Cartier CEO says fewer retailers will fight over larger territories as super cities dominate

Cyrille Vacheron, President and CEO Cartier International with French actress Marie-Ange Casta at a fashion event in Milan in 2017. (Photo by Vittorio Zunino Celotto/Getty Images for Cartier)

Cyrille Vigneron officially took the reins as CEO of Cartier on January 1, 2016. Just over two years on, he is regarded as one of a new generation of leaders at parent group Richemont that is bringing fresh ideas and momentum to their venerable maisons. At SIHH this year, the two key launches were throwbacks to the past, with reissues of De Santos and Panthère models, but Mr Vigneron has his sights firmly set on the future with fast-evolving plans on how to communicate with and sell to today’s customers.

Global distribution for Cartier was in a mess three years ago. The dramatic rise in demand from Chinese customers came to a juddering halt when the ruling communist party introduced rules that stopped high value gifts like watches and jewellery being used to grease the wheels of business negotiations. Conspicuous consumption, the leaders argued, was not in line with the country’s values.

Richemont had invested as if its graph for rising sales would continue rising forever, and needed its own boutiques and retail partners throughout Asia, but particularly in Hong Kong, to keep buying stock. When the party ended, the group was left with a channel stuffed with watches that it could not sell to its usual customers. In an only partially successful attempt to stop grey market dumping of that stock across the world, Richemont agreed to buy it back; destroying some models that were unlikely to sell, recycling others, and reassigning some to channels in other parts of the world.

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Mr Vigneron believes that Cartier acted correctly at the time, and is now benefiting from far better alignment between supply and demand around the world. “Two years ago we launched a programme to buy back massive amounts of retailer inventory. We also scaled back our position to ensure acceptable stock levels, and we now have proper, healthy levels in all our markets. We’ve also adjusted our capacities,” he said in an auditorium discussion at January’s SIHH (his comments have been translated by FHH Journal, the official title of Fondation Haute Horlogerie).

The Asian crisis also prompted Richemont to look more closely at the way it works at a corporate level with different maisons speaking to each other and cooperating more. “Synergies have been made across the Richemont group to ensure we have the right balance, both for general capacity and for the different forms of expertise. We now have a tool that corresponds to what we do and are back in a growth phase,” Mr Vigneron explained.

The way Cartier speaks and sells to its customers is also evolving, with greater concentration of retail points of sale in the world’s most prosperous cities. “We’re seeing a slight concentration of our boutiques because the luxury clientele in general is, to a certain extent, based in large, cosmopolitan cities. What’s true for our own boutiques is true for our distribution too. We’re globally satisfied, although there has been a certain amount of recomposing,” he described.

Recent acquisitions, such as Aurum Holdings buying Mayors in the US, and Bucherer buying The Watch Gallery in the UK and Tourneau in the United States, are also leading to greater clustering, Mr Vigneron suggested. “Distribution is actually becoming more concentrated by itself. Partners are buying each other out. The number of points of sale will probably decrease as the market becomes naturally more concentrated,” he says.

All retailers, owned by Cartier or otherwise, will need to get used to an era when customers browse, research and shop online. Younger customers aren’t just affecting future plans for Mr Vigneron, they have shaped the present tactics. “There’s a tendency to think of millennials as the next generation when they’re already here,” he said.

“Cartier makes 43% of its sales to under-35s. In Asia, it’s more than half. The question being how to talk to them. This means digital, Whatsapp, WeChat and Line. It means advertising but events too. New generations live more in the present and are quick to respond to the things they see and feel. Long, overwrought messages don’t appeal to them. There are one billion WeChat users! We need to be using a new vocabulary that suits this type of media and conversations with their smilies and photos and little hearts, but continue to respect our clients at the same time.”

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