Credits: Article and images by Oliver R Müller @ Revolution Watch Magazine. See the original article here - https://revolutionwatch.com/swatch-group-business-news/
The bad news is not that the Swatch Group carries a majority of its 16 brands in the mid-range and entry price levels, but that even the six brands assimilated to luxury — Breguet, Blancpain, Harry Winston, Jaquet Droz, Glashütte Original and Omega — are underperforming the market with the exception of Harry Winston, which is helped by its jewelry business, as it makes only ~16% of its sales with watches.
Historically, the Swatch Group has an approach which is rather more comparable to FMCG (fast moving consumer goods) than luxury where “less is more.” Even though restricting access to your bestselling products increases the desirability of your brand, the Swatch Group would rather push on product diversification and volumes. More references and more quantities on each. While that can be a good way to use your available production capacities, it does have a negative impact on your brand equity or brand desirability. When you keep Rolex customers hungry and on waiting lists, you promise your clients at Swatch, Tissot and Omega that whatever happens they will get their hands on your latest novelties.
The Swatch Group is an industrial company, but the stock market regards it as a luxury group
Even though the group is stock listed, it is being managed as if it were a private, family-owned company. In fact the Hayek pool (mainly the family) owns less than one-quarter of the equity and just 43% of the voting rights. But no matter. Mr. Hayek told an investor during a conference call last year that if he wasn’t happy with the group’s performance, then he would just have to sell his stocks. Well, if you did that in the USA for example you would probably get sued immediately by a class action of investors in defense of their co-owners’ rights. But in Switzerland nothing happens, apart from some negative publicity with a very few articles.
So back to the obsolete route plan that was left more than 20 years ago. CEO of the group Nick Hayek Jr. was told that the first and premiere goal of the Swatch Group is to have its industrial capacities running at full speed — whereas the stock market thinks he should be optimizing the business units where the margins are the highest, which are those 16 brands. And again 75% of the company’s equity is owned by the market, not the family. But again, it matters not. So basically, you apply a push strategy rather than a pull strategy. In other words, the production pushes the market and not vice-versa, which to me is a very strange way to look at things the primary objective is that everyone has work to do.
Credits: Article and images by Oliver R Müller @ Revolution Watch Magazine. See the original article here - https://revolutionwatch.com/swatch-group-business-news/