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(Bloomberg) -- A dusty attic at the Zenith watch factory in Switzerland bears witness to the company’s near-death experience and rebirth. Four decades ago, a gutsy foreman hid the dies and punches used to shape the myriad tiny parts that make up a mechanical timepiece, defying orders from the U.S. owners to junk them.
The move saved the company when the Swiss industry, after nearly ruining itself with a wholesale embrace of quartz technology, reverted to mechanical movements a few years later for its high-end pieces. Zenith was able to tap its mothballed tools as watchmakers realized that survival depended on updating their heritage of craftsmanship, not jettisoning it entirely.
Now a new Zenith boss, Chief Executive Officer Julien Tornare, is leading the latest attempt to revive the watchmaker as the industry recovers from the biggest slump since the quartz crisis. He’s bucking some of the industry’s conventional wisdom, this time with the blessing of the brand’s current owner, French luxury conglomerate LVMH. Surrounded by reminders of 1970s foreman Charles Vermot’s actions, he’s taking care not to move too far from the traditions of a watchmaker known for conservative designs like its plain-faced steel Elite Classic 3 Hands starting at 4,900 francs ($5,100).
“If we don’t want to become a museum industry, we need to evolve,” Tornare said in an interview at Zenith’s headquarters in Le Locle, a small, French-speaking city in the Jura mountains that’s also home to brands like Tissot and Ulysse Nardin. “Zenith is lacking brand awareness, is perceived as a bit dusty, a bit old-fashioned.”
While exports are climbing back after a downturn caused by a crackdown on corruption in China, the rise of the smartwatch and terrorism in Europe, the industry faces a conundrum. Steeped in heritage and the antiquated manual assembly of mechanical watches, it’s got to keep the history alive while embracing the demands of a new breed of buyers who might be eyeing Apple Inc.’s latest watch instead.
While LVMH sister brand TAG Heuer and some Swiss makers have introduced smartwatches, Zenith has no plans to do so, Tornare said. Instead, he’s introducing a new mechanical watch that features the first new oscillator since 1675, streamlining the roster of retail partners and encouraging fans to customize Zenith’s watches -- something that’s frowned upon at most high-end labels.
Zenith, a 152-year-old brand whose timepieces sell for an average 7,500 francs, this year became the first Swiss watchmaker to officially partner with the U.K.’s Bamford Watch Department, which modifies and personalizes pieces for clients. Zenith supplies it with components and in turn gets to validate the final product. The aim is to cater to the whims of clients like one collector who seeks watches with three yellow parts in them, Tornare said.
Watchmakers have generally balked at customization for fear of losing control over their design and image. Germany’s Blaken GmbH, which modifies and customizes Rolex timepieces, giving them a black tint, notifies visitors to its website that it’s in no way connected with or licensed by the Swiss brand.
“It’s just the beginning and very complicated to manage logistically,” Tornare said. “But it’s like when people said they would never sell on e-commerce. You can’t say you’re not going to do it. If we claim we’re innovative, it must not just be the product, but also the culture.”
Tornare joined Zenith in May after 17 years at Richemont’s Vacheron Constantin, whose watches are considerably more expensive. Jean-Claude Biver, who also oversees the Hublot brand as LVMH’s watch chief, looked after Zenith briefly after former CEO Aldo Magada’s resignation in January.
Forward thinking is needed to attract what the Zenith chief described as a second generation of Chinese buyers -- young people who are choosier than their parents and no longer willing to buy anything at any price.
For consumers everywhere, 10,000 francs has become a “psychological barrier,” regardless of their financial means, Tornare said. Early sales of the new Defy El Primero 21 range, which starts at 9,900 francs, have been the strongest for any Zenith watch in a long time, Tornare said.
The new CEO is revamping Zenith’s website and plans to shrink the physical distribution network by as much as 30 percent in the next 12 to 18 months, from more than 800 points of sale currently. Zenith will cut off retailers who don’t promote the brand effectively, while looking for new store locations in Beijing and, eventually, New York and London, he said.
“My impression is that Zenith needs to get back some of its glamor,” said Luca Solca, an analyst at Exane BNP Paribas. “This is a brand with a strong tradition and high technical credentials, but I am not sure consumers perceive that today.”
More affordable than Patek Philippe and less well known than Rolex, Zenith prides itself on its rich heritage, including the El Primero chronograph movement that was saved by Vermot’s act of corporate disobedience in the attic, as well as timepieces used by aviation pioneer Louis Bleriot or polar explorer Roald Amundsen. The pilot range, which comes in oversized cases made from bronze, is among the company’s best-sellers, the CEO said.
Almost all markets are starting to recover, Tornare said, reflecting the broader rebound seen in Swiss watch exports over the past few months, though last year’s comparison base is low.
“We see good signs and more optimism on all levels,” Tornare said. “And the noise around our brand is positive.”
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