Earlier today Paris-based LVMH Group announced that the several watch brands in its watches division (Hublot, TAG Heuer, and Zenith), and Bulgari (which also produces a number of luxury watches) are following the lead of a number of other major timepiece makers and severing ties with Baselworld. This news comes just days after — and is directly related to — the announcement that Rolex, Tudor, Patek Philippe, Chopard, and Chanel were leaving Baselworld.
While not all of LVMH’s watch making brands have displayed at Baselworld for a while, its most important global luxury timepiece makers were key attractions for guests at the long-standing wrist watch trade show event held in the city of Basel which is about 1.25 hours by train away from Zürich. Problems between watch brand exhibitors and the Baselworld organization have been brewing for a while, and in 2020 the show itself was forced to close due to the COVID-19 pandemic crisis.
Facing huge economic losses, and without much precedent as to how to handle the situation, MCH (the company which operates Baselworld) apparently chose not to fully refund exhibitor fees but rather explained to its many exhibitors that Baselworld 2020 would be rescheduled….. to January 2021. This would ostensibly let Baselworld hold on to fees already collected, and simply apply them to a replacement show. Unfortunately for Baselworld, few exhibitors agreed that a January 2021 show was the same thing as an April 2020 show — with many feeling that Baselworld was operating with poor sportsmanship.
The precise nature of the disagreements between Baselworld and the watch brands which collectively make up its exhibitors and thus clients are somewhat unclear — but appear to be mostly related to money. The consensus seems to be that for the cost and inconvenience of attending Baselworld, the return on investment for being there does not add up for many people who in modern times have plenty of alternative ways to meet and do business. Baselworld has been asked for years to reduce their prices and add appeal for distinguished guests and exhibitors to travel to Basel. While efforts were indeed made, it was all apparently too little, too late.
The first major blow to Baselworld in modern times was two years ago when the entire Swatch Group portfolio of watch brands pulled support from Baselworld and decided to meet retailers at their offices in Zürich. From there brand after brand seemed to follow with the once invincible Baselworld becoming increasingly like Swiss cheese. With that said, watch brands and Baselworld experienced their first major fissure when the Richemont Group, and some colleague brands split off to form the alternative luxury watch trade show known as SIHH in Geneva. In recent months, SIHH has been renamed Watches & Wonders Geneva, and in general had been slowly pulling brands away from Baselworld for years.
Rolex, Tudor, Patek Philippe, Chopard, and Chanel, are now joining the Geneva crew and will participate in a brand new watch trade show event (that does not have a name yet) held adjacent to Watches & Wonders Geneva and that will be organized by the same partner organization — the FHH. LVMH makes it clear they will also display in Geneva, yet where and how is not clear yet. Its brands aren’t for want of options or locales either. In January 2020 aBlogtoWatch joined LVMH watch brands in Dubai at the Group’s own show where they debuted watches, and make it a point to remark on how their event was far less expensive than the cost of attending Baselworld. LVMH was openly taunting Baselworld that it had better options out there, and that its business was going to require some work to preserve.
Rolex and Patek Philippe were the two colleague watch brands whose booths were in the vicinity as those of the LVMH brands, and whose retailers LVMH brands wanted to meet. In essence, the people who came to Baselworld to purchase Rolex and Patek Philippe timepieces for their stores, were the types of buyers Hublot, TAG Heuer, Bulgari, and Zenith wanted to meet — and so they did. LVMH likely fears that even though Baselworld has plenty of other potential brands for buyers to meet, the cream of the crop will not attend the now out-of-the-way watch event in the city of Basel.
LVMH actually makes a very luxury house argument — the logic of which is hard for shareholders to complain against. LVMH in essence says to Baselworld, “we are Louis Vuitton and many of the world’s most well-known names in luxury.” We have to respect our image, because image is our product. Attending Baselworld isn’t a good look for us right now. It’s been fun Baselworld, but right now working with you isn’t helping our image. LVMH says, “[our brands] must also withdraw [from Baselworld] in order to preserve their image and their relations with their clients as well as with the media.” It is hard not to feel bad for Baselworld. As the dominoes of departing brands has kept on falling since last year, the mummers of its demise became a self fulfilling prophecy that convinced enough important people the show should experience demise.
One of the major questions on everyone’s mind is what will happen with the dozens of smaller watch brands that also relied upon Baselworld to reach customers and media. If Baselworld has now lost of all of its anchor brands then it is highly likely operating the show as is will not be economically viable given the overhead of the show at its recent size. It isn’t clear if Baselworld will accept doing a much smaller show just for the smaller brands who still wish to participate. Even with just those brands, Baselworld could be quite sizeable. Having said that, Baselworld will likely never be able to recover the historic earnings it made through exhibitor fees. These days the value of being at the show is simply less for brands, despite how much it costs Baselworld to put on the show. One option might be for Baselworld to be rolled into Art Basel, closer to the summer each year. The famed art show could carve out space for luxury watches since both events attract a high-end clientèle. Though it isn’t clear if the maligned and under-sized hotel industry in Basel could accommodate additional visitors during the busy art event.
Another option is for Baselworld to move to Zürich. There it could counter Swatch Group’s move and do a show at the same time that the Swatch Group invites retailers into town to view its latest products. That way Baselworld can ensure its exhibitors that not only is Zürich a more travel-friendly city than Basel, but that there will be more of the types of buyers already in town they want to meet.
LVMH and luxury watch brands in general have all come to a similar conclusion, and that is they cannot both attend a major trade show event like Baselworld and also have to travel around the world doing a bunch of smaller local events. Stopping them from participating in both Baselworld and travel are practical considerations such as human resources of man power, and available budgets.
Not being able to attend a watch trade show event like Baselworld will have mixed implications for the watch industry — but in all likelihood, most of the former Baselworld exhibitors will find new shows to display at within a few years from now. It might also be a boom for watch media and marketing, the budgets of which might easily get larger due to serious need, as well as budget availability from unused Baselworld francs. It will nevertheless be a few years from now until some new level of normalcy takes shape when it comes to established places where watch brands can show their new products off to buyers, clients, media, and most importantly… each other.