As high-end Swiss watchmaker, Zenith, celebrates its 150th anniversary in 2015, the brand reopened its boutique, after its renovation and refurbishment, in The Dubai Mall earlier this November.
The event was attended by Aldo Magada, Zenith’s president and CEO; Ramesh Prabhakar, managing partner of Rivoli Group – the Richemont brand’s retailer in the region; as well as renowned cosmetic dentist, Dr. Majd Naji, friend of the brand; in addition to a select group of VIP guests and members of the media.
Aficionado sat down with Magada during his sojourn in the emirate, to get an overview of 2015 for the brand, the current dynamics and behaviours of its regional and global customers, and what he believes the future holds for the Zenith and the luxury industry in 2016, expected by many to be a difficult year.
What is the value of the Middle East for Zenith’s global operations?
Middle East counts for roughly ten per cent of our turnover, this mainly includes Qatar, Kuwait and Dubai.
Dubai is the most important because travel retail is huge here. In Qatar, we have a great business but it is totally local, there are no tourists. Meanwhile, here we have some locals, but the majority is through travel retail, especially in locations like The Dubai Mall.
But tourism retail has taken a hit throughout 2015, in Dubai and the larger Middle East. How did you cope?
We have a weaker influx of Russian tourists here, that’s for sure, but some Russians are still going for the very heavy pieces. Meanwhile, the Chinese are still providing good business. Of course, some tourists are coming in larger groups and are interested in buying cosmetics and things that are more affordable. But, in parallel, there are the small groups – four to six people each – that are still very good customers; they have the buying power and have a different maturity in terms of product.
For example, with China, across all the brands, the chronograph is not very popular, yet, individually, they still buy the chronograph, which is what we are mainly known for; it is very surprising.
As 2015 comes to a close, what is your overview of it?
Times are challenging this year. We hope that the Russians come back, although, I don’t know if that will happen anytime soon. But I think Dubai is also attracting new travellers, like the Europeans. It is only a 6.5-hour flight from Geneva, for example; it takes the same time to drive down to Cannes.
But the overall sentiment is that Europe is not doing very well economically.
Some countries in Europe are not doing very well, but there still is money in Europe. Among the 80 million Germans, across England, even Spain, Italy and elsewhere, I can assure you there will be some customers.
The problem with the Europeans is that they are more keen about fashion than watches, because they think they can get the same price or a better one in Europe because of the euro, which is not necessarily true, to be honest.
Yes, you might have a cheaper price tag in Europe, but, in Dubai, you get global experience as a tourist. You may not have the best price, but, again, every brand manages to have a very decent price that is very competitive, even against Europe.
When you are on vacation mode – and this is relevant to the big spenders – sometimes, the experience is as important or even more important than the price tag. This is what Japan understands fully and this is why the yen is so competitive today. It is almost a nightmare for us to maintain consistency between prices around the region.
Another thing about Europeans is that they love to go to their own retailer, with whom they have a special relationship.
Since we are on the topic of Europe, what has been the impact of the recent unfortunate events and what would the consequences be?
It depends. We are going to carefully study the situation for travel retail. The Chinese and other tourists state that it is risky to go to Paris and, of course, the city is important for those who frequent Galeries Lafayette or other big department stores.
Now, with the closing down of the border and heightened security, it is becoming more difficult to enter France and some people don’t want to risk it.
Even London and other places might be threatened. However, when some incidents happened in the past, like an earthquake in Japan, sales were back to normal a week later, because people wanted to show that they are confident about the future.
Now, probably locals will come back pretty quickly, but it is a difficult situation with tourists.
Going forward, why are people worried about 2016?
I have mixed feelings. I know that it will be challenging year, but that’s in macroeconomics. For a brand like Zenith, which is developing strongly in different markets, we have an internal opportunity, if we work properly, to do better in 2016 than we did in 2015.