Vertically Integrated

 Just recently, two giants of the watch industry’s independent brands, Richard Mille and Audemars Piguet, announced they would cease exhibiting at the Salon International de la Haute Horlogerie Genève, or SIHH for short following the 2019 edition. This marks a point in the business of horology where brands are going ever-vertical, vying to move activities in-house, from manufacturing, distribution, to the end retailer. As you have no doubt discovered, Richard Mille and Audemars Piguet are going all-in on mono-brand boutiques and cutting out the majority of traditional distributors. While it certainly saves them money and shores up potential weak-points if the market would suddenly dip, (you wouldn’t want the bulk of your retailers going under without you having direct control) however, it also limits a brands ability to reach out to the consumer who has yet to discover it. This is an especially a big issue for independents like Richard Mille, which despite being a major brand, they still need to actively seek out attention, and a large network of retailers is one way to gather it. Then again, Richard Mille watches sell like hot-cakes due to their extreme rarity, which some believe is purely artificial. Seeing this move from Richard Mille’s point of view, a large network of retailers could certainly devalue the brand and destroy one of Richard Mille’s founding principles; exclusivity. Frankly, exclusivity must be a principle of any luxury product, but especially Richard Mille and the independent brands.

Another interesting detail is that Richard Mille does not produce their watches entirely in-house, far from it. This is by no means a bad thing, since their suppliers are some of the most experienced and prestigious in the business, likely far better than any in-house brand could put on the market. (assuming money isn’t no object) There is simply far too many items to juggle, from producing dials, cases, and the dreaded in-house movement; good for marketing but not for a brand’s finances. It can take several million dollars (USD) and many years of development to create a movement that substantially differs from the likes of ETA and Sellita, let alone one that is ready for serial production. But by no means does Richard Mille use cheap movements. They heavily modify renown high-end movements from the likes of Vaucher Manufacture Fleurier, although Richard Mille is rapidly shifting to in-house movement production. Currently, Audemars Piguet is drastically cutting its base of authorized dealers, and it seems like most releases from Audemars Piguet are boutique exclusive. For dealers, this is very worrying, and they must certainly hope more big names don’t follow suit.

As a headline, two major brands leaving SIHH might scare you into whole-heartedly believing that horology trade shows are doomed. It is a reasonable thought, though, as Swatch Group pulling out of Baselworld was certainly a shock to the trade show industry. (It shouldn’t have been) In this case, however, trade shows in general just don’t seem to align with these brand’s unique objectives, not that the watch industry is suffering.

Colin Carpenter