpose of a trade show is to include all stakeholders from the Watch industry, whether big or small. In the digital era, trade shows are important to showcase the products to the trade as well as the end-consumers. While small regional shows serve the purpose of individual brands, a big show like Baselworld has its importance and should be more inclusive,” said Elmar Mock, CO Inventor of SWATCH, consultant and the co-author of The Innovation Factory.
Debraj Sengupta, Country Manager India for Victorinox watches is however, of the opinion that Baselworld is the Mecca of watchmaking and an annual visit by a retail partner broadens his perspective. It exposes him to global trends. Today an Indian consumer has similar preferences as his western counterpart. He quotes an example of Victorinox Maverick watch. When the watch was shown to his Indian retail partners, most of them rejected it and refused to stock it. Their contention was that the green colour will not sell in India.
However, the company coaxed them to order a few pieces and the consumers lapped it up. After two years, the Victorinox Maverick with its green colour dial and rubber strap is one of the fastest selling watches in India.
One of the major exhibitors of Baselworld is Breitling. Their CEO Georges Kern is of the opinion that trade fairs should be more of communicating platforms like fashion weeks in major cities around the world. Breitling had very successful road shows in Europe, America and Asia where they invited retailers, distributors and journalists. George feels that road shows can create a better experience for everyone, with better proximity to his team, a better experience of touching, feeling and understanding of watches by going to clients rather than them coming to Basel. This view is endorsed by Swatch Group boss Nicholas Hayek Jr. who said, “The old traditional watch fair doesn’t make sense anymore. If you look around the world we are close to the consumer, close to the retailer.”
Simon Wolf, the owner of WOLF who is in the business of making watch winders, watch boxes, jewellery boxes and accessories since 1834 highlights the benefits of participating in the Baselworld show. ‘Many have said that trade shows have run their course that all can be found in online marketplaces. To an extent that is true, trade shows are struggling, some become far less relevant but we believe that they are still an essential element to building a brand, it is another touch-point that is when you can show your customers who you truly are and you in turn can meet them, look in their eyes and understand them better. Talking about the brand and selling our products is as much about listening to your customers as it is speaking to them. We have been participating in the Baselworld show for the last four years and will continue our association in 2019 as well. As a marketplace it pulls many of the world’s best brands together under one roof so the audience, our customers, are concentrated in one place in a very short time span. We have a very large stand/booth that allows us to really “show-off” who we are and what our products can do,” he says.
The Way forward
Many argue that either Baselworld dramatically reduce its costs for exhibitors and visitors or they radically increase the services, comforts, and educational/networking opportunities that the show offers. The city administration needs to encourage the hotels in Basel to invest in their property and infrastructure so that they can offer modern, contemporary lodging to international visitors at reasonable prices.
Jean-Claude Biver, President of the LVMH watch division, publicly called for Baselworld and SIHH to work together to hold their fairs at the same time, so that the watch trade does not have to make two trips to Switzerland in three months.
“I believe that the press days need to be restructured and digitalisation needs to be accelerated,” said George Kern. “There should also be a platform for collectors,” he continued. Breitling hopes that the organizers of Baselworld will develop a service centre in addition to renting stands.
Dr. Daniel André Langer, CEO, Équité said, “I don’t think that there is a right or wrong on brands participating in shows like Baselworld. What I can observe, across different industries, is that there are many more ways to communicate with consumers and trade partners than ever before driven by social media. Similarly, the way consumers seek information has drastically changed. While many years ago visiting a fair or a trade show was must for buyers and sophisticated consumers, in many cases, there is no such need any more as information is available in real time and high quality. However, trade shows allow a more direct face-to-face communication, and they also enable the companies to build events around the show, e.g., by inviting keynote speakers to inspire their clients or creating memorable experiences. In my opinion, each brand needs to evaluate trade show participation regularly along precise KPI and build a customer engagement strategy around the event. I would never advise any of my clients to participate in a show just for the sake of joining. There needs to be a strategic reason, and the venue needs to have a rigorously planned customer journey, in line with brand positioning and objectives.
Michel Loris-Melikoff, the new Managing Director of MCH outlined a number of changes planned for Baselworld 2019. The goal is to shift Baselworld from primarily a sales event to “a marketing, communications Jean-Claude Biver Michel Loris-Melikoff Dr. Daniel André Langer and events platform.” Among the changes is a new hall for independent watchmakers on the first floor of Hall 1. Hall 1.1 will feature an exhibition about the art of watchmaking. There will be different catering options at the show, ranging from takeaway to a new three-star restaurant. There will also be a Retailer Summit in order to improve the show as a communications platform, Baselworld 2019 will be open an entire day for the media representatives.
The exhibition newspaper Baselworld Daily News will be coming back in printed form in parallel with enhanced digital information and communication initiatives for exhibitors, visitors and the media. The Baselworld show management will allow the exhibitors on the ground floor of Hall 1 to leave their three-story booths in the building until the next Baselworld. This will spare them the expense of dismantling them and putting them in storage for a year, as they normally do. To do this, the fair will have to move other fairs to the upper two floors of Hall 1, or postpone them.
This move is meant to benefit brands such as Rolex, Patek Phillipe, the LVMH Group, Chopard and Breitling whose support is crucial for the survival of the fair in future. Simon Wolf ’s statement is an indication that the participants are hopeful of a better future.
“I would say that any organization goes through changes, good and bad and so long as it can learn from them the result will be a stronger organization and in this case a stronger Baselworld. I believe that changes are afoot and what we will see is a more nimble, more customer-centric show that is once again fun to be at” he said in my interaction with him.