Piaget

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A new focus and growth area

Hmmm,

Some interesting views so far, though mostly (naturally) from the enthusiast viewpoint. Given that the winner of the competition is to be chosen by chance rather than for quality, I will therefore take a slightly different tack. A bit of a ramble, I’m afraid, and I hope I don’t offend….

I can’t find out what the CEO of Piaget earns, but the highest paid director at Richemont last year was the CEO of Cartier and he made €7.2m, while the CEO Johann Rupert ‘only’ got €3.9m (albeit he part-owns the business). I’m therefore going to assume that Richemont pays well if you make the company money. Now as a collector with distinctly sub-€7.2m current earnings (!), the focus of my five years at Piaget will therefore be to deliver for Mr Rupert so that I can take home buckets of cash and accelerate my collection. Or position myself to take his job if he has retired by 2017 (he’ll be 67 when I’m finishing my stint). Or both, of course.

Delivery in my eyes means remaining consistent with the broader business strategy while delivering sustained profit growth as an autonomous maison.

The three things to be sensitive about here are:

1. Different regions (and therefore types of customer) are experiencing different levels of growth. While the US is Richemont’s largest market, China is growing fastest (of course) and new Piaget boutiques in FY11 were in China, Singapore and the Middle East (plus London). Some may be unimpressed by the ‘year of the dragon’ bandwagon among luxury watchmakers, but I’m going to be riding that bandwagon hard and focusing on what buyers from “newer” markets want.
   
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• However, for the purposes of this question I’m going to ignore the thinking on what a collection needs to look like to appeal to Chinese buyers - just because I have no idea
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2. Boutique sales (as opposed to wholesale sales) are generally higher margin and are growing faster. I therefore want a watch collection that stands on its own in a Piaget boutique and is complementary and consistent with the brand
   
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• As I don’t have any particular comment about the comprehensiveness of the collection beyond what others have already said, I shall say no more about the specifics. But thematically, I want to ensure the link between jewellery and the broader image of Piaget and the watch collection. I’ll come back to this in a moment
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3. Lastly, I am running an autonomous maison, but Vacheron, Jaeger, Lange, IWC, Cartier, Roger Dubuis and Panerai are part of the same group (I'm ignoring B&M and Montblanc for these purposes); taking sales off one of them may benefit Piaget’s numbers but taking them off another company is better for Mr Rupert (and as we don't share R&D with our fellow maisons, I will be investing alongside them, too). A differentiated position within the group that does not overly cannibalise is therefore important. This leads me to some conclusions:
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• I don’t want to make big tool watches because Panerai already does that
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• Ditto for repeaters (VC), pilot watches (IWC) and uber-high-complications with finishing to die for (VC, Lange)
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• I think (personal view) that the Piaget Polo line is less compelling than the Vacheron Overseas for mainstream and RD for bling. However, I wouldn’t spend too much of my development budget on changing that relative position and therefore I intend to leave that sports part of the market alone
  
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• What I need is something that is ‘completely Piaget’ to build some new models/lines off

This, I think, is the nub of this question (how to market what we make is, though interesting, the subject of another contest!) What does it mean to be completely Piaget? I think anything we produced needs to express:

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• The appeal, look and standards of jewellery, whether it is jewellery or watches and, for the latter, whether the watch has stones on it or not
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• Slim, beautiful, understated elegance. Even where the maison does Bling, it is chic bling, if that is not oxymoronic. The female brand ambassadors reflect this
  
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• Femininity. This may be a controversial one (obviously not for jewellery), but I think even Piaget men’s watches are feminine – not a criticism, just a view!
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• Quality. The stones aren’t cheap, the manufacture calibres are refined, the design is excellent, the finish is high.
  

And these themes combine with my comment about brand positioning and the focus on boutiques to dictate my master-strategy for model-line extension for Piaget:

“Become the pre-eminent creator of beautiful, mechanical watches for women who want the best”

Now why is this an insight of genius that should enable me to out-earn Bernard Fornas (‘Mr Cartier’) over the next five years? I think there are lots of reasons but these four are key to me:

• The demand for luxury goods from women is there.
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• Yes, China is a growing consumer of luxury goods, but almost all high-end mechanical watches are bought by men, and I'm sure there are more rich women in the world than there are rich men in China. There is plenty of demographic demand if we think they will buy
  
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• As any male purists knows, it’s not like women don’t like luxury consumer goods. Even using Richemont's own numbers, jewellery maisons represented 50% of FY11 sales and specialist wachmakers represented only 26%. More is spent today by women on jewellery than by men on watches and if you think they won't willingly spend on something else because they are already buying jewellery then you've not met my wife...
  
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• Quartz and high-end watches shouldn’t go together and women know this
  
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• Why would you buy a €50k watch with a €10 movement when you could have something beautiful beating beneath the face? Why should women be served quartz watches?
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• Women are not too stupid to understand or appreciate mechanical watches. In my experience, career women (and WAGs of purists?) in particular like mechanical watches, but they are not alone in this. They just get ignored by the industry
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• In short, the only hard, white stones in a high-end watch should be diamonds. Ditch the quartz…
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• Women are woefully served in the mechanical space today
  
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• When it comes to mechanical watches below about 33-34mmAP has the fabulous Jules Audemars Small Seconds and there are a couple of other brands (Patek comes to mind and Jaeger is okay if you want a reverso) who try, but most brands are just rubbish. This is why almost all career women either give up and buy quartz or go Rolex or Cartier…
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• Piaget has form here
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• Piaget has a few 34mm options in the Altiplano line already, though most of the others models (Limelight, Possession, Dancer) are regrettably quartz
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• We understand femininity and designing beautiful things for women. And those women trust us to do so
  
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• If you’re going to do a small movement for a small watch, it needs to be thin (a big issue for me on Roles). Piaget does thin – it’s in the DNA
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• We want to sell in boutiques because the margin is better. Our boutiques are already filled with rich women who like our jewellery and buy our brand. Why wouldn’t we want to sell them mechanical watches?
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• The rest of Richemont is pretty bad at this, too
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• Big women's mechanical watches do exist: some women want a Panerai or chunky RD and will buy one. We’re not going after them so we need not worry about this part of the market
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• IWC is man’s stuff, I think Lange has one nice (34mm) option in the form of the Little Saxonia and Vacheron has long-since focused on men to my mind
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• Cartier is closest, but has a different feel to the watches. Piaget could differentiate here. And anyway, we've established that the CEO of Cartier is doing something right...
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• As such, sales here are additive to Richemont overall

So I will give you a number of small, beautiful women’s watches. Some will be time-only and some will have complications, some will be skeletonised and some not, some will be jewel-encrusted and some plain metal. But all will be mechanical and all completely Piaget.

And then, in five years, I will start spending my cash...

Thanks,

simon