A conversation with Peter Stas, CEO Frederique Constant
Watchonista recently attended the ground breaking for Frederique Constant’s new manufacture in Plan-les-Ouates, Switzerland. While on-site, I had the opportunity to sit down with Peter Stas, their founder and CEO. What followed was an enlightening conversation about the current state of the watch industry.
Josh Shanks (JS): Hi Peter, thanks for having me
Peter Stas (PS): Thank you
JS: So how is the company doing? Congratulations on the new launches and today’s ground breaking
PS: Yes thanks, Company is at plus 4% at the moment, at Basel were at +6%, so we’ve returned well back to growth. At the same time, we’re now at 150,000 pieces output per year. Longer term we want to be at 250,000 pieces per year which is why we’re inaugurating the new building.
Peter Stas, founder/CEO of Frederique Constant
JS: How are you competing now within the marketspace, who do you see as your nearest competitor?
PS: Still the same, I would say Longines is a big competitor, used to be also Baume & Mercier, but Baume & Mercier has dropped quite significantly. Used to be also Maurice Lacroix, but they’ve also dropped a little bit. We’re still in this middle field between $1000 and 5000 and continuing to compete with those brands.
JS: Is that your bread and butter at that price point?
PS: I would say our bread and butter is between $1,000 and $3,000.
Frederique Constant New Manufacture in Plan-les-Ouates, Switzerland
JS: How do you find the current retail landscape? Do you still find traditional brick and mortar to be a big player or is your business moving towards e-commerce?
PS: Still brick and mortar, 90% of our business is done at traditional retailers. We are also investing in ecommerce and all kinds of activities there. But we see even in ecommerce that we have a system that during the check our process, we proposition the buyer to find a retailer in their area. This will help buyers to go and touch and feel the product and start a relationship with a retailer. This will help for after-sales service, for straps, and for the future.
Frederique Constant workshops
JS: Do you see people going through the entire vertical of the product line? For instance, starting with a $500 watch and then moving up to another price point? Do you see that journey or is it more a one and done?
PS: No not really, we’ve done some research in the past and we found that 30% of our buyers return for a second watch from our brands. Our main growth comes from new customers.
Frederique Constant Flyback Chronograph Manufacture
JS: Speaking of new customers, let’s talk about millennial buyers. How do you view that segment?
PS: Well they come relatively early to us, because we are accessible. If they want a to have their first more serious watch then they come to Frederique Constant. For example, when they start a job and they want to go and have something nice on under a suit. This is where we start, so I would say they typically then are already in their twenties. With Alpina, we also have some younger customers, there you have some teenagers.
JS: How do you view social media, especially in today’s watch industry?
PS: Listen, we use it. We have over one-million Facebook fan and we’re strong on Instagram. It’s part of the marketing mix but it’s not the only thing for sure. Still for brick and mortar the presentation in the shop remains very important as well. We still have above the line advertising both online and offline.
JS: Where do you see the market going? It’s been a tumultuous past few years, do you see further consolidation of brands or more growth in the future?
PS: I would say we’ve bottomed out. We’re slowly starting to have thin growth again. I don’t think we will have some same kind of growth that we had in the early 2010 to 2014 period. But I believe we’re slowly getting back on our feet. China is recovering, we still have sales issues in Russia, oil is a little bit back, knock on wood we don’t see any more terrorist attacks in Europe, and the US is not good but ok. Ultimately, you no longer have the perfect storm situation we had with problems in China, Russia, Middle East, and Europe at the same time. That storm was a big trigger in the past. The other thing is that a lot of brands have been pushing too much stock to retailers and now that stock is slowly being eaten up.
JS: How do you view our current political climate with the Euro zone news, and the US elections? Do you see that playing a role in your sales? Especially buyers being more conservative with how they spend their money?
PS: No I don’t, but this is a big question as to what will happen in the future. Typically, when the stock exchanges go up, also the watch sales go up. That goes well together at the moment. The question is especially in the US is what will happen with the stock exchange? We’ll see if this growth will continue, balance, or alternatively come down again?
Frederique Constant Classic Worldtimer Manufacture
JS: You’re obviously a fan of watches, starting Frederique Constant back in the 80s. Do you collect watches personally, perhaps brands outside of the FC family?
PS: No, two times no. You know, as the boss here, I always get the latest new models. Right now, it’s the fly-back chrono which I love very much. Last year, I got the Perpetual calendar. Often in the past, I gave the watches back or they took them back from me to test them. I’m usually the one of the first ones to wear them so the tests would see if anything would happen inside mechanically. Only a few years ago, I’ve started to say, “once you’ve checked them, I want them back” so I have like five or six Frederique Constant watches, and one or two Alpinas.
Alpina Startimer Automatic
JS: Last question, is there any person or brand that you look up to within this industry?
PS: Oh definitely, but I’m not sure I’ll go for the question, but some of the older Pateks I really love them, they’re beautiful and I see them coming by auction houses. If I would not have Frederique Constant then I would definitely be very interested in one of those.