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«Our people to people concept has revolutionized our way of working»

In an exclusive interview, François-Henry Bennahmias, CEO of Audemars Piguet, explains how the pandemic has pushed him to radically change his relationship to clients, as well as towards his colleagues.

Cristina D’Agostino

By Cristina D’Agostino22 octobre 2020

CHF 40,000

the average price of an Audemars Piguet watch in 2020

< 38,000

the number of watches produced in 2020

- 16%

the decline in revenues at the end of August 2020

< CHF 1 Bn

estimated revenues in 2020

250

jobs to be created in 2021

42,000

the number of watches that will be produced in 2021

François-Henry Bennahmias, CEO of the Audemars Piguet brand since 2012 (DR)

It’s October and in a beautiful office facing the Jura mountains, François-Henry Bennahmias, leading the brand of Le Brassus since 2012, explains and measures the journey he went through in just a few weeks, since the month of March when the world stopped. To go back to the way things were? That is not an option for the man who likes to be straight forward. So, he listens, he asks, he has numerus remote conversations with his colleagues and clients in Switzerland and worldwide. The observation is clear: the system needs a reboot. “Show-off luxury has to stop, he says. New generations are demanding it”. Contrary to the current sluggish atmosphere of a paralyzed watchmaking industry, he claims to have set a new business model in motion, one that works and is going at full speed. Interview.

What is the current pace of the manufacture’s production?

The manufacture has been running at 100% of its capacity since the end of August. We won’t be able to compensate two months’ worth of lost production. Without the pandemic, we had planned to reach 45,000 watches in 2020, but we will only produce 35,000 to 38,000 watches after all. The last thing to do would be to saturate the markets.

Have you already proceeded with some budget cuts?

Mainly the marketing budget, considering we were not able to host events. We cut a few costs so the financial results will be good. The sales results will be close to a billion, when it should have originally been close to 1.3 billion for 45,000 watches.

As part of the Audemars Piguet x Ralph & Russo collaboration, Audemars Piguet presented a new series of Royal Oak models in 34 mm. Here, the Royal Oak in pink gold and diamonds (DR)

With 37,000 watches instead of 45,000, are you keeping everyone’s job safe?

Yes, I need everyone to work on big projects scheduled for 2021, with a foreseen production level close to 42,000 watches.

Will the average price increase?

Organically yes, because of changes in the product mix and novelties introduced in the collections, including many more complicated watches.

How has the average price been evolving over the past five years?

It reached CHF 32,000 in 2015. Today the average price is CHF 40,000 and five years from now, it should reach CHF 45,000.

How profitable are you today?

This information is confidential.

What visibility do you have on the business today?

Covid has taught us one thing: it’s that tourism will not go back to normal until 2023 at best. And even if it were to resume sooner, Audemars Piguet is currently completely shifting its strategy towards activating local clients. I have asked all our markets to reinvent themselves, imagining what it would be like to only work with local clients. An important part of the job has already been done over the past four months. Of course, some markets such as Japan or Germany were already focusing their efforts on local business. Just as in the States, where results are still very strong.

Inspite of Covid, the elections and riots?

Yes. The Hamptons for example - where real estate skyrocketed this summer - have recorded an increase of 50% in sell-out. Our Dallas boutique, inaugurated during lockdown, has recorded 1.5 million in sales results during its first week. In Switzerland as well, numbers are strong.

Have you still recorded a global decrease?

End of August, we were at -16% with production having stopped in April and May, but our boutique sales are still growing.

According to you, is this linked to a post-confinement bounce-back effect with sales falling today?

In the future, Audemars Piguet will increase the number of partnerships such as the one with Ralph & Russo, an haute couture brand (DR).

Not at Audemars Piguet, as we did not bet everything on purchasing tourism. We need to maintain a certain balance within our distribution network, on the contrary to some brands that concentrate at least 50% of their sales revenue in Asia. At Audemars Piguet, it will never be the case. Of course, the sanitary crisis has had an important impact and a social crisis could emerge down the road, but people haven’t stopped enjoying themselves. It’s an observation I must admit I did not expect. And we shouldn’t forget that the stock market and real estate are doing well. We are aiming at such few people in terms of intrinsic value that clients who are likely to buy Audemars Piguet still exist.

It’s difficult to keep your clients captive…

Yes, indeed that’s the most complicated part. During confinement I engaged with many colleagues. I asked them to imagine a post-Covid world with their children of all age. Two main concepts transpired: loving others and loving the planet. As a result, we decided to evolve our point of view about the business and no longer talk about B2B or B2C, but B2Love, with both our colleagues and clients. I have never seen colleagues embrace a new concept this fast. Today our Business to Love vision has already evolved into the People to People concept, with one major challenge: taking care of our clients at a level we had never reached before. This new modus operandi is already showing incredible results.

Do you have an example?

In Hong Kong, we know our clients are foodies. We have partnered with numerus local chefs and have delivered perfectly orchestrated surprise dinners at our clients’ homes, just to make them happy. The messages we received from our clients were incredible. Why? Because 200-people events where personal interactions are not possible are over. Our objective today is to take better care of each of our clients, by building the purest form of personal relationship: person to person.

You are going to need more staff and more arguments to be able to keep them…

Yes. We plan on hiring about 250 people in 2021. And of course, we’ll continue to offer good working conditions.

If I understand correctly, is show-luxury over?

I wouldn’t say that exactly. A couture fashion show remains a show. Show-luxury must remain more than ever. We need to keep on dreaming. But show-off luxury, yes that’s over!

You launched the AP House concept, locations imagined as apartments where you could welcome clients in an exclusive way. Have you scheduled other openings?

Yes, we already have seven worldwide. The two newest AP Houses to open were Madrid and Bangkok, with the latter spanning over 600m2. The next big opening will take place in New York, in the Meatpacking District with over 800m2. Then Tokyo.

The recently inaugurated 600m2 AP House in Bangkok (DR)

Are they real estate investments?

No.

When you open an AP House, do you close a boutique?

Potentially yes. If a brand is aiming at purchasing tourism, it needs to keep a flagship store, but if the goal is to reach local clients, it’s the strength of our bond that will prevail. Clients will be happy as long as they experience something unique. With this in mind, we wanted to reach 120 boutiques worldwide a year ago, but today the objective is to focus on less than a hundred (76 boutiques currently). 

Has the flagship store trend therefore become obsolete?

It’s simple. Today a luxury brand needs to renew its image in retail stores ever five years on average. The square meter in the watchmaking world is very expensive. On a yearly average, more than tens of millions are spent for these renovations. When you add tens of millions spent on rent, the figures skyrocket and this still doesn’t include client experience, which is the main focus. This is the main concern and the type of waste that new generations don’t want anymore! The critical question of tomorrow must be: can we offer an unforgettable experience to a client outside of the boutique walls? That’s the People to People concept exactly. It’s not a challenge, it’s a natural evolution adapting to the current context.

What will you do with e-commerce purchasing and digital platforms that grew during confinement and that younger generations love?

We do not follow this trend as the younger generation is also keen on meeting in person. Luxury in its purest form remains a human experience, with interactions and passing on know-how from one person to another. Even the most beautiful technical tools aren’t everything.

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