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You may have recently read a variety of articles reporting on the dramatic changes in the world’s most important watch fair. These changes have been building over the past few years and should be worrying for organizers as the numbers speak very clearly. 2017 saw a decrease of 200 exhibitors from the previous year and this year, another whopping 600 exhibitors decided not to join the show, effectively cutting last year’s numbers in half. With the Swiss watch industry recovering from its recent crisis, and markets like China and the US growing once again, one might ask what the reasons are for such a decline in the number of companies exhibiting at Baselworld. Despite the industry being upbeat about its recent recovery, the retail landscape has changed significantly, and the times when 30 percent of a brand’s total production was sold to distributors and retail partners in Basel are over. Thanks to rapid digitalization, customers are much more informed and thus more sensitive to pricing today. This forces the brands to rethink pricing strategies to reach a better match between pricing and offering.
A further effect caused by a more digitalised customer base is the need to communicate and engage with consumers about the brand’s activities year-round. The constant access to quick information requires brands to present new models and collections throughout the year and “feed” the blogs and watch aficionados with new content. This requires a higher frequency of new developments and a shorter time to market for the brands. The ease of digital communication and the decreasing costs of global travel have also led to a decrease in the importance of big fairs like Baselworld to facilitate the interaction between brands and their retail partners.
A recent article by Revolution’s Wei Koh (https://www.revolution.watch/will-baselworld-continue-to-exist/) titled “Will Basel World Continue to Exist?” also points out many of the shortcomings of the fair in comparison with its relatively new competitor the Salon SIHH (Salon International de la Haute Horlogerie) in Geneva. He writes from his perspective as a watch journalist and complains about simple hotel rooms in Basel costing triple the regular price during the fair; slow or no Wi-Fi to upload live stories for his readers; as well as brand stands that are only accessible for retail partners and not open to the public. SIHH does things a bit differently and offers free Wi-Fi, well-lit photo booths purposely built for social media photography, work stations for journalists and a generally more open and friendly attitude towards visitors.
At the end of 2016 we changed our business model completely by building an award-winning e-commerce site for our brand and selling exclusively direct-to-consumer. This had the very welcome side-effect of eliminating retail margins and led to the possibility of offering our watches at a much more competitive price and therefore passing the savings on to our customers. All this, while including super-fast shipping, taxes and duties and free returns in almost every country in the world.
While trade shows undoubtedly have prestige they are also about presenting the brand and its new models to existing and potential retail partners. They also give journalists sneak peaks and presentations on new models so they can inform the public.
For us at Formex we have no need to lure in new retail partners. We would much rather invest the resources we save on shows like Baselworld and put them into product development and improving our customer experience even further.
Contrary to what most people would think, going exclusively online has brought us much closer to our customers and we enjoy the personal contact we have with them on a daily basis. The market feedback on our products also became much faster than it used to be. Customers are more able to share their experiences with us and therefore help us understand what they need without the barrier of a brick and mortar retailer.
However, we do participate at smaller shows that are targeted at the final customer. For instance, the Wind Up Watch Fair by Worn & Wound in San Francisco this May, and the MunichTime in Munich later in October, where we are able to interact with our customers in person and share our passion for watchmaking.
Raphael Granito, CEO Formex Swiss Watches