Omega: Timely moves

01 november 2010 - source By Chuang Peck Ming

Omega's astute sense of timing has helped the Swiss watchmaker to clock up successes in the Chinese market, the Olympic Games and even outer space. Its president Stephen Urquhart explains. By Chuang Peck Ming

APPARENTLY, no one working at Swiss watchmaker Omega is allowed to utter the name of any competitor watch brand while on duty. Not even the boss. And giving an interview to a reporter absolutely counts as being on duty. What you say will go into print and reach your staff and the big boss.

'I can't mention names,' Omega president Stephen Urquhart says guardedly. 'We're not the only one, don't get me wrong. There are other brands that have core values - there are a few top brands that will come out of this strongly. You know what I mean,' he says, jabbing the Rolex on my wrist with his finger.

We are chatting about the big blow which the 2008-09 recession has dealt on the watch business. Other than being reticent about mouthing the names of other big watch brands, Mr Urquhart, who kicked off his career at Omega in 1968, speaks his mind freely.

Many wannabe watchmakers, who jumped on the bandwagon when the industry was booming, have now dropped out of sight, or will soon disappear, according to Mr Urquhart. Only those with strong core values have been left standing.

Omega, part of the multi-watch brand Swatch Group and by many estimates the world's largest watchmaker, is of course among the survivors. Watch names with substance are now more appreciated by customers, says Mr Urquhart. These are not necessarily those that are the oldest in the business, but they are 'the most consistent, the most coherent in their approach'.

'In all modesty, I don't think another company could handle the Games. You're talking about 300 people on site, plus 100 going there a year in advance to prepare. There are thousands of kilometres of cables to lay. It's a big, big enterprise to time the Games.' -- Stephen Urquhart

The Great Recession has rid the industry of its excesses. 'What the economic turmoil did, this is good for the consumer, good for business in general,' says Mr Urquhart, who worked from 1974 to 1997 for top-end watch label Audemars Piguet, before rejoining the Swatch Group to head its high-end Blancpain brand.

It used to be that the higher the price of a timepiece, the more sought-after it became. 'I remember being told by people around the world about the Russians coming in and saying they wanted to buy an Omega. They would look at the watch and say, 'Why $10,000? Don't you have one that's $100,000, $200,000?',' relates Mr Urquhart who became Omega's president in 1999.

Watch buyers have now become more knowledgeable - often more so than the salesmen - and saner, according to him. 'I see a bit of a return to value, which is a good thing. Let's keep our feet on the ground, let's not go crazy.'

While total sales of luxury timepieces were slashed by up to a third last year, Mr Urquhart says that Omega's were up. 'Our own boutiques' worldwide - the best barometer of real sales, because here there are no discounts - were up 17 per cent in 2009 over 2008, which is fantastic, a very strong figure,' he says.

Industry observers say it helped that Omega's exposure to the American market - where Swiss watchmakers saw their exports plunging 38 per cent last year - was small. Omega has a bigger presence in the Asian market, which continued to grow during the 2008-09 global slump.

While the industry is now trying to regain sales lost in the downturn, Mr Urquhart says that Omega's sales in Singapore have already surpassed pre-recession levels. 'We're doing a good job here. We have good distribution - we have cleaned up distribution. We have three to four boutiques.'

Mr Urquhart is proud of Omega's big product base, perhaps the biggest in the business. But it's the distribution that he finds most challenging, and where he says Omega is putting its 'biggest efforts'.

'I think the watch distribution network is where I've been most active,' he told the watch-fan website PuristSPro in September. 'Obviously, marketing is very important; product development obviously. The Planet Ocean (model) was a great success, the Hour Vision is a fantastic product, the ladies mechanical movement was a real breakthrough for us. All that's very important, but without proper distribution, you defeat your purpose.'

China connection

Omega's smartest move was probably to move into China before its rivals do. 'We knew the potential. What is incredible is the middle class in China,' says Mr Urquhart, who holds Swiss and British passports. It still has a long way to go before it can catch up with Japan or America, but the Chinese middle class is strong - and it has expanded 'quite' quickly, according to him.

'I can't imagine any luxury brand today surviving in this environment without the Chinese consumer,' Mr Urquhart says. 'You have to be blind not to see China's potential.'

Apparently, many were. And so when the big names in watchmaking rushed into the Chinese market when it opened up in the 1990s, Omega already had a good headstart.

The Swiss watchmaker actually first stepped into China over a century ago. 'We've been there all those years, and even during the years when the mainland was closed to the world,' Mr Urquhart says. 'We made our first watch there - I have it in our museum - for the Chinese Railway. It's a pocket watch.'

Omega also struck up a connection with the Chinese government, supplying it with watches to give away as official gifts. Today, Omega is the No 1 luxury watch brand in China - and China is its No 1 market, Mr Urquhart says.

'But we have to fight for it, we have to be very vigilant. Don't get me wrong. We're not completely fixed on China, but it's such an incredible market and has such potential. It's not just Beijing or Shanghai, it's the whole country. We still have plenty of room to grow.'

Sure, he concedes, the Chinese consumer who buys an Omega timepiece today will advance up the income ladder and upgrade to a pricier brand. But Mr Urquhart says that many others will also move up from the bottom and want to own an Omega. Besides, he adds, Omega has such a wide range of models that it can easily cater to those who have progressed from middle to upper-middle income.

The Beijing 2008 Olympic Games was a new high for China; it also helped lift Omega's standing in the eyes of the Chinese consumer.

'Obviously, to be part of the Games in Beijing for us was an incredible opportunity to make the brand known in China,' Mr Urquhart said last year in an interview with E&T magazine, a British publication targeted at engineers and technologists.

'For the Chinese, it was such an important event for them,' he said. 'We saw the result there: We saw the build-up, during and after. If the brand is strong today in China, then the Olympics has doubled our strength there.'

Olympic achievement

As the official timekeeper for the Olympics, Omega's name and logo appeared in virtually every event of the Games. The brand was clearly visible to every Chinese consumer while the Games were on in Beijing, and also to billions of sports fans around the world who watched the event live on TV every night.

'Though I can't prove to you that it (the exposure given to Omega by the Olympics) relates to sales, I'm 99 per cent sure that it adds to the overall positive image of the brand, very positive,' says Mr Urquhart, who was in Singapore for the inaugural Youth Olympic Games.

Omega, the first-ever watch brand to be commissioned by the International Olympic Committee (IOC) as its official timekeeper, has been linked to the Olympics since the Games kicked off in 1932 - and it has recently inked a timing deal with the IOC that will last until at least 2020.

Omega has been the Olympics' official timekeeper for so long that not many people remember the other two watch brands - Swatch and Seiko - that had briefly played that role. In more recent years, the Japanese brand was the timekeeper for the 1992 summer Olympic Games. Swatch took over in 1996.

'One of the first things that I pushed for when I took over Omega in 1999 was to get Omega back in that role, especially when we knew that the Games were going to be in Beijing,' Mr Urquhart recalls. 'Beijing is a very important market for Omega.'

He sees the Olympic Games as part of the brand's DNA. Tying up with the Olympics has helped Omega to build an image of seriousness, reliability and quality, he says. 'We don't sit down and ask ourselves, 'Do we as part of our strategy sponsor or become a partner for the Olympic Games?' It's part of our future and it goes without saying.'

He's pretty confident that Omega today has got the Olympic Games deal locked up for good - at least for a long, long while. 'Nothing is guaranteed in life, but honestly today, in all modesty, I don't think another company could handle the Games.'

Mr Urquhart is talking about the know-how, the infrastructure and the organisation that the official timekeeper of the Olympic Games is saddled with these days. The job would be too massive for another watch brand to handle.

'You're talking about 300 people on site, plus 100 going there a year in advance to prepare. There are thousands of kilometres of cables to lay. It's a big, big enterprise to time the Games.'

When Omega first started as the official timekeeper for the Games, it sent only three representatives armed with just a hand-held stopwatch each to clock the races. Today, it's a big exercise that involves research and development, high technology and an army of planners, engineers, technicians and workers.

'It's a whole system,' Mr Urquhart says. And Omega's job today is not just simply to time the Games accurately; it is also involved in many of the technical developments - the photo-finish cameras, the touch-pad and kick-pad for swimming, and a whole list of things.

It is responsible for the back-up system and also for making the races 'more meaningful' for the world audience to watch.

The IOC pays Omega for its services and the watchmaker buys back from it the marketing and commercial rights. 'It's all part of the deal, a win-win situation,' Mr Urquhart says.

Omega's marketing foray also extends into golf, sailing and other sports. But Mr Urquhart says that they are nothing like the Olympic Games. 'The Olympics is every sport, every medal. It's all timed by Omega. That's why we put the Olympics on a different level from any other sport.'

The Olympics provides Omega with the TV coverage worldwide. 'We're the only brand visible on TV - the only one,' Mr Urquhart says. 'I don't have any proof but I'm convinced it's important to the brand. It would be the last investment we scrap.'

Moon landings

Along with Omega's linkage with NASA, perhaps. Its Speedmaster watch model, in particular, is famously worn by the astronauts in the United States' moon-landing and space programme. In fact, Omega marked the 40th anniversary of the moon landing last year with a new limited-edition timepiece, pumping more money than usual into a TV commercial using the late president John F Kennedy to sell it.

'The JFK TV commercial was fantastic,' Mr Urquhart told US WatchTime magazine soon after the advertisement made its debut. 'It seemed as though every TV station had big, long programmes on the moon story. I don't remember seeing those 10 years ago. Maybe the fact that we were in the middle of a financial crisis made this a message that the American people related to - nostalgia for a better time, some good news, not some damn broker saying the stock market would go down.'

peckming@sph.com.sg

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Stephen Urquhart
President, Omega

Member of Swatch Group's Extended Group Management Board

Holds Swiss and British citizenship

Studied industrial management at University of Neuchatel, Switzerland

1968 Started career in Omega

1974-1997 Worked at Audemars Piguet, where he was joint chairman and delegate of the board of directors from 1989

1997 Returned to Swatch Group as president of Blancpain

1999 Became president of Omega