Swatch

LONDON - The Swiss watchmaker has been hit by a sharp decline in sales for its luxury brands.

Formed in 1983, watchmaker Swatch was the product of a previous economic downturn. It is painfully ironic, then, that the current recession is causing it such woes.

To most consumers, the name is associated with cheap, gaudy plastic watches that were the height of fashion in the 80s. However, the company is one of the biggest watch manufacturers in the world, also owning high-end brands such as Omega and Breguet.

Although Swatch appeared only in the 80s, its foundations extend further than the era of synthpop and Fame.

In the 70s, the Swiss watch industry was facing heavy competition from cheaply made Asian quartz watches. This forced SSIH and ASUAG - two long-established watchmakers - to go into administration at the beginning of the 80s. They agreed a merger and, from these ashes, Swatch, with its bold design and cheaper engineering, was born. These mass-market timepieces proved to be a lifesaver for the industry.

While high-end brands have generally weathered the recession better than most, the bottom seems to have fallen out of the market for luxury watches since last autumn, with Swatch reporting that sales have dropped between 10% and 14% in the past two months.

So, aside from hoping for an 80s revival that allows its cheaper watches to prop up its more expensive brands, what can Swatch do to regain its success? We asked Shaun Moran, creative director of LIDA, which works for Signet and Ernest Jones, and Richard Exon, chief executive of RKCR/Y&R, which handles the Seiko account.

SHAUN MORAN, Creative Director, LIDA

Swatch's uber-luxe brands have fallen into the tempting trap of positioning as 'accessible luxury' in the face of the recession. The minute a high-end luxury brand does this, its target market - the super-rich - looks elsewhere.

They don't want the watches they buy to be seen as 'affordable'. They may not be buying as many expensive items, but they still want to remind the world they are loaded - they just want to be a bit more discreet about it (even P Diddy has cut back on his bling in a bid to be sensitive to the sans-culottes).

That's why simply badging a watch with a celebrity isn't working. Omega has done this for years with Cindy Crawford - a campaign that is as 80s as pink legwarmers and shoulder pads.

The other problem is that 'Swiss made' is synonymous with quality and dependability, but also with being boring. What Swatch did so brilliantly with its plastic watches was to tap into the zeitgeist and create bold designs which took off. It needs to be bold again but across all its ranges.

REMEDY

- Keep the 'prestige' brands luxurious, not affordable or accessible. This way, Swatch will be much better placed to thrive as we emerge from recession.

- Talk to super-rich customers via personalised communications. Focus on heritage, innovation and knowledge, such as Breguet's replica of Marie Antoinette's watch.

- Use celebrity endorsements only for the middle ranges. The super-rich don't want to be seen chasing stars.

- Continue to be bold with the Swatch brand: perhaps it could launch personalised watches online, or watches that court controversy? Think pink 'Team Tweedy' and blue 'Team Cole'.

RICHARD EXON, Chief Executive of RKCR/Y&R

Swatch feels like an artefact from recent history. A plastic prop from a time when only designers used Apple computers, only academics had heard of the internet and most households had one TV with three channels.

We marvelled at the delicious contradiction that something brightly coloured and mass produced could be perceived as high value and desirable.

Swatch created a whole category, finding a gap in the market between cheap and nasty on the one hand, and expensive luxury on the other.

Boy, did it own that market for years.

I can think of five Swatches that I owned over a 15-year period in school, college and early work. For anybody short of enough ready cash for a 'proper' watch, there simply didn't seem to be any alternative.

Then, as ever, the world changed. Competitors responded, the original Swatch generation graduated to mortgages, marriages, kids and Tag Heuer - and mobile phones arrived complete with built-in clocks, of all things. Try asking somebody under 25 for the time, and watch the iPhone/Nokia/LG come out.

REMEDY

- The Swatch brand needs a wholesale refresh, with particular attention paid to regaining a sense of leadership and, its original pioneering personality. Too much of its current activity feels like a grown-up brand desperately trying to engage a youth audience via borrowed interest. Instead focus on what makes Swatch unique and worth paying for.

- Free up the digital strategy. There seems to be lots of strong Swatch content online, but not enough reach and engagement. It needs to break out of simply occupying its owned space.

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