Julien Tornare took over the position of CEO of Zenith in April this year, amidst some turmoil within the 152 year old grand maison. We caught up with him recently in Singapore, and had a good long chat with him, recounting his adventures as CEO of Zenith and what he is aiming to do there. Listen in to our wide ranging discussion here.
Julien Tornare came to Zenith after spending 17 years in Vacheron Constantin where he held several sales and management roles. His last position in VC was Managing Director for Asia Pacific, where the author met him for the first time when he was the management host for the VC Overseas Tour in Japan in 2016. Julien graduated from the University of Geneva with an Economics degree and later with a Masters from the London Metropolitan University. And speaks five languages fluently: English, French, German, Italian and Spanish. Currently 45 years old, Julien is married with three children aged 11, 8 and 5.
There was an air of familiarity and sincerity as we discussed diverse matters. He was forthright, communicative and very clear in his thoughts and vision. Hallmarks of a great leader. Let us delve right into the conversation.
We began by talking about his vision for Zenith. Julien arrived to helm a company with a great heritage, but who is a bit of a hidden gem in the industry, a Sleeping Beauty were the words he used. His first task is to increase Zenith’s visibility and image. Dust off the old cobwebs, and to embark on a journey of innovation.
He remarked that the watchmaking industry is one which tuned to the past. Repeated designs, tried and tested formulae which have worked well, but now beginning to break down. The new economic climate is bringing unprecedented change to the way luxury and watches are being purchased. And as CEO of Zenith, he has an urgent need to address this.
Always the optimist, Julien professed to be excited by big challenges, and we believe he has his work cut out for him. He has to tackle the challenging current business environment, the drive to innovate and to forge ahead with a brave new strategy. We discuss each of these in turn.
The Current Business Environmemt
The current business environment is a tough one. Not only for Zenith, or for watch brands, but for all players within the luxury ecosystem. Business has changed, and reflects the new purchasing patterns of the new generation of clients. Gone are the times where ever escalating prices are easily absorbed by eager clients. In the last two decades, watch prices have increased almost exponentially. Watch manufactures were able to sell huge quantities at any price. And rely on grown as the engine to prosperity. But this trend has ended. And will probably never to return.
Customers are increasingly becoming more well informed. Perhaps we are biased, but as the digital media, we claim a hand in informing and educating the watch buying public and horology enthusiast. And with this new found knowledge and appreciation for the history, tradition, heritage and techniques of horology, the buying patterns have shifted.
Watch brands who have enjoyed the early boom, characterised by the China Phenomenon have mostly failed to forsee its end. And are headed for disaster. With the huge growths of the last 20 years, many have increased production capacities, have extended market reach by increasing points of sale. With the new climate, this behemoth machinery created to meet the now disappearing demand is bringing some of these brands to their knees.
Julien’s view was that perhaps being a Sleeping Beauty was a blessing in disguise. Zenith failed to take advantage of those glory years, and thus never planned a great expansion. The production remains at 23,000 watches a year for many years. And will only grow organically under his stewardship.
The Digital Equation
Watches now needed to be right priced. It needs to address a client base who are used to change, who consume information and data at a ferocious rate on their smart devices and over the internet. Julien revealed that Zenith will increasingly take on more and more online strategies to deliver the message to the market, and also to market watches. E-commerce is inevitable.
An anecdote he told us, “I was in the VIP lounge of a major business. And I observed that though there were TV screens and print magazines lying around the beautifully appointed room, nobody was paying any attention to them. Almost everybody was glued to their smart personal devices.” This convinced him that a digital strategy is critical.
Julien says, he is seeking to use these channels to reach these new clients. And to position Zenith products with innovation, but at a pricing which is correct. He identified proximity marketing as something he will be exploring. And that Zenith will embark on e-commerce to sell watches online.
We asked Julien to characterize his customers. Are they young? Are they well educated? His response was interesting. While risking misreading his client base, he offered that the typical Zenith customer is one who is neither younger or older than the general watch buying customer. But the Zenith customer is one who seeks authenticity, and one who is keen on innovation.
Addressing grey markets
We tackled the tough question of grey markets. While Julien acknowledges that Zenith has its fair share of market dilution from grey market dealers, he defended the position that Zenith is probably not the worse offender in the industry. This we agree. But we pushed him to identify the problem and how he intends to address it.
He told us that the profusion of the grey market began when brand CEOs were being short sighted, and looking out only for their own bonuses. As production increased during the growth years, the sell through rate to the end customer is often much lower than the sell out numbers which the manufacture accounts for. What happens to the excess inventory? This typically gets dumped into the grey market.
The grey market is unhealthy for the industry and eventually the collector suffers. Grey dealers do not invest in developing brand equity, and long term stability. Grey dealers are opportunists who are out to make a fast buck.
So how to halt this? Julien told us that he is fortunate enough that Jean-Claude Biver is in agreement with his assessment and strategy. He aims to buy back excess stock from the market. He has put in place a strategy to consciously limit production, keeping steady at 23,000 watches a year, growing only organically when possible. He has even started to execute on a plan to reduce the number of point of sales of Zenith world wide from the current 807 to 600 in the near future, with an aim to reach about 500. This will strengthen the distribution mechanism, and will halt the flow of watches to the grey world.
“Watch out for the small dealer in the middle of nowhere, who is recording double digit growth in sales. That is the source of the grey market. And I will close that POS”, says Julien with tenacity. And we believe him. We hope his strategy will work, and the flow to the grey markets will cease, or at a minimum reduce to a trickle. It will be good for the brand. It will be good for Zenith collectors.
Innovation with Breaking News information
Innovation remains the key on Zenith’s strategy. The key to this is that Zenith will ensure brand continuity and respect history through innovation. The discussion quickly turned to the new and exciting project Zenith has embarked on.
The new and very exciting new oscillator will be released as a commercial product on September 27, 2017. We will cover the event live from Tokyo on our Instagram @deployant and Facebook pages.
In the meantime, we published a Breaking News article a few hours ago about additional information on this new oscillator not previously published. Click here for that link.
So where goes tradition? Julien was clear on his view of how Zenith can take advantage of their long history and tradition to propel forward. He noted that Zenith is not Hublot or TAG Heuer, both stable mates within LVMH Watches, and all coming under the oversight of Jean-Claude Biver.
Zenith will not be avant garde like Hublot. Nor will she be embarking on an aggressive campaign with huge sponsorships. These have worked well for Hublot, but for Zenith, a more quiet, considered approach is needed. And Zenith will also not aim to be the market price leader that TAG Heuer is being positioned to be. For example, Zenith will never make a smart watch as TAG Heuer is setup to address that market genre.
In his estimation, Julien feels the Zenith customer is all about authenticity and innovation. And it is in that direction then that Julien will focus his attention on. The Zenith new Oscillator project came up again in the discussion as an example of one of the many ways he is pushing for change within the company, and getting ahead.
We touched briefly on traditional haute horogerie aspects like fine finishing. Julien’s view is two faceted. First the finishing needs to meet the principle of “Value for money” that Zenith is targeting at for all products. And secondly. Zenith will finish the watches in order to meet and exceed technical requirements to optimise the function, rather than traditional haute horlogerie fine finishing for the sake of finishing and decoration.
Time was catching up with us by then, and we had to conclude our meeting. We quickly took some portraits, which we show in this article, and asked about the watch he was wearing. The Zenith Defy El Primero 21, of course. The defining watch from Baselworld 2017. One which Zenith is just beginning to deliver to the markets.
And with that, our discussion drew to a close, we were left with the impression that here is a CEO with a good head on his shoulders. One who is incredibly smart and with in-depth knowledge of the market. One who is brave enough to challenge norms and push for new ways to do business. Julien comes strongly with the backing of Jean-Claude Biver, whose prowess as a marketeer is unmatched, and whose vision is probably the most keen in the industry today. We feel good and warm for Zenith with Julien Tornare at the helm. And wish him and Zenith the all the very best.