CHANGING THE RULES OF THE GAME

Jean-Claude Biver is a force of nature in all things horology. He was the brains behind Blancpain’s resurrection, putting an Omega timepiece on James Bond’s wrist, as well as Hublot’s rise to success within a decade. So, when he took the reigns as TAG Heuer’s interim CEO, amidst significant reshuffling of its senior management team, it would have been safe to bet that the next big thing to happen in the LVMH Group would be at TAG Heuer.

And we were not disappointed. On the first day of the Baselworld Watch & Jewellery Show outside the TAG Heuer booth in Hall 1, the busiest and most frenzied place in the entire fair, a pin-drop silence hung over this space as the world waited with bated breath to see what Biver would reveal.

Then, from the speakers built into the walls of TAG Heuer’s multi-storey booth, blared forth the voice of the man himself. “There is a saying that the only fish that go with the current are dead ones,” boomed Biver. “TAG Heuer will be the fish that swims against it!” With a snap of his fingers, the names of two of Silicon Valley’s most powerful companies, Google and Intel, suddenly appeared alongside that of TAG Heuer’s iconic shield, marking the beginning of a first-of-its-kind alliance between the Swiss Watch Valley and Silicon Valley to produce the brand’s own Android-powered smartwatch, which is set to hit the shelves later this year.

“We aren’t challenging or fighting the Apple Watch with our own smartwatch, but we do need to address the challenges it will present to the Swiss watch industry,” says Francoise Bezzola, Vice President of Communications for TAG Heuer. “Our objective is to surf this wave of change and find ways to take advantage of the situation by positioning ourselves as the brand people will look to after they’ve moved on from the Apple Watch.”

This move towards creating a smartwatch comes hand-in-hand with TAG Heuer’s recent shift in positioning, from one focused on high horology pieces, as seen with its award-winning Mikrogirder and MikroPendulum, towards a more technology-focused stance. TAG Heuer has made it clear that it won’t be completely scrapping the high horology department, which was built up by former CEO Jean-Christophe Babin (who now heads TAG Heuer’s sister LVMH company, Bulgari), master physicists and aerospace engineers such as Guy Sémon (see The Peak’s March 2014 issue: Man Behind the Machine).

“Innovation is a big part of TAG Heuer’s DNA,” says Bezzola. “For the past few years, we tried to convey this through our high horology timepieces, but it appears this message was not very obvious to the end consumer. That is why our partnership with Google and Intel is so important for the brand’s image.”

This drastic change in TAG Heuer’s strategy comes not long after the Swiss Central Bank’s unexpected decision to remove the Franc’s peg against the Euro in January 2015. In just one day, the Swiss Franc appreciated by a massive 30 per cent against the Euro.  Nick Hayek, the CEO of Swatch Group, likened the devastation wrought to Switzerland’s export-dependent economy to that of a “tsunami”.

This ‘tsunami’ was followed a watch ‘gold rush’ where panicking consumers scrambled to buy timepieces before the inevitable price hike, which some naysayers predicted would be as high as eight per cent. However, TAG Heuer shocked the world when it did just the opposite and slashed prices in several major markets – eight per cent in China, Switzerland and the Americas, seven per cent in the UK and a whopping 13 per cent in Hong Kong.

“We felt that in many countries, the prices of timepieces had become disconnected from their real value. So, we’re taking this opportunity to realign our prices to regain volume in the entry-level range of timepieces, with more competitively priced products,” explains Bezzola. “This market segment has always been the core strength of our brand.”

And the key market that TAG Heuer is banking on from here on is the United States. Amidst contracting luxury markets in China, a result of its recent anti-gifting policy, the economic sanctions that have weaken the Russian Ruble and crises plaguing the Middle-East, TAG Heuer is looking across the Atlantic to fuel its growth.

“To be honest, we’ve over-invested in China in the last five years. We’ve also compromised our timepieces by making them slimmer and smaller to cater to the tastes of Chinese consumers, although the core spirit of TAG Heuer has always revolved around our sports timepieces,” Bezzola says. “However, we’re not going to abandon what we’ve built up in Asia. We’re simply going back to our core strengths; big watches with a strong character, and we expect the growth to come from US markets.”

In line with this, TAG Heuer is targeting the 18 to 35-year-old millennial generation. “TAG Heuer will be where the young people are! We will be at their sports, their clubs and music festivals!” Biver declared, referring to the addition of ‘Lifestyle’ and ‘Art’ to TAG Heuer’s existing ‘Sports’ and ‘Heritage’ product categories (see sidebar). Spearheading this strategy are TAG Heuer’s new line-up of young and social media-savvy ambassadors, such as 22-year-old English supermodel Cara Delevingne, LA Lakers basketball extraordinaire Jeremy Lin and renowned DJ David Guetta, among them.

“We’re looking for people who are always connected with the world around them,” states Bezzola. “Take Cara Delevingne, for example. Throughout our advertising campaign with her, she was posting pictures on Instagram and Facebook to her 11 million fans. Our objective is to bring this huge community of followers to TAG Heuer. While the millennial generation may not be our customers today, we want them to become our clients tomorrow.”

To sum it up, TAG Heuer has had an extremely busy year so far, and we’ve only just seen the first few pages of a new chapter in its history. While only time will tell how its ambitious strategy will play out, there’s no doubt that the rest of 2015 and beyond will be an exciting time for TAG Heuer.