The cost of doing business at Baselworld...

The cost of doing business at Baselworld…

by Michael Weare

Yesterday Baselworld 2014 comes to an end for yet another year in the clean and well organised city of Basel. Even as I write, the vast structures that housed the major brands such as Rolex, Patek Philippe, Omega, Hublot and many, many, more will be in the process of being dismantled and packed away for another year.

It’s easy, almost natural to assume that everyone even remotely interested in watches knows exactly what Baselworld is, and exactly what it does. But the truth is, while this is by far the biggest trade show of its kind in the world, this showcase for the multi- billion dollar watch industry is something of a closed door and a mystery even to many a watch collector.

In addition to being the biggest show of its kind, it is also the longest running. It started in 1917. In those far off days the idea was that after the long winter months toiling in the manufactures, the watchmakers would welcome the opportunity in the sunny springtime to announce to the world what they had been working on, and show them off to potential buyers from the key markets. It’s not so very different from the modern Baselworld in terms of idea, although the show would no doubt be unrecognisable to any manufacture participating in the early 20th century.

Today there are probably more journalists milling around the Media Centre wolfing free ham rolls and downing complimentary coffee than there were participants of the whole exhibition.

Baselworld 2014 | Media Lunch | Impression

Baselworld 2014 | Media Lunch | Impression

Baselworld – A time to spend

And as for the cost… exhibiting brands, even the largest and most stable of them, must swallow hard when they see the bill. The organisers of Baselworld, MCH Group invested big money, around CHF454 million to modernise and expand Baselworld last year, and they reckon it’s going to take years to pay off, but they still see it as a worthwhile investment. The cost of participating has subsequently risen by around 30%. It is reckoned that the largest stands at the show, some of which are three or four storeys high, can cost in excess of CHF10m ($11.4m) for the structure alone.

Basic ground rent, paid to the organisers, is CHF420 per square metre. According to Baselworld, the largest stand covers 1,625sq m. Who rents it? Well it’s most probably Rolex. And let’s not forget, for all that massive investment it is all dismantled after just one week, and those staggering rental costs do not include the cost of entertaining VIPs, water, electricity, air conditioning, and wireless networking. Someone has to bear the cost for all this investment, And that is of course the end user – the customer.

Bvlgari Stand - BASELWORLD 2014 - Hall 1.0

Bvlgari Stand – BASELWORLD 2014 – Hall 1.0

Brands then have to pay up should they desire an additional incentive, and the big boys tend to want it – to have their stand as far away as possible from the next stand to give that sense of distance and respectability. The widest amount of space between two stands is that of Rolex and Patek Philippe. Yet no matter how much the costs continue to spiral, the brands say they cannot afford not to be at Baselworld. The consensus is, if you’re not at Baselworld, you’re not in the game.

Being a business to business show where major deals are struck and large contracts forged, it does not cater to the general public, even though it is open to the public. Anyone arriving here under the illusion that watches will be handed out as freebies, or on sale to the public will be quickly disappointed. In fact, you can’t even get to look up close and personal at any of the watches without a pre-arranged appointment.

BASELWORLD 2014 | Global Brands | Hall 1.0 | Impression

BASELWORLD 2014 | Global Brands | Hall 1.0 | Impression

If you speak to Basel locals about the exhibition, while they appreciate that it brings plenty of money into the city each year, it’s not exactly a must see show for them because although there is plenty to see, there is not plenty to touch or try on. The best you can do is simply window shop and may be ask for some sales literature. It’s not a shoppers paradise unless you are ordering by the truckload.

That’s not to say the show does not have its fair share of elegance and glamour. There are plenty of attractive young ladies in sparkly silver hats to guide you to the relevant stands or give you free branded carrier bags. Last year Baselworld attracted 122,000 visitors from 100 countries. They could potentially visit some 1,460 exhibitors, even though it is impossible to visit even 10% of that number.

Baselworld – A time to meet

But one of the most important benefits of a Baselworld visit is the chance to sit down not merely with a PR Executive, but with the CEO of a company. This provides a unique insight into the strategy and thinking of the brand, and it’s an opportunity which is very difficult to repeat elsewhere.

At Baselworld the focus is all on what is new, what is different, which is why new watches are often referred to as novelties. But there are novelties and semi-novelties, because not all watches are brand new. Some have been around 6 months prior to Baselworld, while some have been part of the brand line up for years. However if you want to be talked about, feted and admired, you need to bring something new to the party; something audacious that is only unveiled at the event itself. You must make a splash.

BASELWORLD 2014 | Global Brands | Hall 1.0 | Impression

BASELWORLD 2014 | Global Brands | Hall 1.0 | Impression

Baselworld – A time to reflect

Baselworld is also a great way to determine the way in which the market is headed, and most CEO’s of the major brands agree this year that after three to five years of the brands heading East to China, the greatest growth right now is coming from the West, specifically the USA. Subsequently, some of the brands that would rely on fancy names for watches such as Zenith’s Montre d’Aeronef, have found themselves simplifying names because the American public are not comfortable uttering or remembering complicated unpronounceable French.

The other critical realisation that CEO’s have reached is that despite their efforts to give women watches with complications and fancy movements the idea is yet to be as effective or to generate as much interest as hoped. The consensus is that by and large women are not yet ready to wear complicated mechanical watches and that at the end of the day, they are still valuing aesthetics over function or technology when it comes to purchase.

Maud Tiberti of Zenith described it as ‘some people are really not so interested in the movement as the look of the timepiece’.

Whatever the cost, and one must assume it is only going to keep going one way, brands must find the investment worthwhile or they wouldn’t keep coming back. Nick English of Bremont commented ‘We tried to put it off as long as possible, but now we’re just too big not to be at Baselworld’. No matter how you make your money, it’s called the cost of doing business.

Credit © Photos Baselworld Official Website.

    Author Bio

    Articles by Michael Weare


    Michael Weare hails from an international advertising agency background where he handled several well known and highly desirable watch brands; handled, but sadly never got to keep. However it's this exposure that gave him a lasting fascination for watches. Michael was Editor of Click Tempus for over 2.5 years and is now in the same role at Watchuseek, the web's largest watch forum.