A TimeZone Interview with Audemars Piguet CEO François-Henry Bennahmias A TimeZone Interview with Audemars Piguet CEO François-Henry Bennahmias

An interview in February 2013 by Howard Parr

In conjunction with the 40th Anniversary of the Royal Oak last year, Audemars Piguet set out to do some deep self-examination. That may sound complex, but in truth the result was a simplification of the message. From a revamped logo and new marketing tagline (“To Break the Rules, You Must First Master Them”), to consistency across the range of the 2012 novelties, and heightened effort to solidify the customer experience.

The brand has been noticeably clarifying its message and its product.

This year we saw a reduction in the number of pieces introduced at SIHH, which follows this same tact. We were also left with a number of questions, which became apparent Internet-wide. In light of much speculation floating around the Web, I requested an interview with AP in order to clarify the goings on.

Newly appointed CEO François-Henry Bennahmias invited me to meet with him this week in New York to address those very questions, and here is that interview.

TimeZone (TZ): You have recently moved from CEO of the Americas to CEO of Audemars Piguet. Congratulations again.

François-Henry Bennahmias (FHB): Thank you

TZ: Audemars Piguet has been working hard on clarifying the message from headquarters to the end client. It shows up in the marketing, the appearance of displays, boutique branding, and the watches themselves. Perhaps you can comment on how this carries forward under your direction.

FHB: I could summarize it in three words: Fewer, Bigger, Better. Which means over the last 5-7 years, we became a little too easy on ourselves. Too many Limited pieces, too many similar watches. So, we have had to do some serious homework. We decided to slow down, reduce the number of references, reposition the collection, and look at which models could sustain for the next 10 years or more.

A pattern developed. We would see a big buzz on new watches, and then people were waiting for the “next big one” a year or two later. We want to build business by being more consistent with the message, the models, the collection itself. It’s certainly not a blank page, but rather more of a cleansing.

We’re doing something unique among manufacturers. We are buying back inventory that has not moved in a while from the retailers, which will help strengthen their existing inventory. We have also lowered prices on some of the precious metal pieces. Over the last 3-4 years, the cost of precious metals has increased dramatically. Consequently, so have all costs. We expect to sell a watch for more than a few years prior, but there is a point where it’s too much, and it doesn’t work.

TZ: It seems to be working really well now, no?

FHB: Now, yes. But there is a point where you have no room for sustained growth. Not just in terms of price, but in terms of the significance of the models. You don’t want to leave a watch insignificant, and the planning and solutions need time to play out.

There are possibilities for growth specifically in precious metal sport watches. And to play effectively in the marketplace, we have to make some adjustments. We determined it was best to do this now. This affected only a small number of references, and on an average there was a 15% reduction on those models. Some more, some less, but that is the precise average.

TZ: And it does not include any Limited Editions?

FHB: No, we didn’t touch those.

Royal Oak Offshore Michael Schumacher LE in Rose Gold

TZ: Some have asked about accommodations for those who recently bought these pieces.

FHB: People have to do what they think is right, period. We are not the only ones who sell our watches. We have some solutions for our own boutique customers–we know what they paid for the watches–and retailers know what they need to do with their customers. They capably handle their own businesses A-to-Z, just as they always do.

TZ: So the goal is specific, not speculative?

FHB: We had to look at last year’s launch of the 37mm Royal Oak, the 41mm Royal Oak, the Royal Oak Chronograph, the Extra Thin Royal Oak. The overall reception was unbelievable. Except, with feedback from clients and retailers, we took a close look and agreed that a number of precious metal pieces were high enough that we could see 2 to 3 years down the road having to introduce new models just to maintain momentum. Not good for anyone. These models were very well received. They have lasting power. We don’t want to replace them so quickly.

Don’t forget, every time we stop a model every 2 or 3 years, the cost of re-tooling a new model, new hands, new crown, new dial, etc. is outrageous. When you consider that the Royal Oak has grown for a 40 year period, it’s crazy to turn through models so quickly when a great 41mm watch has every right to be in the collection for 10 years or more.

Of course, there is room for a special Offshore, or 40th Anniversary Royal Oak, but the core collection is an enduring one, and we need to support it. We are committed to a message of quality and consistency, so this is integral to what we are doing.

TZ: You could see this in this year’s novelties. Some beautiful Ladies models, a few Grand Complications and only a couple of new Offshores.

FHB: Fewer. Bigger. Better. Which is why in 2014 we’ll see fewer Offshore models, and will continue to reduce the number of references. We have to be able to deliver the watches to our customers, and some struggle to find them because we simply have too many references to maintain consistency.

We have two years of “cleansing”, if you will, and come 2015 we’ll be in a good position to stretch a bit.

Royal Oak Offshore Michael Schumacher in Titanium with Cermet Bezel

TZ: Does this include discontinuing the Rubber Clad?

FHB: The Rubber Clad will continue for a little while, and then we’ll see it re-imagined. It has been very successful for us, but it’s been the same watch for a long time. It’s going to be time to do something a bit different, and so in time we’ll see this.

TZ: How about the blue dialed 41mm Royal Oak and Royal Oak Chronograph? Are they now boutique-only?

FHB: Yes, confirmed. And for a simple reason. We cannot make the exact same quantities of the three dials, because of materials access, production scheduling, etc. We simply can’t. So we chose to maintain standard production of the black and white dial models, and instead of going through the process of choosing who gets what from a lower production of blue dialed models, we are simply selling the blue dial versions through the boutiques.

Royal Oak 15400

TZ: And what about Forged Carbon? We’re told no changes for 2013, and keep posting this, but the word ‘discontinued’ keeps popping up around the Internet

FHB: I don’t know where this came from. I can officially say that Forged Carbon is not going anywhere. It has been a very successful material for us. We were first to market with it. We are not stopping Forged Carbon.

And we are always looking at other materials, which leads me back to the “Better” part of our goals. Forged Carbon has been important for us, and it will remain so.

Royal Oak Offshore Diver in ceramic

TZ: How does your goal of “Better” affect your relationship with the retailer network?

FHB: Same as the watches. We have been dealing with quantity over the years, and we need to focus on quality. At every level, and in everything we do. It’s a huge challenge, but this also puts the retailers in a stronger position. We’re spending an extraordinary amount to buy back inventory that has not moved for them. The pricing is positioned for sustainability, and moving forward we are more competitive.

There are maybe 5 to 7 brands who can generate more than $2 Million in annual revenue per door (point of sale), and we are one of them. The concept is proven, and thankfully we have many wanting to become Audemars Piguet retailers. Looking ahead 10 years, we will bring the brand to another level as we have the past 10 years, and the retailers will be pleased. We are not going away from the retailer network, and we could even open stores with the retailers.

The bottom line is we care more about this partnership than ever before, and it means looking ahead. Not just for a sale, or this week. A year, 5 years, 10 years. We are all answering the same question. “Who are we marrying for the long term?”

TZ: Quality over quantity, with the collection and your relationships?

FHB: It’s always about relationship. Always, always, always. And we can improve the collective benefit if we are working toward the same goals.

In 1999, I came to the US and we were doing $6 Million in revenue, with 95 doors (points of sale). We are now at 39 doors, and we just broke $100 Million in sales for the year. What does this say?

TZ: Quality product, sold by quality people, spells luxury.

FHB: REAL luxury. True luxury is the experience that goes with the product. It is not an amount.

TZ:Thank you very much for taking the time to address these questions , and congratulations again on your new role at AP.

FHB: Thank you!

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