At this year’s Baselworld, you announced the launch of the first Hublot smartwatch. What is the strategy behind the Big Bang Referee 2018 FIFA World Cup launch?
Hublot is known for being innovative and creative, for always trying to be different and unique, and for being a pioneer in everything it does. The smartwatch is revolutionising our industry in a certain way, and we wanted to be open to this trend. We will always produce mechanical watches and very high-end watches; pieces of art. But thanks to the FIFA World Cup, we had the opportunity to create a smartwatch.
What was the inspiration behind this watch?
FIFA approached us and asked to work on a watch for their referees. And we said OK, let’s try to create something. Of course, being part of the LVMH Group, it was possible for us to base the watch on the module developed by TAG Heuer, which is Android Wear with Intel Inside. We started from there. But we were not going to replicate TAG Heuer, we wanted to do something different. So to answer the FIFA needs, we created an application specially designed for referees, as well as another application that links to the World Cup itself. We developed basic dials with a lot of features included that will operate during the World Cup games. Fans will be able to follow the games on their watches with alerts and other information.
We have also designed a fan-based watch with countries’ flags that you can select, depending on whether you are a fan of England, Switzerland or Germany for example. We have used the quality of a Hublot watch on the outside, with the design of the Big Bang, a titanium case and interchangeable straps with our patented one-click system which includes a rubber strap buckle in carbon fibre. However, this is a very limited production – 2018 pieces only, at 4900 Swiss Francs or 5000 USD.
You mentioned the price – it is one of the most expensive smartwatches. The target is also very specific.
The target includes Hublot fans as well as football fans. We know that we have a few thousands of the kind of fans that will acquire a Hublot because they love the brand and also love football. And because it is very limited, it is going to be a collector’s piece.
We had the same approach in 2014 for the World Cup in Brazil. We created a simple, rubber watch at 1500 USD which was dedicated to the event. Today, we have smart technology. This is why we decided to create a smartwatch for this year’s World Cup.
What are you expecting from the upcoming World Cup?
Our brand visibility is given through the referee boards. In 2014, we had 21 minutes of visibility on the board for a one-month period. If we had to pay for this amount of visibility through advertising, it would have cost us hundreds of millions.
We will use the World Cup in Russia to create brand activation where we will be inviting over 1000 people, including big fans and customers who love football. However, it is quite challenging logistically to organise brand awareness and on-site PR activation at the same time.
If we go back to the watch, you are now working with Google and Intel like TAG Heuer. Should we expect more synergies between LVMH watch brands? Are there any other projects coming up?
We have synergies that are pragmatic. For instance, we use Zenith movements too. In our Tonneau-Shaped “Spirit of Big Bang” collection, we have the El Primero movement that has been “Hublotised”; we have redesigned the aesthetics of the movement, and so we believe it is a manufactured movement by Hublot. This is another example of synergies that we can generate. But this is based on common sense of course. There may be other synergies in the future.
In terms of strategy, you announced a growth of 12% in sales last year. How do you explain this?
I would say thanks to China. The crisis that we have experienced in the watch industry is somewhat because of the Chinese; at one point, they ceased buying certain watches for gifting.
However, Hublot is a young brand with a concept that is very innovative – the art of fusion where we combine gold watches with rubber strap, create ceramic watches or use other materials that never were used in the watch industry. However, it has only been 10 years since we started working on brand awareness with the Chinese market. Now, we have noticed that something is happening. The younger generations of Chinese consumers do not want to own the same watches as their parents anymore, they do not simply want a classic watch. This young, emerging generation of 20 to 30 years old want something different, and Hublot is a good answer for these consumers.
We achieved incredible growth last year; 35% in Greater China, compared to 12% worldwide. The beginning of this year was fantastic, and if this growth continues, the next few years are going to be quite good as well. Last year, Greater China only represented 8% of our global sales. For all the brands, it is more or less 25-30% growth. We may still triple, or grow the business 4 or 5 times from what we see today. The potential is there.
Why do you believe Hublot is late in China?
We are young. I used to work for Blancpain before Hublot. Blancpain entered China in 1995. It was the very beginning. Hublot entered the China market in 2007. And one cannot immediately become successful.
Does being a young brand allow you to be flexible in terms of reacting to changes in the digital landscape or new consumer behaviours? If so, how do you do this?
We take risks that other brands will not take. We do so by investing in partnerships that other brands will not invest in. We were the first watch brand to be involved with football. If we take boxing with Mayweather, art with Orlinski, music with Depeche Mode, one can see that we take risks and explore worlds that no other brand has gone into before. This is because other brands are into more classical sports such as golf, equitation, tennis… But Hublot has been able to explore new worlds and I think that we have set a trend; now other brands are following us. Being young allows us to take more risks.
Apart from China, which other markets do you see potential growth from?
Japan is our number one market, but we have reached a level of maturity where we cannot double our business in the next five years, it is impossible. We can only increase it by 10 to 20%.
There still is potential in the US, as it is a big country with a great number of consumers. However, American consumers have a different relationship to watches so the potential lies in guiding them to understand the different values of the watch industry.
Then, we have Eastern countries where there is a lot of potential, as well as Africa of course. In the Middle East, we are very strong already. But as I said, the big relay in growth is Greater China.
You mentioned a growth of 35% in China. What is your growth strategy in China?
In China, people want to be treated like the others. We do not have a specific strategy for the Chinese, we simply have our strategy for Hublot. By creating the world of Hublot, we believe that the Chinese customers will be touched and will want to be a part of it. This is not a Chinese world, it’s an international world. Globalisation is everywhere. They can identify themselves with what we do in sports, such as football or with Ferrari, in arts or in music.
Sometimes, we do focus on the Chinese culture, as we did with Lang Lang, our ambassador, or with Chen Man, the photographer. But we try to present our world as it is without adapting it to the Chinese.
As it is, the Chinese differ from other markets because of demographics. A huge chunk of the Chinese consumer-base is made up of millennials. What steps is Hublot taking to appeal to millennials?
We are very strong in digital. We are leaders on Instagram for instance, with all the storytelling that we do. We have a specific strategy with WeChat and Weibo that is dedicated to China. We are focusing on making our strategy in China 100% digital.
What are the specific steps you are taking? How do you leverage WeChat?
We try to create a real customer experience. Is it via our manufacture, or we create stories about our partnerships. This can be through ambassadors, or with football this year, or with Ferrari too. We leverage these platforms to communicate with consumers.
What do you mean when you say that you are focusing on making your strategy 100% digital in China?
We do not do print advertising there, only digital. We also stage events around our boutiques or around the department stores where we are present. We centre these event on different themes such as cars with Ferrari, or football. These are all linked to our different partnerships.
You mentioned Hublot ambassadors such as Lang Lang and Chen Man. The Chinese are very receptive to KOLs. Are there any upcoming plans to collaborate with new ambassadors or KOLs in China?
We always try to be different and unique, but it is not that easy. We are always trying to find emerging ambassadors and influencers. It is a continuous process.
Many Chinese travellers purchase outside of China. What is your strategy to retain Chinese consumers who purchase in Europe and how are you going to build a relationship with them when they return to China?
We want them to purchase in Europe, so we communicate with them when they come to Europe. Our strategy is always to be present in places where there is a big flow of traffic, such as big cities like Paris or London. We believe that through billboards and our standalone boutiques, we can show them that Hublot is a strong brand. We are always present in the best locations in these different countries. However, in terms of these consumers returning to China, we still have some work to do in order to really communicate with them. I would say it comes down to talking about the brand through storytelling.
E-commerce is a big question for luxury watch brands. An increasing number of them are starting to sell online. What is your view on this global topic and what are your plans for Hublot?
Creating our own e-commerce site today will not work. In order to buy a watch at 5,000, 10,000 or 15,000 USD, one cannot just click-and-buy. Consumers need to have an experience before buying a watch. Of course, a watch priced below 1,000 USD is another story…
Therefore, we are trying to communicate and provide an experience for our consumers that combines digital with the boutiques. We are trying to find a way to create a digital experience for the consumers and then bring them to the stores. For instance, we are currently trying to build a digital boutique where consumers can have an appointment with somebody online; this is the first step before bringing them to the physical store. It is a digital step. This is not e-commerce, but it will help sell more watches.
We have launched this initiative in the US, but not in China yet. In New York, we have a studio where you can make appointments. Consumers can select the models they want to see while chatting with the salesperson to help orientate their choices. Consumers will then come to the boutique two weeks later with what they want to buy already in mind. We call it a digital boutique.
Building our own e-commerce site will not work yet. It will happen eventually for sure. If you also look at who is selling the watches, it is either retailers or boutiques. Therefore, I think we will need actors who are specialists in digital retail, as with Mr Porter for example. However, when you go to those websites, there are only a few models. Who is going to buy those watches on those sites? In our luxury segment, we are at the beginning. There is still a lot of work to do.
When looking at what is being sold on digital platforms, it’s mostly through eBay. But it’s resell or second-hand watches. People are looking for prices. So, to sell at retail prices today is very complicated.
Pure players are building luxury sections, such as Alibaba with Luxury Pavilion, where they try to build the right environment fitting to certain brands. Is this a better strategy?
Yes, but you have to choose the players. For example, if you go to Chrono24, it is the grey market. People are looking for discounts. At this juncture, we have to make choices, as we cannot work on both. Either you go with the brand and you play the image, the experience and sell retail, or you go to the parallel market which is another type of business.
For us, digital is our primary way to attract consumers to our physical stores, for the time being. Eventually, we will want consumers to be able to purchase within our digital boutiques. This may happen in two to three years’ time. But the former is our first approach.
Cover image credit: Hublot. Image: Ricardo Guadalupe.