The story broke in Switzerland’s NZZ am Sonntag newspaper. Swatch Group’s CEO Nick Hayek confirmed that the group would not be at Baselworld 2019. Some have already said that the decision is not a surprise, after a number of major exhibitors were already absent this year. Yet Baselworld specifically organised a closing press conference earlier this year to confirm that all exhibitors would be present at least in 2019. So what went wrong?
Quoted in the NZZ am Sonntag, Nick Hayek bemoans the lack of consultation with exhibitors, rejoining similar concerns expressed earlier this year by Jean-Claude Biver, responsible for the LVMH watchmaking pole (Hublot, TAG Heuer, Zenith), who suggested that the exhibition needed to change.
Unfortunately, none of these messages seem to have been taken on board. Earlier this month, the invitation to the 2019 edition of Baselworld arrived on Mr Hayek’s desk without any prior consultation. The ideas were presented to Swiss exhibitors on 3rd May, but submitting a new exhibition plan to Mr Hayek without further consultation was considered a “fait accompli” by the Swatch Group supremo. This was undoubtedly the straw that broke the camel’s back.
Could there be a domino effect?
The Swatch Group’s departure may now trigger reactions of other brands who had so far stood behind the exhibition. All eyes will now be turned towards Rolex and Patek Philippe to see whether they still consider a presence at the show necessary, especially given that there will be a huge hole in the exhibition hall behind their stands unless things change drastically. The final plans for the show are supposed to be submitted by the end of August.
What future for Baselworld?
The most worrying quote from Mr Hayek is that “there is longer any point in the traditional annual watch exhibitions for us.” Other brands have already shown that the budget for such exhibitions can be invested elsewhere more effectively. But with the Swatch Group this takes on an altogether different dimension, since the group’s estimated budget of 50 million Swiss francs could be used to put on one hell of a show.
The organisers of Baselworld seem to have ignored the fact that Basel needs the watch industry more than the watch industry needs Basel (the canton of Basel City owns 33,5% of the share capital of Baselworld organiser MCH Group). Stories of strongarm negotiating tactics and inflated prices have abounded over the years, but now Nick Hayek has had enough, pointing out that the Swatch Group “is not there to amortise an expensive hall by Herzog & de Meuron”, referring to the refurbished Hall 1, which cost 430 million Swiss francs. With the share price plunge of MCH over the past year, the company’s stock exchange valuation is worth less than its real estate. Losing precious income, not to mention goodwill, from the Swatch Group is not going to help.
What will replace Baselworld for the Swatch Group and others?
The watch retail landscape is definitely changing and operations such as the recent “Speedy Tuesday” sale prove that a company like Omega can generate millions in turnover in a matter of minutes. But this is just a small part of the company’s annual production, the rest of which still needs to find its way into retailers, who will want to see the products before placing their orders. Will the Swatch Group do this through a separate event, inviting its retailers to Switzerland? And if so, where? Its home city of Biel is ill-equipped to accommodate them and a move to Geneva seems unlikely. That leaves Zurich or… Basel?
