It is no secret that the arrival of the Apple Watch in 2015 changed the watch industry. After initially being dismissive of the threat, many Swiss brands scrambled to meet the challenge. After notable efforts from TAG Heuer and Frederique Constant, Hublot entered the fray during the FIFA World Cup in 2018 when it armed officiating referees (all 101 of them) with a 49 mm smartwatch called the Big Bang Referee.
This June, Hublot launched its first regular production smartwatch – the Big Bang E that borrowed its design codes from the brand’s talismanic Big Bang model. Hublot is probably the most high-profile Swiss entrant in the smartwatch market. While the mechanical watch industry may be struggling, global smartwatch shipments continue to grow with a 20 percent rise in the first quarter of 2020. According to data released by Strategy Analytics, 14 million units were sold in the first quarter of 2020 with the Apple Watch accounting for 55 percent of the market share.
We caught up with Ricardo Guadalupe, CEO of Hublot, over the videoconferencing app Zoom earlier this month. Here are excerpts from our chat (edited for brevity and clarity).
What explains Hublot’s forays into the world of smartwatches?
RG: Hublot has innovated with mechanical movements and with case materials like ceramic, Magic Gold, and sapphire. We must be open to what is happening around us and we can see today that smartwatches are omnipresent. And although Apple Watch sets the reference today, we see space for luxury connected watches.
We believe that we can create demand for a watch that is rare [Hublot only plans to make about 4,000-5,000 smartwatches a year) and with a strong design language like Big Bang. Our smartwatch has the same strong design identity as the Big Bang and we continue to use the materials that we are known for - in this case, the Big Bang E is presented in a titanium or ceramic case and it features Hublot innovations like the one-lick system for straps. Although we use Google’s Wear OS, we can bring in a more lifestyle experience with our unique digital interpretations of traditional watch complications like the perpetual calendar and the GMT display. There are infinite possibilities in terms of the user experience.
What is the tricky bit about getting a luxury smartwatch right?
RG: It is a difficult thing to do. It takes millions of dollars of investment to create the technology platform, also part of the reason why Swiss brands fail to create smartwatches. As Hublot is part of the LVMH Group, we can benefit from the technology platform that was created for our sister brands like TAG Heuer and Louis Vuitton.
So at least we have access to basic hardware from being part of the LVMH Group. The luxury connected watch is a niche market and this will only be a small part of our business. Our core business will always remain mechanical watches – if smartwatches one day become even five percent of our business, I would count it as a big success.
You are also debuting an ecommerce channel with this smartwatch
Yes. The unprecedented Covid-19 crisis has made us rethink our distribution channel. We were working on an ecommerce strategy and a digital platform to sell our watches was already in the pipeline. However, with our distribution channels cut off during the crisis, we had to fast track the entire process.
Now we are ready with our ecommerce platform, we have opened it up to the Hublotista [an exclusive club for Hublot owners] first and from June 15, we shall give everyone access. Anyone can create an ecommerce platform. The big challenge is for us to develop this digital experience for our customers going forward. That will be a real test.
Given the pandemic, what is your outlook for the rest of the year?
April was our worst month. About 80-90 percent of our network was closed around the world; our factory was closed as well. The month of May has been slightly better but nowhere close to what it was in 2019. Given the current situation - April, May, and June were always going to be tough months going into the summer.
This year is going to be tough, I am seeing −20 to −30 percent for us.
The big issue is we do not know when people are going to be able to travel again. We need tourists coming to Europe - the Chinese, Americans, people from the Middle East - these are all our customers. In their absence, we are selling to the local population now. This year is going to be tough, I am seeing −20 to −30 percent for us and I believe the watch industry will see similar levels. I do not anticipate a recovery next year. It will maybe take two or three years. We don’t know - it really depends on whether the virus disappears or not. There are not too many parameters here to predict what’s going to happen in the long term.