Style / World of Watches (WOW)

Business of Luxury: Georges Kern Quits Richemont to Join Breitling, His IWC Accomplishments and What He can do for Breitling

Georges Kern has resigned Richemont. We take a look at his accomplishments at IWC, his marketing savvy and what Kern can actually deliver for Breitling.

Jul 15, 2017 | By Jonathan Ho

Less than four months after his appointment as Head of Watchmaking, Marketing and Digital of Richemont Group, Georges Kern has resigned effective immediately. The role was one forged during the management shake-up in early 2017 which saw individual brand CEO positions re-organised, leading to the departure of Jaeger-LeCoultre’s CEO Daniel Riedo, the retirement of Group CEO Richard Lepeu and Chief Financial Officer Gary Saage; Montblanc CEO Jérôme Lambert becoming Head of Operations.

Georges Kern Resigns as Richemont Head of Watchmaking, Marketing and Digital, a role specially created for one of the most prolific Chief Executives in recent Group history

The shake-up came amidst the industry’s worst performing consecutive three year protracted contraction – in February that year, Tiffany & Co.’s CEO Frederic Cumenal was replaced by chairman Michael Kowalski as interim CEO while LVMH’s head of watchmaking Jean-Claude Biver took over as interim CEO of Zenith, replacing Aldo Magada.

You might recall that Georges Kern was became the youngest CEO at Richemont after he was appointed to the top spot at IWC Schaffhausen in 2002. Kern had joined the Group in 2000 from LVMH’s TAG Heuer after the holding company acquired A. Lange & Söhne, Jaeger-LeCoultre and IWC.

Kern would utilise star power and levy upon celebrity association to increase mindshare for his watches.

Kern would utilise star power and levy upon celebrity association to increase mindshare for his watches.

The then 36 year old was appointed to a lofty position at IWC Schaffhausen where he became responsible for perpetuating the 30 years of consecutive milestones which heralded the company’s second Golden Age in the 1970s. To adequately describe the size of the role he had assumed, one has to take into account the many firsts launched by the company. During the Quartz Crisis, then IWC CEO Otto Heller successfully positioned the company by producing its vision of the modern wristwatch through close collaboration with Ferdinand A. Porsche  and cementing its reputation of being ‘highly engineered’ with the first titanium watch bracelet. In the 1980s, new IWC director, Günter Blümlein built the foundations of marketing and technical innovation for which IWC remains reputed till this day, accordingly, the customer base and financial positions for the company became stronger as a result.

In 1991 Blümlein acquired IWC completely with majority stakes in Jaeger-LeCoultre and revived Saxony-based watchmaker A. Lange & Söhne. The trio of watchmakers were held by LMH Group also headquartered in Blümlein’s Schaffhausen stomping grounds before the Group was itself acquired by Richemont in 2000. By 2001, IWC would be among the first to establish an online collector’s forum and given all the revolutionary advancements, Kern, as the youngest CEO ever appointed, would have been hard pressed to fill these shoes.

But fill them he did.

IWC under Georges Kern

Early in his term, Michael Friedberg interviewed the newly minted IWC CEO where Georges Kern spoke of building on the Schaffhausen manufacture’s exceptional capacity in construction and its outstanding know-how – by 2004, Kern had increased IWC’s technical capacity with 14 people working on new developments. At SIHH that year, Georges Kern unveiled a new line of Aquatimers while beefing up the popular Portuguese (now called Portugesier) collection and adding new Da Vinci and Portofino models, IWC under Georges Kern rode out difficult market conditions while improving worldwide market-share, out-performing projections.

An older model 2004 Aquatimer

An older model 2004 Aquatimer

By 2005, IWC’s aggressive marketing, increased worldwide distribution coupled with operational and management controls had led to another Golden Age. Under Kern, IWC was enjoying a resurgence in popular recognition – Portofino models increased to more contemporary proportions for some models while Flieger – the Pilot’s watches and Aquatimer collections started to show off the Schaffhausen manufacture’s increasing prowess through special complications. Whether it was case engineering, design or high complications – IWC steadily cemented its reputation as a technical watch company.

In the grand scheme of things, Kern pretty much kept through to Blümlein’s wishes, positioned from the perspective of case technique and engineering in contrast to Lange’s slavish approach to movement finishing. For Kern, IWC’s value proposition was that its watches were providing more perceived value through superior engineering than the retail prices reflected. And it was a strategy that was working. More importantly, Georges Kern possessed a kind of marketing savvy which made him uniquely capable of accruing PR value and media interest, under Kern, IWC began their affiliation with Cousteau Society, cementing the Aquatimer as a technical diver’s watch, Saint Exupery was also a master-stroke – a flirtation with a literary war hero adventurer and then saving the Galapagos? Talk about Vitruvian appeal.

Early on, Kern fought for and saw the return of the Calibre 5000 where previous there weren't enough watchmakers to put them together fast enough for a commercial production run

Early on, Kern fought for and saw the return of the Calibre 5000 where previous there weren’t enough watchmakers to put them together fast enough for a commercial production run

Even the red-headed stepchild, Da Vinci, a tough sell (due to its aggressive angular tonneau shape) in the best of times. Envisioned as a futuristic high end quartz watch, the debut round Da Vinci watch lay dormant for a time until it came back with digital display perpetual calendars and other iterations but still it never fully caught on but testament to Kern and IWC Design Director Christian Knoop, it came back to the fore during SIHH 2017 but by November the year before, Georges Kern was already the Head of Watchmaking, Marketing and Digital.

Still, he cast a large shadow in Richemont even as another former Jaeger LeCoultre, and then Montblanc CEO cast his. While Luxuo is not prone to rumour and conjecture, it must be noted that the industry at large was watching if signs of a rivalry would come to the fore as Jerome Lambert assumed the other major corporate position: Head of Operations responsible for all brands with the exception of jewelry and watchmaking.

There were high hopes for the IWC Da Vinci which were never really fulfilled until Kern returned the collection to its round case at SIHH 2017

There were high hopes for the IWC Da Vinci which were never really fulfilled until Kern returned the collection to its round case at SIHH 2017

Amidst rumour and innuendo, Kern laboured in increasingly harder market conditions, eventually unveiling an aggressive if questionable decision to start selling IWC watches online. IWC watches costing from the five to six digit range debuted on Net-a-Porter and Mr. Porter as Kern tested threw a Hail Mary pass to online shoppers to counteract a protracted industry slump. In a comment to Bloomberg, Rene Weber, an analyst at Bank Vontobel said, “The industry gets less than 2 percent of sales through direct e-commerce sites”

 

“Watch buyers typically shop at brick and mortar stores for a variety of reasons, chiefly, when you want to spend that kind of money on a watch, you’ve got to try it out first. Second, there’s an unspoken arrangement for regulars to enjoy privileged pricing, sometimes this extends out to their friends out of good will as well. Third, if you happen to be a tourist, you enjoy fairly substantial tax rebates. Finally, personalised service and a salesperson you can return to when there’s a problem with your watch makes it more comfortable to part with that kind of money. Online shopping takes all that away, I’m not convinced it would take off, these are not Daniel Wellingtons you are talking about.” – A senior retail executive who would only comment anonymously.

According to sources within Richemont, by the morning of Friday 14th July, at the last minute, a meeting at Lange & Sohne was cancelled. Additionally, a short goodbye email from Kern stating that an owner’s stake in a “big house” had been offered, was sent to a small circle of the Group’s most senior executives. Not long after, Johann Rupert, President of Richemont offered a professional, if cold, statement – “An interesting opportunity to become an entrepreneur was offered to Georges. We wish him the best.”

Business of Luxury: Georges Kern joins Breitling

Towards the end at Richemont, Kern had upset many people with project interruptions and restructuring of the Group. Long time senior employees were asked to leave as Kern attempted to shake things up. According to Trade publication Le Temps, CVC investment fund managed to attract Kern because the savvy marketer would not have liked his position as Head of Watchmaking, Marketing and Digital, Kern was more interested in the communication side of things rather than the administration and labour management side of things.

A pallor was cast on Breitling’s future when owner Ernest Schneider passed in May 2015, with mounting pressures from the global slowdown, particularly in China and Hong Kong, the firm started considering offers of interest for acquisition of the watchmaking brand founded by Leon Breitling in 1884. In terms of high end watches, Breitling is responsible for roughly 5% of Switzerland exports, a far cry in comparison to Richemont’s portfolio (Stats from FHH show Breitling responsible for only 165,000 pieces in 2014 compared to Cartier’s 620,000 – Richemont own’s Cartier, IWC and other premier watchmaking brands) .

That said, Breitling before Kern is already on an upswing, a high performance Chronoworks with in-house Calibre 01 was launched last year to quiet fanfare but boasting high technical accomplishments – minimal lubrication thanks to the use of high tech materials have boosted power reserve by 45% along with silicium escapement assortment and UV-LIGA elastic toothing. Thus, there exists a technical and innovative platform for Kern to exploit.

In terms of history, Breitling enjoys significant provenance in the realm of chronographs, being the progenitor of the first independant chronograph pushpiece and the second return-to-zero pushpiece, an invention which made it possible to measure several successive short times. Plus it helps that though Omega has space heritage locked down tight, Astronaut Scott Carpenter wore the Cosmonaute chronograph during his orbital flight aboard the Aurora 7 space capsule, with US space ambitions curtailed under science-averse Trump, Kern can exploit and co-sponsor a European (or gasp! Chinese) space agency to great commercial value.

That said, Georges Kern will have his work cut out for him. As the adage goes, it’s easier to take a car from 100 kmh to 150 kmh than it is to go from 0 to 50 kmh, that’s not to say that Breitling is completely out of position but rather, there’s a lot to fix even if there is growth potential. According to Forbes, Breitling has not been adequately addressing a small but important segment of the market – women’s watches and more importantly, appealing to women.

Recent Breitling NYC store opening

Recent Breitling NYC store opening

Present Breitling campaigns communicate the macho male aviator with a backdrop of buxom bomber pin-up girls in hot pants and stilettos, much to the chagrin of real life women’s pilots like Patty Wagstaff, award-winning air show pilot and inductee to the National Aviation Hall of Fame, “after thinking about this ad I looked at the Breitling ladies’ watch that I wear and I found myself thinking that their retro marketing strategy somehow took away from the elegance and beauty of my watch.” A doctorate holding pilot for Delta Airlines and holder of 2014 ALPA Air Safety Award, Helena Reidemar went so far as to say that Breitling campaigns reeked of “stripper feel”.

Perhaps, judging from the recent showing at SIHH with a slew of women’s Portofinos, Georges Kern might just be the ideal candidate to kick things up a notch as a shareholder and executive at Breitling.

 

 

 

 
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