WatchTime - August 2012

PROFILE
TAG Heuer’s Jean-Christophe Babin
just five years, thanks largely to Babin’s
vertical integration.
MUCH OF HIS tenure has been tougher
than he expected. For one thing, the competition
is worse: there are more brands in
the watch business than in others Babin
has seen; some 200 active ones in Switzerland
alone. “Before Christmas, you can
count up to 40 brands advertising in a single
[general interest] magazine. You won’t
find any other product like that,” he says.
One reason, he believes, is that the
watch business has been very easy to get
into. “Until recently anyone could launch
a watch brand with a few million dollars
because you could subcontract everything,”
he says. You came up with a good
idea, found the right third-party suppliers,
and, if you had good relationships with
the trade, you were in.
Babin with TAG-sponsored actress Uma Thurman in 2006 ...
80 WatchTime August 2012
Distinguishing his brand from the others
has also been harder than he thought it
would be. A watch has so many mandatory
components − a dial, hands, indices –
that there isn’t much room for improvisation,
he believes. “The room for differentiating
is very small and the constraints you
have are many. I thought, naively, when
entering the business, that it would be
much easier.”
Furthermore, the market requires constant
technological innovation, a taxing
proposition and, he believes, a paradox
given that a luxury watch is supposed to
be something one wears for decades.
He was also surprised by the speed with
which watch brands rise and fall. “There
are brands that were virtually nonexistent
in the early 2000s, when I joined the company,
and today they’re super stars,” he
says. Hublot, also owned by LVMH, and
the fashion brand Ice Watch, founded only
five years ago, are just two examples of apparent
overnight sensations. “Ice Watch did
3 million pieces last year,” Babin says. The
opposite is also true: “Some brands were
extremely powerful and today they are dying.
A strong brand can become a weak
brand in three years. In consumer goods it
takes ages.”
Babin has had a few major bloopers. In
2002, he introduced several models with
gold cases, believing that because LVMH
was a luxury-goods company, TAG should
sell luxurious watches. Consumers didn’t
agree. “The brand image and reputation
were probably not strong enough to sell
gold. In a gold watch, the main cost is the
gold, not so much the movement or the labor.
So the more gold you use, the closer
you are to Rolex in terms of price. And this
works if your image somehow competes
with Rolex. If your image is still too far
away, which was the case in the early
2000s, obviously it’s hard to sell gold. You
can compete [in the gold-watch market] only
when you have achieved a certain status
level. Now we can sell gold, not as much as
Rolex, but we are credible.”
He stumbled again when he opened two
ill-fated stores. One was in New York’s So-
Ho neighborhood. “While visiting New
York I discovered that there were no watch
retailers in SoHo. It was very active and
lively there on the weekends because the
Madison Avenue stores were closed on Sundays.
I thought that because there were no
watch retailers there, that we would make a
lot of money,” he recalls. “But the reason
there were no watch retailers there was that
there was no watch business,” he says with
a laugh. “The boutique proved to be a disaster.”
Babin closed the store after two and
a half years and took a massive write-off.
He made a similarly costly mistake in London,
opening a store in the wrong location.
Eventually, Babin got the hang of retail. By
the end of this year, TAG will have 60 boutiques
worldwide, and 90 percent of them
are doing well, he says.
HE HAS MORE to learn. One question is
how to cope with a huge problem facing
nearly all of the Swiss watch industry: the
Swatch Group’s cutbacks in sales of finished
movements and movement components.