For connoisseurs, part of the charm of a well-crafted timepiece is the story behind it.
IWC Schaffhausen, the Swiss luxury watchmaker, too, has a tale to tell. In the mid-1800s, a young engineer and watchmaker in Boston, Florentine Ariosto Jones by name, wanted to do something on his own. When most men of his age and ambition in Boston went a-prospecting in the west, he sailed in the opposite direction. His plan to make high-quality timetellers combining modern tech with a Swiss touch for the American market was not well received by master craftsmen in Geneva. So off he went up north an odd 280 km, to Schaffhausen. Here he met craftsmen amenable to his idea and thus came to be International Watch Company in 1868. Jones would leave for his native land, leaving the company in the hands of the Rauschenbachs, who supplied engines to IWC at the time. More than a century later, IWC Schaffhausen stands tall in the horological hall of fame.
IWC Schaffhausen’s biggest draws are its Pilot’s Watch series, and the large-dialled Portugieser collection. This October it launched the latest Pilot’s Watch collection in India, where economic growth has slowed and luxury products draw high taxes. However, Mehdi Rajan, IWC Schaffhausen’s brand director, sees it as a market that has the potential to double in size in the coming years. “… In the last two to three years our sales have actually gone up,” he says. In an interview, Rajan also spoke about the importance of social media to increase brand visibility, competition from smartwatches, and increasing digital ad spend. Edited excerpts:
How do customers discover luxury watches? After all, premium print advertising has contracted over the last several years and online medium is too distracting to draw the attention of your eclectic clientele?
In my personal opinion, there is a shift from where you get your information. It’s basically from online—whether it is social media or news online. The medium of paper is shrinking but it still doesn’t mean that the medium of paper does not have a future. I strongly believe that when you don’t have any content to offer, then you will be dead as a brand, whatever be the industry you are in. What clients and luxury buyers are asking for is a statement. A media outlet which publishes press releases will not get the client’s attention. Customers like media with a view, telling them what they like and what they don’t. That’s also one of the reasons people engage so much on social media… on Instagram because you have people forming forums and people interacting together and forming communities around watchmaking and luxury where they exchange feedback. So clients are more interested in communicating among each other and communicating directly with brands. So, it’s one of the challenges of the media industry to facilitate that between clients and brands, and right now social media is a great way to reach our clients.
Therefore, your advertising must be mostly in the digital media? And if so, is it largely digital now or paper can be interesting too?
Yes, our spend in the digital medium has increased substantially and accounts for a big portion of our budgets. And paper is always interesting if there is genuine content. We pick publications and go for comprehensive solutions. So, media that do print alone is not relevant if there is no digital aspect or even a PR aspect. Social media is surely important but media that makes a strong statement is extremely relevant. Because even if readership is lower, engagement is very high. And that’s what you want as a brand. By definition, we are a luxury brand and we don’t talk to the majority of any population. So if you have a publication that proposes a very strong standpoint, that’s what you want. You want people to engage with your story and then come back to the store so that we can eventually tell our story. Because at the end, the objective of all this is to bring people to the point of sale.
India is a developing country with a per capita income of $1,800 and there is a perception that luxury is a bad word. Luxury merchandise is also taxed at higher rates always. Therefore, is selling luxury in a developing country a tricky affair?
There is taxation in every country. In India, you have undergone several waves of change in regulation in the last five years. I have discovered two things. There is always a desire for luxury products irrespective of the local taxation system. The second thing is that Indians are extremely resilient. The interactions we had five years ago and the interactions we have today are not based on taxation but based on the desire to know more. Most clients are focussing on the story behind the watch. Actually, despite talks of a slowdown, in the last two to three years our sales have actually gone up. We also see India as a market that has the potential to double in size over the next few years. We see a strong desire for younger audience to find relevance in luxury products.
India is still a nascent market for luxury watches. So do you have to target all the luxury watch buyers or more first-time buyers to establish a relationship early on?
India is not necessarily a nascent market or a young country when it comes to luxury. The idea of luxury existed in India long before we invented watches. What’s more recent is the specific desire for craftsmanship and luxury watchmaking. The room to grow is quite big and we see potential because of the strong emergence of the middle class. In every country, you have the elite, but when you have a good middle class it is the right indicator that the market is truly deep under a long term view. So in India, we are fortunate to have clients who own a lot of IWCs like in many other countries we go to. However, there is a strong younger generation who are looking for something that is meaningful and in watches they look for something that embodies what they believe in. So, our clientele is very broad based even though the market is evolving.
How do you rate real estate development? Supply of luxury real estate in India? High streets are very mixed in India.
It is difficult to form an opinion. This a common challenge for a lot of countries focussing on tomorrow to build the right infrastructure. It’s true that the infrastructure level of luxury retailing in India is underdeveloped vis-à-vis the market potential. We see a lot of efforts that are being done with many projects coming in Bandra Kurla Complex in Mumbai and in other cities too. It is challenging to have a street location in Mumbai as much as it is in Dubai, which can be considered a developed market. In Dubai, the heat creates the problem and to that extent every country comes with its own challenges. We see a lot of effort in metro cities and even in Chennai and Hyderabad there are efforts to provide a luxurious environment for clients. Thankfully, we don’t need 25 points of sale in India and we are currently doing well with our five. We need to focus on a few high visibility locations in India and that is not much of a problem.
The rise of smartwatches, which have become synonymous with health and being connected, put the mechanical watch industry in a tizzy. Has the storm blown over?
There are two aspects to this. First, it actually does us a favour. A vast majority of youngsters under 25 don’t wear anything on their wrists. Smartwatches force them to wear something on their wrist and we hope, eventually they will evolve and potentially wear a luxury watch. Secondly, a smartwatch serves a different function than a mechanical timepiece, which are built for long-term timelessness. A smartwatch is built with an expiry date on manufacture. I know customers who wear both. A smartwatch is bringing technology for a need today whereas wearing a luxury timepiece appeals to a different side of emotion. There is enough room for both.
In recent times, the Indian economy has grown slower than what we are used to. How has that affected your targets and therefore growth?
You seem very pessimistic and on the contrary, I feel very confident about the market and we have done well in recent years. In challenging times when you have to do 100 but do only 70, a lot of things that needs to be improved comes to light. These years has shown us that in the luxury market in India, the focus should not be on the product or the point of sale but on customers. [In] the last three years, we have been streamlining distribution and finding the right partners who do run the distance with us. We have now three partners: one each for Mumbai and Delhi and a common one for Chennai, Bengaluru, and Hyderabad. Earlier, we set up an office and warehouse, and hired local staff. In a way, uncertainty is the new normal in business and there will always be a crisis somewhere that could impact business. We are now clear that we just need to focus on clients in a fast growing market like India.
What is your bestselling watch?
Everywhere in the world, undoubtedly, the Portugieser.