Sunday, March 10, 2019

Once Upon a Time in Malmo

So news broke on Friday that the Festina Group had acquired the assets and intellectual properties of Anima, the parent company of Kronaby.

So, in essence, Festina has acquired the former darlings of the connected watch world.  And have done so at a fire sale price.  Here is the release exactly as it was forwarded to me by another journalist -

Madrid - Spain, March. 08, 2019 – Festina Lotus SA has announced today that it has entered into an agreement to acquire from the Bankruptcy Estate of the company Anima AB, their assets and intellectual properties, including the hybrid watch brand Kronaby. Anima AB, based in Malmö, Sweden – designs, develops, manufactures, markets and distributes the hybrid smartwatch brand Kronaby. The acquisition, subject to certain conditions, is expected to be finalized in March 2019. Several of Anima/Kronaby functions and operations will be integrated into Festina Group. The ten-person Research & Development team focusing on Application, Cloud and Analytics development will remain in Malmö. The acquisition has been conveyed by Trägårdh's law firm, Malmö, Sweden. 
"We are happy to be able to find a solution together with Festina Lotus SA. They have a long experience of the watch and jewelry business, and we believe that the Festina Group will bring great opportunities and vision to the Kronaby brand and the technology it is based on” says Pål Borge, co-founder of Kronaby. "The capabilities of the Festina Group are so much more extensive and we look forward to see the development of the Kronaby brand in the future.”
The President of the Festina Group, Miguel Rodriguez, commented, "It is an important acquisition for us, we not only bring in a new brand to our existing portfolio, we also take a step into the smartwatch segment. Kronaby has proved to be one of the best hybrid smartwatches in the world and the newly integrated people and technology will play an important role in the strategic future of our Group. We all know that the world is constantly changing and connected devices are something we all have around us in our daily life.”
So what does that mean for the staff at Kronaby?  Well, suffice it to say, the word around the campfire is that most of them will be contacting their local unemployment office.
I have to say, in all honesty, that this is one of the most dramatic rises and falls in this business that I have seen in the time that I have been involved in it.  And if I am really honest?  It didn't have to go this way.  
So what went wrong?  Probably a lot of small things, each one on it's own not enough to sink the ship.  But like a poison pill, you swallow it, and slowly it makes it way through.  But at it's root?  This was a fairly fundamental misunderstanding of how the watch business actually worked.  And that was evidenced in several areas including marketing, sales and PR.  Inevitably, a few fundamental things have to happen:
1.  Your PR function needs to actually LIKE the press and be willing to communicate with them, rather than just hang onto the good looking influencer at the party.  Because, curious to relate, it is the press who will get your product and message out there.
2.  Your marketing has to try to shake off millennialitis.  This can be challenging, because all of the data tells you that millennials represent a huge buying group.  This is true, but as a group?  They are not really  buying watches, with, perhaps, the exceptions of Apple and Samsung watches.  Your marketing team needs to message to people with actual money who will actually spend it on your actual product.
3.  Your sales team needs to understand that merely opening a store is not the same as actually selling watches.  If watches are sold, they actually need to be paid for, meaning that, in theory, monies should be received by your HQ in a reasonable amount of time.  The watch business is a goofy one, and one that all too many people think that they can outsmart, and they ultimately get their heads handed to them for their trouble.  A store on memo is going to pay Richemont, LVMH, SWATCH, everyone else, and finally, eventually, maybe you.  But most likely not. 

Kronaby was a wonderfully charming, romantic story...
until it wasn't.

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