At a time when all sectors are experiencing challenging times and readjustment, Chris Grainger-Herr, CEO of IWC, believes that IWC is prepared to face what the future holds. In an interview, the person in charge of the Schaffhausen brand talks about the evolution of the luxury market, the new digital reality and strategies to develop the consumer experience.
We are experiencing extraordinary times. What do you think the long-term effects of the Covid-19 pandemic will be for IWC and how are you coping with it?
It is terribly difficult to make predictions. I think we have learned some things quite clearly in the past 12 months. I think that everything that was extravagance has disappeared and people are more focused on the substance. And I think that will lead us to a more conscious way of spending our time and consuming.
On the other hand, we have seen a leap into a period of innovation in all things digital, where it is clear that the relatively gradual growth of our industry has accelerated massively, with probably three years of progress in a single year. And perhaps this shock of innovation has also called into question a number of things. Why travel for hours on an airplane if we can get together via zoom, as long as there is already an established relationship with the stakeholders? On the other hand, how can we build relationships that matter in this digital universe?
I think some of the distractions have disappeared and we have also learned to connect with many more people in a more personal or personalized digital way. This has not happened before. See all the video technology that has come up massively. Augmented Reality (AR) and Virtual Reality (VR) have made great strides. If we think about how little developed these technologies were a few years ago and the quality they have today. Much more dynamic and richer. This is the ultimate customer experience that is here to stay. The future will definitely be a mix between physical and digital.
During global lockdown last year you quickly adapt to the new situation through trialing new concepts like augmented reality and live streaming. Were these solutions already in the pipeline of IWC digital transformation or were they born from the needs of the lockdown?
We definitely had developments that were in the pipeline that were accelerated. For example, when we thought about the global digital presentation of our products, which we did last year, we had to step up because the only channel available to display our watches was that. But it was definitely already in the pipeline to have a very strong live digital component, but it was all accelerated.
On the other hand, other things like “Time well Shared”, the virtual boutique and all the experiences provided there, the virtual watchmaking events, etc., everything was caused and invented by the lockdown. And the truth is, if before we used to do an event for 100 people, now we can do it digitally for thousands of people and, at the same time, for some physically, which translates into a much better reach for various activities.
Social media today also is integral to any company’s plans. Where will social media move in the future, and how can does it make a difference for IWC?
The reality of social media is that they are rapidly evolving and not always in the direction we expected. Last year, there was a big take-off of audio. It all started with a real boom of podcasts and their popularity soared with the creation of Clubhouse, a platform that is now dominant in terms of audio and which continues to grow at an incredible rate. And this allows brands to connect with their audience in new ways, which bring with them peculiarities that are unique to each platform. Clubhouse, for example, offers the ability to connect with all types of interest groups globally very immediately with live audio and create relationships that are much more direct than what has already been possible on Instagram and that allows us to really be part of each client, club and interest group, namely collectors, anywhere in the world, at any time of the day. It is a great potential to connect all points of view that were not together before on any other social media platform.
With all these unexpected and fast changes, what does the future hold for your distribution channel? What’s the importance of e-commerce?
What we have always believed in is that our distribution is based on the basic principle of global demand and a global supplier for our products. Any barriers that stand between our customers and us who provide the services, must be eliminated. This is the basic principle. We do not intend to direct any of our customers. If they choose to buy in a multi-brand retail store, or online on their mobile phone, or on the phone, or receive the watch as they see fit, the choice is always the customer’s. Our job is to offer an exciting, easy and perfect experience at all these different points of contact. And that is what we are focused on, creating the infrastructure where we can offer all these services and then it is up to our customers to decide how they want to interact with us.
E-Commerce promises to become a major revenue source. But, when it comes to watches, e-commerce could be very impersonal. How can IWC make the E-Commerce experience a personal and luxurious experience?
First of all, the purchase of a watch is often not made through a single point of contact. Many people who end up buying the watch online, at some point in the process, physically interacted with us and / or the watch. When this is not the case, what we also see is that the vast majority of online purchases, whether by phone or video chat, are at least strongly influenced by one of these two channels. And that means that, even if the customer is in a chat or video conference experience or over the phone, the personal service part is still the main factor in buying and selling watches. The way he then makes the purchase, either because he is waiting for the plane or the train to travel anywhere and decides to buy the watch via his cell phone and chooses to have it delivered to his hotel, for example, is his decision.
We offer this service, this hypothesis, but it doesn’t have to be impersonal. There are countless options to communicate with us and we see that, especially in the process of buying watches, some orientation of the relationship between the seller and the customer is still very important, to consult, touch and experiment, to listen to the opinion of another person. This is still necessary for an emotional purchase, such as a mechanical watch.
In September, the company opened a more immersive concept store in Zurich. Can you let us know a little bit more about it and its goals?
This is a very exciting project for us, because it is a whole new generation of stores where what we were talking about a little while ago is coming to life. In this boutique we interconnected for the first time, the physical, the virtual and the digital, in a really appropriate way, from all the possibilities of interaction existing in the store, to the valet service, to the home delivery service, to the live connection for the manufacture in Schaffhausen, to the patented cyber loop, where we have a streaming device in a watchmaker’s loupe, where the watchmaker can transmit the internal workings of the watch movement to any mobile device or screen, wherever one is.
At the same time, we wanted to create a very strong emotional experience in the store. And that is why we moved away from a traditional retail concept and decided to tell a story the way we would do it at an event, but as a permanent daily store event. That’s why we created this home base for the IWC racing team, centered around the 300 SL. And when we enter the boutique, every little detail of the atmosphere has the smell, feel and appearance of that engineering garage that makes the connection between watchmaking and automotive engineering.
Instead of trying to make small pieces of 50 different stories, we focused on one story. This gives a completely new experience to customers who interact with the brand and the product, which we have for the first time, in what we call “sensation displays”, where the watches are presented without glass, giving a completely different experience of light in the product compared to the retail space. We have all of our engineering milestones in tangible objects available at the boutique to feel the materials in the case. You can feel the details of the movement. We try to give people a real reason when they physically go to a store to have a unique experience.
Was this an initial shape for how IWC’s physical stores would be in the future?
Yes. In the next three, four years, we will be making 10 of these boutiques worldwide. Two will be inaugurated next year, and each one will be entirely designed individually. Every little detail, every new project will be done from scratch, so that it becomes a truly unique destination.
IWC appears to have today diverse target markets and different watches. Is this a market advantage? Does the breadth of product line reflect new marketing strategies?
We were founded as an international watch company and I really believe in that. We don’t just work for one type of customer. There are different realities of target audiences, customer profiles and markets. I think that our different collections have always been a force to be able to speak to different audiences in a different way, that challenges us and is an opportunity for us, as people behind the brand, to put these stories together. That’s what we’ve been working on in our watch families.
I understand that you are continuing the concept of creating narratives, in order to develop emotional responses to product. Why is this critical to market positioning?
Narratives are at the basis of luxury. When we think of the power of association to create values, environments and images, it goes back hundreds and hundreds of years. The expression of luxury has always been lived and expressed by the aristocracy or the elites in Ancient Rome, and then copied by the general population. They were the ambassadors of the time. So it’s not like we’ve invented that concept last year. It was always there, having just changed the shape. He went from religious and secular elites to the first movie stars in the twenties, thirties, forties, fifties, sixties. Then, for the athletes, for the personalities of the social media and, in the end, for the different partnerships and associations. The values of luxury objects are expressed through the power of association. I think it’s as old as the history of luxury.
Corporate Social Responsibility is becoming increasingly important. Why is it crucial for a watchmaker to be socially responsible?
We were created as a responsible and sustainable company in 1868. When Jones came from America and established IWC here on the banks of the Rhine, his first factory was driven directly by the energy of the river. And today, 154 years later, we have electricity, the energy of which comes from the hydroelectric power station, which is 200 meters away here, on the River Rhine. And this has been our sustainable energy for 150 years. On the other hand, we have always made mechanical products that are designed to last forever. We produce perpetual calendars pre-programmed for 499 years, and even after that, a simple intervention is enough to keep up to date. We basically guarantee our customers that these products will last for eternity, which in terms of sustainability is a very different message from an electronic device that we have to replace every two years.
Our products are produced in the heart of Europe, here in Switzerland, continuously for 150 years providing skills, jobs, cultural content made from materials of responsible origin, moved by the energy of the wrist, fingers and designed to last forever. As a starting point, I think it is very responsible and sustainable. Why is this important? Because if we sell an emotional product that people buy to give them pleasure, to feel better about their lives, it is absolutely essential that there is a guarantee of intrinsic sustainability. That is why we are committed at IWC to produce mechanical watches in the most responsible way possible.
On the other hand, we also want to make it very clear that we intend to be as transparent and traceable as possible. That is why we started to publish our sustainability report three years ago, detailing everything. We came out in the WWF study on gold sourcing in Switzerland, because we were not only sourcing responsibly, but we were also communicating this very clearly and answering questions. And now we have become the first watch manufacturer in the chain of custody certified by the responsible jewelery board. And that means that all the precious metal content in our cases is individually traceable, right back to the original manufacturer. Which means that, if 50 years from now, the customer wants to check where their product comes from, we can say exactly for that watch where the gold came from. And it is this combination of advancing in terms of sustainability, but, at the same time, also clearly communicating to our customers where their watches come from, that we want to perpetuate.
Last year novelties focused heavily on the new manufacture and in-house movements. Will it be the same for 2021? Can we say that IWC strategy for the future is to equip all IWC models with in-house movements?
That is a broad generalization, but that is the direction. The first collection I worked on when I became CEO was the Spitfire Top Gun, in 2019. It was a totally in-house watch. Last year it was the turn of the Portugieser, also fully produced in-house and, this year, the situation will be similar, but it will go even further. What we want to show with the new manufacture is clearly that we have the capacity to produce everything from a simple automatic movement to, for example, a chronograph. We can master all these different levels of watchmaking. We can make complicated cases. We presented our Ceratanium, we introduced Armor Gold, cutting-edge and complex materials, remastered and machine here in schaffhausen in the new facilities. This demonstrates that we can generate more and more content for our watches than just movements and also bring much more value to our customers.