Saturday, October 13, 2018

Searching for Severin

Contrary to what some of my not-so-collegial colleagues would have you believe, I truly hate seeing people and companies fail.  But the news about Corum withdrawing from BaselWorld has deeper implications than many people want to consider.  While I realize that they are (at least on paper) separate entities, the fates of Corum and Eterna are now intimately intertwined.  And the current state of affairs at Eterna is (to be diplomatic) not great.  And that is simply on the watch front.  

The other, more concerning aspect is the fate of Eterna Movements.  The word around the campfire is that after some "away time", and a few tentative moves forward had been made Eterna and the Eterna Movements might do a "JEANRICHARD".  The "sleeping beauty" strategy is starting to become a somewhat worrying trend.  We often think back wistfully of similar "Prince Charming" happy endings in the 80s, where the plucky young entrepreneur gently kissed the slumbering watch brand, bringing it back to life, while Jim Kerr (Simple Minds) gently crooned in the background.  But I don't think that Jean-Claude Biver is going to be donning a Polo shirt and bomber jacket, regenerate a wedge hair style (complete with perma-gel) and ride in on his moped to save the day any time soon.  Because those (Blancpain and others) were brands that had been beaten, lay down their hands at the table and walked away.  They did not exist any longer.  But Corum and Eterna?  These are brands that have now passed through several sets of hands before landing at City Champ.  And the sense that many of us are getting is that City Champ can wait it out hoping for their own Prince Charming to come in and buy them out of the current quagmire.  

And as I often say when acting as a mediator in my dispute resolution practice - we didn't get here overnight.  This didn't just happen.  This is a series of decisions - some good, some clearly bad, that have led to the situation these brands are now in.  And I turn back again to that (seemingly) crazy guy who took a fairly basic idea, priced it at an appealing level, and brought Corum back to life.  The Bubble that caught everyone's imagination was not a $5,000 watch.  It was much more attainable.  And it sold.  I realize that Corum is much more than the Bubble, but the Bubble is somewhat emblematic about the dysfunction in the decision making paradigm.  The belief that Corum must be priced at very high levels in relation to what the other brands are selling for, has put them in a bit of an unworkable corner.  The result?  Too many SKUs languishing, unsold.  Severin Wunderman was unique in that although he was rich, successful, and in later years lived a lifestyle many would be envious of, he understood what people wanted.  And he also understood pricing.

Two things -

One - I don't claim to have any special "insider" knowledge about the current situation at any of these brands, and I have been wrong before.  But I also can read the tea leaves well enough to know that when news stops flowing, new models cease being released, shows are cancelled... let's just say it raises more questions than it answers.

Two - Running a watch brand is hard, hard work.  Watch enthusiasts all think that they can do it, and do it better than the people doing it.  We are, of course, wrong.  Having said that, the watch industry is also an incredibly forgiving industry which tends to attract people with a certain degree of moral flexibility, where people are promoted, fail, crash, and come back reborn multiple times.  And it is not to say that people don't deserve second (or third, fourth and fifth) chances.  It is to say that when you continue to pursue the same path, strategy, philosophy even though it has failed repeatedly, then perhaps you need to rethink the entire premise of how you do business.

If I were City Champ?  Well, if the stories are to be believed, they have plenty of cash.  They do not need for their Swiss investments to start shitting Tiffany cufflinks right away.  On the other hand, they are not stupid.  The smart play would be to simply not put any more money into either of these brands until they can either straighten themselves out, or find a buyer who is looking for a hobby to dump his/her millions into.  

We all wanted something better for Corum and Eterna, and you never know, there could indeed be a happy ending out there.  So get your hair gel out, and bust out that soundtrack to Sixteen Candles!

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