07/29/2018

Industry Analysis: What Does Swatch Group’s Exit from Baselworld Mean for The Future of The Show?

An earthquake struck the Swiss watchmaking world on Sunday July 29th. Swatch Group, the leading Swiss watchmaking group, will not be exhibiting at Baselworld in 2019. There is a risk of a domino effect. Here’s what’s next.

By Joël A. Grandjean

Contributor

According to Nick Hayek's confirmation to journalist Daniel Hug in the Sunday edition of the largest Swiss daily, the NZZ am Sonntag, "Swatch Group has decided to no longer be present in Baselworld from 2019". He and 18 brands from his group, the largest watchmaking group in Switzerland, will no longer spend their 50 million CHF Baselworld budget and will therefore leave the event which just recently (in 2017) celebrated its 100th anniversary. Continuing the steady decline for the show. This decline started in 2002 with the massive departure of watch suppliers for the EPHJ-EPMT exhibition.

Nick Hayek, CEO of Swatch Group

Just last year, the most traumatic news in the history of the event was the departure in March 2017 of more than 600 exhibitors including an impressive number of historical brands, which accounts for half of the exhibitors present in 2016. Back then, I was talking about a real "managerial decision" or even a "deliberate marketing repositioning". Because when a company lets more than half of its customers go at once, it clearly means that it has decided not to listen to a market which its offer no longer fits. In the long term, Hall 1, the place to be in Basel at the world's largest watch exhibition, risks losing its attractiveness as Halls 2 and 3 become empty.

Risk of domino effect

The Swatch Group's decision also seems to apply to the following years, even if the new Baselworld director Michel Loris-Melikoff seems to hope that Nick Hayek's decision is not irreversible, as witnessed by the remarks he gave our colleague from the NZZ: "We'll do our best to keep them in Basel," he says.

Breguet at Baselworld

The question that all observers are asking themselves remains: what now binds Patek Philippe and Rolex in Basel? These other two cornerstones that bring balance to the Basel event? Also, what becomes of LVMH brands (TAG Heuer, Bulgari, Zenith, and Hublot)? Already at the end of the 2017 edition, I argued that the future of Baselworld had passed into the hands of one man, Nick Hayek, CEO of Swatch Group. Because I remain convinced that Patek Philippe and Rolex are partially or completely exempt from paying for their square meters in Basel. Which, let's face it, would make commercial sense given the decisive influence their presence can have on the presence of other players.

Harry Winston at Baselworld

Therefore, on this watchmaking holiday Sunday, let us hope for the canton of Basel which remains the main shareholder of MCH, that the Swatch Group's decision will not be followed by a domino effect. And that other brands, in the wake, also announce their departure in 2019. We shall indeed see…