Basel Blues

War. Pestilence. Weather. The 2003 BaselWorld Watch and Jewelry Show (April 3-10) deserved an ancient Greek tragedian to adequately chronicle its woes. This year’s edition of the trade fair, held annually in Basel, Switzerland, was one of the most star-crossed in its history.

War and SARS. Over the past three years, the show’s owners—MCH Swiss Exhibition Ltd. (SE)—have made extensive changes to the fair, culminating this year. These included renovation and reorganization of existing buildings and the construction of another and, most notably, relocating 26 national pavilions (783 non-brand exhibitors) to SE’s Zurich convention center under a new “one show, two cities” plan. So, advance copies of opening-day speeches given by the show’s proud-as-peacocks managers promised Basel 2003 would be “exceptional.” It was—but not in the way they expected.

First, the Iraqi war—and widespread European protests against it—began two weeks before the fair opened, prompting many foreign retailers and some vendors’ staffers to cancel plans to attend. (It also put an unintended focus on some vendors’ displays, such as Rama Swiss’s Lady Liberty watches, Leonard’s precious-gem U.S. flag watch, Swiss watchmaker Quinting’s Peace watch, and Corum’s cabinets de curiosités artistic displays of the skeletal figure of Death.)

Then, two days before the show opened, the Swiss government banned its Southeast Asian exhibitors and support staffs (about 400 exhibitors and 5,000 people) to prevent the spread of the SARS illness. (However, Asian visitors and buyers weren’t banned or restricted.) Their expulsion could cost Hong Kong watch and jewelry firms alone almost $HK2 billion in lost business, not including $HK90 million in pre-show global advertising, expensive new stands for Zurich, and logistical expenses. At press time, Hong Kong associations and exhibitors and the Basel Fair management were preparing to sue the Swiss government for compensation.

Fewer visitors. Sluggish economies in Asia and Europe, hesitant consumer spending, and the uncertain U.S. market—which global watch and jewelry industries rely on to spur sales—also affected attendance and business. So did the weather. Though officially springtime, winter temperatures chilled show-goers, and a serious snowstorm blanketed the show’s last day.

All of this had a “nightmarish” impact on the heavily promoted redefined trade show, said René Kamm, SE’s chief executive officer. However, he remained upbeat. “Conditions couldn’t have been worse, but the fair survived them and will be stronger for it in 2004,” he said.

Attendance fell 22% to 64,350, with North America and the Far East accounting for the biggest drops. Missing were many independent U.S. jewelers and some regional and national chains, such as J.C. Penney and Federated Stores. However, officials of Zale Corp. and Sterling Inc., the largest U.S. retail chain jewelers, did attend. “It’s important we be here to show our support of the industry,” said Mary Forte, Zale’s president and CEO. Other than the expelled Asian vendors, virtually all 2,163 exhibitors (1,377 in Basel) were there, too.

In terms of business, “this year’s BaselWorld was extremely difficult … for exhibitors,” said an official after-show report. The “shortfall of purchases,” said Kamm, was largely the result of absent Americans and Asians. Still, some vendors did satisfactory business with the European market, and surprisingly—in view of the Iraqi war and turmoil in that region—”excellent” business with buyers from the Near East, he noted.

Serious buyers. Overall, many exhibitors reported they did “better than expected.” Luxury jewelry- and watchmaker Guy Ellia, for example, said, “Business itself hasn’t really suffered, just visitor numbers. I’m fairly happy considering the circumstances in which this show took place.” People who came were “serious buyers, who were focused and knew what they wanted,” said Stacie Orloff, president of luxury watch supplier Corum USA, which, like a number of upscale brands, did healthy business in Basel. The post-show report noted, “Key exhibitors at the Basel location reported the quality of orders was good to excellent, with visitors focusing on new designs in the middle to upper price range.”

However, despite the presence of nearly 400 other vendors—including the Israeli Diamond Institute’s first-ever national pavilion—the Zurich pavilions had few visitors after the Asians’ ouster, even after show managers waived admission fees and kept daily shuttle buses running to and from Basel until late at night. Although Thai and Indian delegations reportedly did “quite good business”—possibly because their main competitors, the Hong Kong firms, were absent—Kamm conceded the debut of the fair’s “one show, two cities” plan was “a failure, a flop.” The management, he said, will rethink the concept (since many Hong Kong vendors—essential to the plan—said they won’t return to Zurich), consult all exhibitors, and devise a “creative” solution.

Newcomers and joint efforts. Despite its woes, Basel 2003 exhibitors included more than 40 prestigious first-time or long-absent-from-Basel watch vendors, including Bulgari and its Daniel Roth and Gerald Genta brands, Philippe Charriol, Burberry, Revue Thommen, Gevril, Robert Lighton, Ritmo Mvndo, H. Stern, and Chanel, the latter two first-timers seeking to expand business by adding U.S. jewelers (see “Timely Trends,” p. 224). Other well-known U.S. brands actively promoted their international business. Bulova (with a new Swiss line for the world market) and David Yurman each opened European offices this year and did brisk business at the show.

A well-attended Gemfest Basel, sponsored by the Gemological Institute of America, spotlighted trends in fancy colored diamonds in a program featuring researchers, laboratory experts, and key GIA officials.

In seminars, officials of the Diamond Trading Company (DTC), the sales and marketing arm of the De Beers Group, said DTC aims to boost the $50 billion diamond jewelry business 50% in 10 years through its “Supplier of Choice” initiative, which already has helped develop 200 branding and marketing projects worldwide. (See “De Beers’ New Direction,” p. 106.)

Several firms announced joint projects. Guess Watches and Elle magazine launched a year-long, multimillion-dollar global search for the “Face of Guess Watches,” to be crowned at Basel 2004. Timex and Reebok unveiled new high-tech sport watches. Breitling debuted its Breitling Bentley chronograph, part of a co-branding pact with Bentley Motors. Oris is the new “watch partner” of BMW’s WilliamsF1 racing team. Rosy Blue, a leading diamond jewelry manufacturer and distributor, will work with U.S. fashion designer Vera Wang on a fine jewelry collection. It also debuted a marketing campaign with select jewelry designers and watchmakers spotlighting their use of natural shades of diamonds.

A fair first was “BaselWorld Soundz,” a music CD. Basel is donating half the proceeds to the Jewelers Charity Fund for Children, the charity of the U.S. jewelry trade.

The next BaselWorld is slated for April 15-22, 2004.