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Interview with Aldo Magada, new CEO and president of Zenith

“Disconnected watches could be a big plus for us”

Less digital is more. At least that seems to be the case for the future of the luxury watch market, says Aldo Magada, CEO and President of Swiss luxury watch maker Zenith: “We will never compete with digital or connected watches because it’s not our segment.” As a luxury watch maker, Magada is putting his faith in disconnected watches. He also hopes they will be his biggest asset in attracting a younger generation of customers.

International Trade News: Mr. Magada, you have been CEO and president of the luxury watch brand Zenith for the past six months. If you take stock of those months, what conclusions do you draw?

Aldo Magada: I’ve got the best job in the watch industry.

International Trade News: Why?

Aldo Magada: I have been working in this industry for almost 35 years, but everything is different now. First of all, Zenith is a manufacturer. A manufacturer is not only a space where you can build one or two calibers. It’s a mindset about developing different movements in a different axis. And we have more than 600 versions of movements. That means we are really creative. And I recognized something that I never had: a possibility to go to our technical department and say, “Oh, I have a great idea. Could you think about this kind of system?” And they can do it.

International Trade News: Have you got a certain leadership style? How do you motivate your employees?

Aldo Magada: I like teamwork. When I say teamwork, I don’t mean spending the whole time together. It is necessary for great individuals who really can work as a team to communicate with one another. I am the guy who facilitates this process.

International Trade News: What do you consider to be the challenges for the Swiss watch industry?

Aldo Magada: Since the recovery of the luxury watch segment in the 1980s, the Swiss watch industry has understood that it is more about emotion. Today’s consumers are looking for experience and therefore we are in competition with products and services outside the watchmaking industry. Our task is to bring an emotional dimension to our products as a part of a global experience.

International Trade News: What kind of experience do you mean?

Aldo Magada: By experience I mean any situation in which you have the chance to live and that brings you your own feelings and sensations. So, especially in mature markets, the “have” is more and more replaced by the “be”. To be and not to have is one of the marketing challenges we have for luxury products.

International Trade News: There is another challenge called the digital age.

Aldo Magada: Yes, but it depends on the positioning of the product and the typology of the watches you have. As CEO of Zenith, I think it’s very important to make a distinction. We will never compete with digital or connected watches because it’s not our segment. And our mission is different: Zenith is one of a few manufacturers in Switzerland. We are not living in the past, that’s for sure. But we are living on mechanical watches. We innovate each year, with new materials, systems and different approaches, but we will certainly not go too digital. Instead, producing disconnected watches could be a big plus for us.

International Trade News: For the young generation, too?

Aldo Magada: Yes. As you know, youngsters are wearing fewer and fewer watches because of their smartphones so, if you want to reach the younger generation, you have to build some stairs to allow them to enter the mechanical watch world.

International Trade News: But which part of the young population would you like to reach then?

Aldo Magada: It’s all about appreciating different values – esthetical value, historical value, mechanical value and technical value. These are not appealing to people before their late 20s and early 30s because they want to go out and have fun. They don’t care about the product itself. They buy IKEA furniture – but suddenly discover the Le Corbusier sling chair, which still looks lovely and has history and real value. When you are sensitive to this kind of thing and a little more sophisticated, you are ready to go for Zenith. Having disconnected watches will help us to establish in the minds of the young people that you can wear something on the wrist which is an accessory, or better, an emotional accessory.

International Trade News: Nevertheless, the LVMH group division to which the three watch brands Tag Heuer, Zenith and Hublot belong deals with the topic of smartwatches. Guy Semon, the general manager of LVMH’s watch division, commented on smartwatches, saying, “We cannot ignore the tsunami that is coming closer.” This is a clear statement, isn’t it?

Aldo Magada: At a certain point in prices and positioning, there are brands such as Casio and Tissot which focus on digital-based timepieces, too. Such brands will, therefore, definitely be worried about smartwatch devices made by Apple and Samsung. Those IT companies have extraordinary machinery to develop function. In terms of design, I think the watchmaking industry in Switzerland can really compete with them. But in terms of function, let’s be clear: These IT companies are so strong that they will take a big market share of a market which doesn’t exist today. And that’s my point. Everybody is looking at destroying a market, but I think a market will be added.

International Trade News: You are talking about the market for connected watches.

Aldo Magada: Connected watches will very soon be much more than only a kind of small telephone on the wrist. The connection will allow you to really go deep in some functions, let’s say for companies which produce watches for pilots. Perhaps pilots will be connected to their flight plan by their own timepiece. Another example is the health sector: As understood from Samsung and Apple, smartwatches will include digital systems that monitor health metrics or control the daily fitness goals of individuals.

International Trade News: The luxury watch market is different.

Aldo Magada: It’s really different. Take a look at the car industry, which is very well segmented. You have new cars and electric cars. Electric cars did not take over the diesel engine or the gasoline engine. Now, when we are discussing luxury watches more in terms of price segments, do not forget that it’s a few million pieces. Since there are about 7.5 billion people in the world, we definitely have potential to grow.

International Trade News: Besides that, luxury goods are long lasting. Smartwatches don’t fit into the definition of longevity since the software will be old after two years.

Aldo Magada: Well, for real luxury goods, longevity is important. But you also have to make sure that your product is not obsolete.

International Trade News: Are there any important innovations in the pipeline?

Aldo Magada: It’s an ongoing process. For instance, Zenith has solved a question which had been asked for three centuries: How can you minimize the gravity influence on your watch escapement? While our competitors use the tourbillion, which is there to compensate for gravity, Zenith developed a gyroscopic escapement that eliminates the influence of gravity completely.

International Trade News: What significance do special economic zones have for Zenith?

Aldo Magada: We are very strong in Asia, particularly in China, which is, of course, a challenge today because of travel retail and the fact that China did not issue group visas for Hong Kong last year. We also have to develop other regions. Japan was great last year because the Japanese really appreciate our products. However we should improve our performance in the German market.

International Trade News: How come?

Aldo Magada: I think Zenith could really attract the German customer who is sensitive to mechanics and does not just go for flashy exteriors and bling-bling. At the moment, we are analyzing this market in order to better communicate to German customers and better fit their needs.

International Trade News: By the way, what is the average price for a Zenith watch?

Aldo Magada: Zenith starts around 3,500 EUR. It goes up to 300,000 EUR. But the average price is related to the El Primero Chronomaster Open 1969, which costs 7,700 EUR.

International Trade News: The Chronomaster 1969 is really celebrating its renaissance.

Aldo Magada: Yes, we have a 45-year edge advance because we are still the only company proposing the chronograph at 5 Hz which is meaningful for chronography. Having a 45-year edge over your competitors is not very common in any industry. We want to keep the legacy. And in 2015, Zenith celebrates its 150th anniversary.

International Trade News: In order to spread the name of Zenith around the world: How important are the Rolling Stones as ambassadors of your brand?

Aldo Magada: The Stones give us the opportunity to shed a bright light on the brand, which has long been considered traditional. But we are not traditional; we are classic like the Stones. The Stones are really classic. They belong to history, but I cannot find anyone who could pretend that Keith Richards is traditional. That’s how we would like to express that we have iconic products and, yes, the Stones are iconic, too.

International Trade News: Final question: Can you explain the strengths of the brand Zenith?

Aldo Magada: Zenith is the leader in high-frequency chronographs, and we will stay this way.

(Pictures: Zenith Watches)

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