Spring arrived during the Basel Fair with perfect weather. It felt like a rebirth of hope and confidence, as confirmed by the sentiments of many vendors. I even heard from one vendor that it was his best show in years and that a surprising number of American retailers visited his booth and bought well. I heard other positive stories from exhibitors, though admittedly not many.
But these same vendors said that things would not return to where they were in the past—not this year, and perhaps not in the years to come. These were not negative comments or complaints. It was a simple recognition that manufacturing, distributing, and retailing of jewelry have changed, are changing, and will evolve in ways that will fundamentally alter the whole process.
The Basel show is, at its core, a watch show. There are an astounding number of suppliers, Swiss and foreign, and I admit I don’t know most of them. As one retailer said, when you look at the mind-numbing quantity being displayed, one becomes discouraged by the repetitiveness and lack of innovation. Some major brands do move the needle, but is it a needle in a haystack? Apparently, the last two years had an effect as rafts of exhibitors did not show this year.
Watches are totally a branded business, so glitz, image, and innovation are everything. While there are plenty of women’s watches, this is the big alpha male zone, the one area of adornment aimed at men. The objective is always to turn men into collectors by showing more and more exciting innovations from one year to the next. We know this mode—it’s used by Apple, BMW, and Louis Vuitton. But in watches there is a big difference. The Chinese have refined their manufacturing ability to very nearly match the best of the Swiss. So look-alikes abound, and there is this debris field left behind the major leaders. The business rests on illusion, as branded products do, and that may account for the many times old Swiss brands, even defunct ones, are revived for the sake of using their lineage. Building a brand from scratch is difficult. I saw one such revival, where an old-time Swiss-based name, now Chinese-made, showed a nice line. The top line offered lifetime guarantees. A tourbillon was already tagged with a Swiss retail price of about $8,000. (Wholesale cost is about $1,400.) This is the golden egg laid by the Swiss industry. But now it has become more a survival contest, with the outcome hard to perceive. Will a price war break out? Probably not among the few-dozen top brands. But will the eggs keep coming?
The jewelry side has different issues. Classic gold jewelry has priced itself out of the reach of a portion of the market that had been buying it well. Diminished sales drive manufacturers to cut travel, salespeople, and show attendance; reduce product development; and retreat from some markets. That weakens companies even further and lowers the odds of survival. The classic problem, trouble with collections, is only part of the issue. It is more that the cost of maintaining any kind of presence in the country has become prohibitive. A vendor frequently cannot write an order large enough to warrant the cost of seeing the retailer. For many lines, using wholesalers no longer works. Should such a trend expand, it will add to the impoverishment of the range of jewelry available to the American public.
Perhaps the worst aspect is that vendors also are giving up shows. All buyers, at some point, need to see the product firsthand if they are to make a decision to buy. I am led to wonder if these companies are too close to the edge already. Clearly there are the opposite cases—vendors committed to exhibiting at shows and even expanding the number they will go to.
It was easy to pick out those companies at the shows. They had well thought-out collections and great ideas on addressing price issues. They had tight assortments. They talked about organic growth in existing markets and strategies for entering new markets (not just Asia, but the United States). They were steadily busy.
Retailers cannot be faulted for buying cautiously and managing inventories closely. They should make a regular effort, though, to find vendors with fresh outlooks, which develop product steadily, and have the courage to face adversity by intensifying their efforts. To my mind, trade shows are still the best way to do that.