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Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event

Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event Watch Industry News

On the same day, Swiss watchmakers Audemars Piguet and Richard Mille both announced their intent to leave the important annual watch trade show event in Geneva known as SIHH. Audemars Piguet and Richard Mille each appended minor explanations for why they are leaving SIHH in their announcements, but I felt it was necessary to explain the context of their departure – as well as to compare and contrast it with other major trade show brand departure news that we have been covering. Just a few months ago the Swatch Group also announced a similar departure from the other major watch trade show, Baselworld. It might reasonably appear that the watch industry is in a state of chaos. It is, but it isn’t always exactly what it seems.

Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event Watch Industry News

The Swatch Group decided to immediately leave Baselworld and took out all of its almost 20 brands. It did so because of dissatisfaction with the Baselworld organizers and in a sense, as a protest to what it felt was a system that was not making returns on its deep investment. Richard Mille and Audemars Piguet are not immediately leaving SIHH, with them still participating in the 2019 event happening in January. SIHH 2020 will be the first SIHH that will no longer include those brands. They also aren’t doing it because of expressed dissatisfaction with the SIHH organizers, but more accurately, because of major shifts in their own business strategies. Specifically, both Audemars Piguet and Richard Mille have expressed a shift toward selling their products directly to consumers – without third-party retailers. This change in strategy is perhaps the major reason these brands will not be at the show – because they no longer feel the need to interface with retailers around the world who might purchase and sell their products to their clients.

Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event Watch Industry News

While both Audemars Piguet and Richard Mille currently blend direct sales with third-party retailers, the shift for them both is reportedly to entirely sell direct to consumers. What that looks like in practice could mean a few things, but for the most part it will mean that the main place to purchase a Richard Mille or Audemars Piguet product is via a directly-owned or controlled mono-brand retail store. A major reason why brands invest in participating at trade shows is to meet new and existing third-party retailers who can select to order the brand’s newest watches, which will later be delivered to them for sale to consumers. The other reasons to exhibit at a trade show like SIHH is to meet with members of the media, suppliers, and of course VIP customers. Richard Mille and Audemars Piguet have apparently made the decision that venues outside of a trade show environment are best to meet with media and VIP clients alike.

Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event Watch Industry News

The conversation about why a brand might want to sell directly to a customer as opposed to working through independent third-party retailers is complicated. Yes, it is true that doing so allows brands to keep a much larger portion of a watch’s retail price. But this alone isn’t why the brands are choosing to “go direct.” More important are issues related to brand positioning, pricing practices, and overall control of how and where its watches are distributed. Once a brand sells a watch via wholesale to a retailer, they don’t know who ends up buying the watch nor can they control the price it is sold for.

Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event Watch Industry News

When you have hot, hard-to-get products such as some Audemars Piguet and many Richard Mille products, the need to control pricing and distribution is much more important than when you aren’t that type of brand. In a sense, the departure of Richard Mille and Audemars Piguet from third-party distribution simply opens up the door for others to take their place at those stores. All the while, Richard Mille and Audemars Piguet can embark on new frontiers where they are entirely responsible for the full life cycle of a watch from inception to final end-client delivery, and of course, after-sales service. There is so much value in “keeping a client within the brand,” that many of the top luxury watchmakers are choosing to invest in handling the entire relationship themselves. They not only get to keep more money and know who their clients are, but if done correctly, they can enjoy a lot more business from the same clients year after year. In years past, those clients may have very well spread their timepiece spending dollars to a range of brands.

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Why Richard Mille & Audemars Piguet Both Decided To Leave The SIHH Watch Trade Show Event Watch Industry News

Skeptics have remarked that brands such as Richard Mille and Audemars Piguet are thinking in too shortsighted a way. They say that, while they may be experiencing accelerated popularity now, the costs of running and maintaining a series of stores and distribution centers around the world might put them in a precarious situation if their products suddenly become less in-demand. My personal perspective is that Audemars Piguet and Richard Mille have each identified a small number of partners they wish to continue working with, but for the most part are trying to separate themselves from what they might see as wide turmoil in the watch retail and distribution sector. In order to protect their brands and customer experience, they are simply pulling out of working with third-party retail partners. Other brands such as F.P. Journe did the same a few years ago – exclusively relying on their own brand boutiques. They later adjusted the strategy to sell via third-party retailers as well as their own stores.

Richard Mille and Audemars Piguet will still likely remain members of the prestigious FHH organization which, among other things, organizes the SIHH trade show event. With that said, starting in 2020 Richard Mille and Audemars Piguet – two long-standing fixtures of SIHH – will have their former booth spaces replaced with… someone else.

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  • Nirupesh Joshi

    Good insights Ariel. With the kind of demand that RM and AP watches have, it is no wonder that they intend to focus on direct distribution. The design languages of both the brands are so unique (more so RM than AP), that there isn’t a need for widespread distribution. Take Hong Kong, or Singapore, or Dubai: AP and RM patrons will seek out stores even if there were just one or two in the city as opposed to distribution through one of the third party retailers. There is a point to be made about the viability and long term costs of running their own stores, especially when the products don’t have a high lifetime customer value like Apple.

  • BJ314

    I’d wonder if they are concerned about the larger number of stores that buying their watches and immediately customizing them at exorbitant prices. Not that they are opposed to selling customized pieces from everything to PVD coats to diamond encrusted pieces to order, but they (1) want to make some of that money and (2) they want greater control over the quality of the work.

    In recent years, Ferrari, Lamborghini, Pagani, Bugatti and other luxury carmakers have done what would have been unthinkable 20 years ago, they giving their customers all the crazy customizations in-house. I know in the case of companies like Rolls-Royce and Ferrari, it’s very much about their desire to control how their cars are modified. In their mind, every modified Ferrari reflects on them, even if the customization is done by someone else. So much so, they have sued some luxury customizers and forced them remove the Ferrari emblem is they didn’t enjoy their work. And then there’s all that money to be made. Buying a custom Richard Mille is inherently worth more than one modified by some Bevery Hills jeweler to the stars.

    As for their desire to get out of trades shows? Good. I really don’t see the value-add at all. Most retailers still can’t give you a completely thorough description of every watch’s features and history. They are salesmen, so they work the broad details and rely on brand name to close the deal. If going to trade shows doesn’t inspire distributors and retailers to become more educated about your products, why bother going? There’s a reason why consumers keep their little of their favorite stores, because they are far and in between.

    • Joe

      I agree that having fewer retailers and fewer but higher quality (as you say with better-trained staff) boutiques would be more appealing.

      I’ve been to so many “authorised dealers” of various brands only to be disappointed by the staff’s lack of knowledge of the products, not to mention their snooti-ness.
      It’s almost embarrassing to turn up to a shop knowing a lot more about a product than the sales staff, not to mention off-putting.

      When you get a sense that the retail staff are just there to make a quick buck, it doesn’t leave you with the impression that after sales will be any better either.

      It’s sad to lose some of these shows but perhaps a “Consumer Watch Fair” where many brands come together and allow relaxing, easy access to enthusiasts might still be popular.

  • Simonh

    Who cares?

    • This is a watch blog, so… us readers?

  • Ariel Adams

    I’m convinced you’d not want to read articles about watch industry gossip. At least I don’t want to write about half of what I hear about. You are correct that F.P. Journe relies on both their brand boutiques and third-party retailers. I wrote this article in haste and wasn’t able to complete that thought. It is true however that F.P. Journe did entertain the notion of total vertical integration even though they ended up not pursuing that strategy entirely.

  • H.S.M.

    Sounds good, but it is not enough.
    Where is the online direct purchase?
    Where are the price drops by cutting out the middle man?

    In a digital age younger generations don’t care about retail brick and mortar stores. We want instant access to goods, be it every day or luxury. Whilst I can get a car online, or even buy a flippin’ house! I can’t buy a stupid watch. Not even the lower end of the luxury line, like a Tudor or Longines.
    So man up Swiss Watch Industry, because we are impatient. And whilst low and mid tier watch makers already realised this, You guys still put Your heads in the sand and pretend we still live in the early 1900’s.
    Go full online!
    Offer better prices!
    Offer different buying options, like finance deals!
    Offer direct support!
    Use all the online media to get attention, like youtubers eager to review, etc…! Because we don’t care about your stupid brand ambassadors!
    Also create events for your customers and not sales people.

    • Oh my, the very idea!

    • tangible

      you don’t care about brand ambassadors or salespeople but demand YouTube videos and events. Same thing. Financing is already available in many ways, but if it’s not explained on YouTube you can’t be bothered. It’s all online already, you just can’t find it because you’ve forgotten how to Google shit. Good Luck owning an AP since you’ll never make enough bank to get one.

      • H.S.M.

        Oh ouch! You found my weakness!
        I am melting! Can’t Google shiiiiiiiiiiiit…

        Anyway, sorry if I don’t want to pay extra for a middleman for absolutely nothing.
        And brand ambassadors are payed loads of money just to wear a watch, whilst reviewers and youtubers would do a lot for free and they are far better then Lady Gaga. But hey, tell me when were YOU interested more in an ambassador then a reviewer talking about a watch?
        Events for sales people and events for customer are the same thing? (interesting concept)
        And surprise surprise, there are brands where they sell watches directly to you with 0% interest finance deals, online! (Ch Ward)
        How bloody hard would that be for Rolex, or even for Tudor?
        Don’t really give a shit about AP really. So no problems here, if I don’t have the money for it. But hey, if that makes me a lesser human being in your eyes… feel free to feel superior. Not going to ruin your birthday party.

  • GW

    Hubris. The good times shall roll on forever. ?

  • Raymond Wilkie

    You may well be right to point out an error in the review, but could you try to be less flippant about it.. Thanks.

  • Debashish

    Who cares?

  • cluedog12

    Speaking from my selfish perspective – spending one hour per day reading the best SIHH/Baselworld content, as opposed to spending five consecutive 16 hour days covering the shows – I will miss peak SIHH and Baselworld.

    PS – I would miss covering the shows.

  • SuperStrapper

    Still seems like these shows are at risk.

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