LVMH’s Zenith is a watchmaker with a plan: Chinese millennials!
Zenith, the 153-year old brand that makes up part of luxury giant LVMH’s watch portfolio, is experiencing a breath of fresh air at the highest level. Julien Tornare, Zenith’s “new” CEO (as of January 2017) wants to bring some life back to a brand that he describes as “a bit dusty and – if I’m being extreme – almost a bit boring, missing something.” Thankfully, he has plenty of ideas as to how that can happen and knows exactly where to aim them – at young consumers in China!
LVMH’s share price has appreciated by 16% so far this year
SOURCE: Yahoo Finance
When Tornare took over, Zenith was in the tail-end of a slump that began in 2014. Fine – a challenging project like that was just what he wanted: “I knew I was not going to inherit an easy situation,” he says, before adding that seventeen years at Richemont’s Vacheron Constantin in various management positions helped to prepare him for the experience. As he expected, the going was tough. Some retailers even tried to dump the brand. He explains: “I had to gain their trust, and did exactly what I had with Vacheron in the US — asked them for time and to reconsider.”
Approaching two years into the role, Mr. Tornare’s priorities are clear: product design, rationalising distribution, and, critically, targeting the right clientele. That last area is one where his thinking is clear – and driven.
According to Tornare, the Chinese, Japanese, and U.S. markets, make up around 40% of Zenith’s sales. He’d like to see that rise to 60%, and the way in which he wants to do it is by raising brand awareness in China. He says that millennials in the country, as they come into even greater buying power (the eldest amongst the cohort are now about 40 years old), are the key to Zenith’s success. His goal is to target “second-generation Chinese clients” without forgetting new buyers.
Speaking to the Financial Times, Tornare describes this demographic and what he thinks will help to win them over: “The new generation are much closer to Europeans or Americans in their purchasing behaviour than their parents. I’m convinced that if we don’t want this second generation to run away from mechanical watches and go to connected watches — or simply not wear one at all — we have to show dynamism. The Swiss watch industry has not always been very creative. There has been a lot of repeating the past.”
Dominion holds LVMH in its Global Trends Luxury Fund.
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