Raynald Aeschlimann is a member of the extended board at Swatch Group and the international director of sales, retail, and distribution at Omega. He is also on the board of the Federation of the Swiss Watch Industry. He talks to Fortune India about the grey market, building the backend in India, and how luxury sales are faring. Edited excerpts:
How is India’s luxury watch business shaping up compared with other emerging markets?
For us, who started here 13 years ago, India is not an emerging market. We are the only watch group that pays taxes, imports [what we sell here], and has the structure to sell to partners in every state. India may not be as large as, say, China, but there’s a key community here that buys Omega watches.
You recently opened a boutique in Pune. Why there?
We have nine stores in India, and our people read the market well. It’s nice to build a strong brand with lots of marketing, but it’s more important for the customer to be able to walk into a store and experience the brand. [We can be in] more cities, but for me it’s more important to be able to sell the watch the right way.
There are reports that you have cut back on your dealer network.
Some of our partners did not have the right product mix, which is important. To sell an Omega, priced at $5,000
(Rs 3.1 lakh) on average, not only is it important to have the right kind of store and people, but also to be surrounded by the right brands. Being in the middle of Timex and Titan is not the right environment. So, we said, let’s stop and work with other partners. Aspirational as we are as a brand, it’s much more important to provide the right kind of experience to a customer.
How different is it to sell luxury in India today?
It is not that different in terms of profiling the customer for the brand. When we launch a new product, we do it in all the 300 boutiques we operate worldwide, including India. But at times it is more difficult to find the right partners because some buyers are collectors who read a lot and know more than the employees trying to sell these watches. That was not the case 40 years ago, because there was no way of getting that information. So, our mission is to get aligned with the right people.
What are Omega’s bestsellers in India?
We have four families in all, but the Seamaster and the steel and gold Constellation are the most popular ones. The ability to retain buzz around two different kinds of watches keeps us going here. The Constellation collection accounts for more than €1 billion in turnover. That is more than the entire turnover of some watch companies. But we don’t want the line to get restricted to a certain class or age group. So, we will be launching new dials to keep it fresh.
What has Omega learnt after more than a decade in India?
There’s a lot of potential in this market. When we opened this affiliate, we knew that the going would be tough but if we made an effort, we could get results. Our customers have an eye for quality. So, if we introduce a jewelled watch or a piece with precious metals, we know it will be appreciated. Consumers also enjoy refinement, so we have made it a point to ensure that our stores are located at the country’s best shopping addresses.
Do you see the lower cost of ownership for your watches as an advantage?
We invested a lot in satisfying consumers. We were the first to extend our regular warranty to three years and then to four years. This wasn’t just a marketing idea; we put so much in our technology and our movements that we felt they had to last that much longer. Chronometer testing is next. Our master chronometer testing adds eight tests in addition to existing standards after exposure to magnetic fields of 15,000 gauss. The value we give is part of how we differentiate ourselves.
How do you see the grey market impacting sales in India?
The grey market sounds like a bad thing, but of course, the watches come from our partners or dealers, whom we support and trust. They push for sales at the end of the month [to achieve targets]. Part of my duty has been to reduce the number of distributors to control this. Worldwide, we went from 7,000 points of sale to 3,000. With 3,000 points of sale, our volumes went up 29 times. Finding genuine partners was a big task but we’re more in control now. In many ways, the grey market is actually an endorsement of success or an indicator that your product is in demand—that’s the good part. The bad part is that they are playing against the rules. So, we have decided not to service watches if they are not stamped by an authorised dealer. The bigger issue is the fake market, which you find all over the Internet all the time.
How do you see Omega placed in the next five years in India?
We have all the ingredients to see sales double and will be in new cities once we align with the right partners. I would rather have a big billboard in a small city with my watches on it than open a store in a big city and shut it soon.