My thoughts after Audemars and Richard Mille decision to leave the SIHH in 2020

The path is traced out for Audemars Piguet and Richard Mille

Let's be honest: the news of Audemars Piguet and Richard Mille departure from SIHH is surprising even if it is implacably logical. Personally, I didn't expect it in such manner and so quickly. It would be wrong, however, to consider in the same way the decision of these two brands and that of the Swatch Group (or others) with respect to Baselworld. The consequences are the same and a big watch fair is weakened again. However the reasons that led to these withdrawals are absolutely not the same.

In fact, Audemars Piguet and Richard Mille have prepared this departure which will take effect in 2020 for many years. It is in line with their similar strategic orientations (do not forget that Audemars Piguet owns shares of  the capital of Richard Mille) even if the two brands are not quite comparable: one has much higher production figures than the other and continues to have a consistent permanent collection. But the trends are the same: more exclusivity, more desirability, increasing average prices and a willingness to address end customers directly.

The message is very clear: what good is it to be present at the SIHH as we sell more and more our watches through our own boutiques and moreover we want to communicate in a tailored, personalized way and without intermediary to the attention of our customers?


I read many comments explaining the decision of Audemars Piguet and Richard Mille by the distribution strategy. This is obviously true. But these media, mostly blogs, knowingly forget the second strategic element: communication. A brand like Richard Mille absolutely doesn't need any press or bloggers anymire. An article presenting a new watch can even be counterproductive. Why? Simply because Richard Mille wants that the first people who discover the watches have to be the potential customers. So if a blogger put an exceptional Richard Mille wrist watch before the customers, it could be misperceived and undermine the notion of exclusivity.

Anyway, given the success of the brand, the scheme is very simple today: a limited edition watch is presented directly to end customers, they order, the series is sold out. And it is these same customers who provide communication via social networks. So why communicate via external channels especially on a product that is no longer available?

Audemars Piguet is not quite there but that's what the brand already practices for the rarest pieces and the objective of F.H.Bennahmias is to increase the percentage of watches sold this way.

The decision of both brands to leave the SIHH is not a coincidence. It is based on certainties and trust. Confidence in their economic model. Confidence in the future and in the sustainability of their success. What must be understood is that the distribution mechanism in the watch industry looks like a lot to an insurance mechanism.

When a brand X sells watches to its distribution network, it simply transfers the business risk to retailers. The latter accept the risk of slump for a high but logical remuneration. If a brand is confident in the success of its collections and is confident that its products are sufficiently desirable for demand to exceed supply, then it has no interest in transferring the risk since it considers that there is no more hazard. Its main objective is so to work to keep the entire result. To do this, we restructure the network, close points of sale and reorient to the in-house "boutiques". This is what Richard Mille does and  Audemars Piguet seeks to do.


Such a strategy may be risky: a star may turn pale and the security mechanism the retailers bring doesn't exist any longer to absorb the shock of a poor business performance. But Richard Mille and Audemars Piguet are sure that their model will work for many, many years. It is difficult today to contradict them: all their signals are green. So, such an attitude can be considered as arrogant. On the contrary, I see it as the result of coherent and consistent policies that have been carried out in a timely manner. Both brands have worked to restore value to their products, it makes sense that they want to keep the full result.

Swatch Group is not in the same situation: its portfolio includes broadline brands that need a distribution network to absorb the millions of watches produced.

And that's where I was coming from: we abolutely can't compare the respective decisions of these players. Audemars Piguet and Richard Mille leave the SIHH because they consider that they don't need it anymore. Swatch Group leaves Baselworld because it believes that the services it provides are too expensive and not efficient enough. Swatch Group believes it can spend less to transfer its risks. However, uncertainty remains. If the path seems to be traced out for Audemars Piguet and Richard Mille, I'm not yet aware of the Swatch Group plan B (we are hearing of a solution in Zurich) or the true strategic direction it wants to take in the future. Because if Audemars Piguet and Richard Mille undertook very clear transformation actions before making the decision to leave the SIHH, the profile and ambition of Swatch Group have changed little before the announcement of the withdrawal of Baselworld. It is perhaps this lack of visibility that is sanctioned by the financial markets: the stock price has fallen sharply since July 30, the first trading day following the announcement of the withdrawal of Baselworld. More than the alternative to Baselworld, investors expect a clear roadmap from Swatch Group that sets out its transformation goals and thus charts the future of the company. It is quite capable of meeting these challenges but time is running out. Audemars Piguet and Richard Mille are on their side already in the right tempo in their segments which are obviously narrower.


amanico October 9th, 2018-13:56
Thanks for this very interesting article, Fx. Still, I am not sure this is the good way to do.... The SIHH and the Basel Fair were two horological high lights, each year. A Mass. They could organize their B plan in parallel with the A plan. For the prestige. Best, Nicolas
foversta October 9th, 2018-14:03
For sure it is bad news for the industry.... and for me! Let's take my case: I spend two weeks of holidays and I see let's say 80% of the novelties of the year (this rate is decreasing every year). But I will not spend my life chasing the novelties everywhere. More importantly: as you mention it, it is a true p... 
MCG (Markus) October 9th, 2018-14:10
I agree totally to your view points. And it stays interesting, what alternative Nick will draw out of the hat! Clear is, he needs an alternative! And hopefully a good one! Depending on place and date it might hurt BW - and probably also the rest of the watch industry - even more...
cazalea October 9th, 2018-14:17
This is what we are seeing in high-end automobiles The manufacturers (Ferrari, Aston Martin, Lamborghini, Bugatti, McLaren) announce a new limited edition, multi-million euro/dollar model coincidentally with saying, "All the cars have already been spoken for by the select group we have chosen to enjoy our... 
TonyR October 9th, 2018-17:10
Thanks for this insightful post Fx........ The strategy of pulling away from distribution and moving to in house sales works until it doesn't. Brands selling in the boutiques keep the full margin now but when real tough times hit, and they always do, many brands will struggle to move watches not h... 
jomni1 October 9th, 2018-17:28
AD's hardly have any stock of AP That’s why I went straight to the boutique. And I get more freebies and better treatment too. But of course other cities don’t have the luxury of having boutiques.
Colin W October 11th, 2018-08:58
Very interesting Insight It’s a shame for us enthusiasts as we just don’t get opportunity to see a lot of these amazing pieces so easily if at all. Thankfully we have Internet forums & social media to view these elusive unicorns 🦄

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