Managing Demand And Finding the Right Collectors… A. Lange & Söhne’s CEO Wilhelm Schmid Tells Us About His Strategy
Going deep into the collector strategy of A. Lange & Söhne… And it’s more complex than you can imagine.
It is no secret that a large part of the watch industry is currently facing a rise in popularity, with a demand often surpassing the production capacity. While some have the ability to release more watches on the market, it’s tempting for a few companies to benefit from this situation and to cap production and increase desirability. And for some, the situation is a bit more complex. Answering demand isn’t always easy, specifically when talking about high-end, mostly hand-made watches. Production isn’t a matter of machines, it’s all about skilled people and their hands. With this situation in mind, we thought it was the perfect time for us to sit down with the CEO of A. Lange & Söhne, Mister Wilhelm Schmid, in order to understand what is the brand’s strategy when it comes to managing demand, to find the right collectors, to avoid those who are in for the short run… In short, to make sure that the few but handsome watches the Saxon brand is capable of manufacturing end up on the right wrists.
“we strongly emphasize on making sure our watches end up on the right wrists,” explains W. Schmid
Brice Goulard, MONOCHROME – Nice to see you again, shortly after Watches and Wonders. How are you doing, Wilhelm?
Wilhelm Schmid, CEO of A. Lange & Söhne – Not too bad, really not too bad. We presented ourselves successfully at Watches and Wonders. This year´s edition was very different to any other Watches and Wonders or SIHH in the past because we did not only focus on presenting our novelties on-site in Geneva. We also used it as a platform for decentralised events and communication formats. And that’s definitely something we will continue to do more in the future. I think the days when only the geography of the Event was taken into account while neglecting the rest of the world are history.
We’re in a beautiful place, at the Concorso d’Eleganza Villa d’Este. It’s the 10th time you’re partnering with this event. Why is it so important?
For us, the Concorso d’Eleganza is a concept that, if you look at what it represents, is very close to what we represent. For strategical reasons, we neither do red-carpet events nor do we have brand ambassadors. But we need platforms where we can entertain our guests and where we can also connect to people that, for sure, are interested in craftsmanship, history and design. And that’s why we think the Concorso d’Eleganza, or for that matter, the Concours of Elegance at Hampton Court, are perfect platforms for us. And when I say platform, I really mean it, as it’s not only taking place at the respective location but also digitally in other parts of the world.
Let’s talk collectors. You are the CEO of a watch company. You’re also very much interested in the world of car collecting. And you have a background in the car industry. How do you see watch collectors and car collectors? Are they the same, or are they different?
A collector is basically somebody who is addicted to a certain topic and who is never happy with what she or he has. He or she is always on the hunt for the next. That, for me, is the best definition of a collector to start with.
And then you have different motivations to collect. We very recently saw a lot of the new type of collector, which is the investment collector. They come and go, but then your product becomes an asset class. At A. Lange & Söhne we treat everybody with respect, but this is not what makes our watchmakers come to work in the morning. Then you have people who collect things to be acknowledged by others and I don’t think we’re an ideal brand for that kind of collector, because we’re pretty unknown to the general public. We want recognition among the right group of people.
And then you have the passionate people, the passionate collectors… And you can find them in the car world too. Many of them are passionate about collecting oddities. The brands that are lost 50 years ago, where you really have to know the history and you really have to source the spare parts. That’s a very different type of collector compared to one who goes to an auction and buys a fully-restored vintage car to accomplish his collection. If it’s a passionate car collector, who really understands his cars, the likelihood that he can sympathize with what we do at A. Lange & Söhne is very high. And vice-versa. That’s the common ground for us.
The next question is an expected one… There’s an impressive rise in demand for collectable cars and watches. Maybe not always the right type of interest, with prices that go high in many sectors (art, wine, cars, watches…) You, as the CEO of a high-end watch manufacturer, how do you see this moving? Is it a trend that will continue or fall?
The question is the motivation. I can’t talk for the general industry, I can only talk for A. Lange & Söhne. Every August, I welcome the new apprenticeship trainees, those who will become watchmakers or toolmakers. It’s 3 years of apprenticeship and then 2 other years of hard work before they can become a full-time member of our manufacturing team. And then, for the rest of their professional life, they will work on watches. You cannot build a business model with people who treat you like an asset class. Because in the end, you’ll still have your watchmakers and staff.
“Our emphasis is greatly on people who are passionate, who are keen to understand what they buy.”
Our emphasis is greatly on people who are passionate, who are keen to understand what they buy, and who really go into details because we believe they are in for the long run and not just for the short game. And that’s why we so strongly emphasize on making sure our watches end up on the right wrists.
I’ve been very apologetic in the last times because it is such a difficult job to do this. I don’t want to come across as arrogant. I’m not saying no. But if I said « we have watches unlimited, and if you get them today, you can triple your money tomorrow. », that of course will attract people who are not really keen on A. Lange & Söhne or watches. They are just keen on making a quick buck.
What is our defence line here? The concept is that we need to know our clients. You have to take into account that in the past, we’ve sold many of our watches through a wholesale network. This means on the one hand that these customers have not been introduced to us. On the other hand, there are still lots of customers out there who are loyal to us but we simply do not know them. I don’t want to upset these people, and I apologize for this, but I have not yet identified a better system to avoid the watches ending up on the wrong wrists than to know our clients.
Pleasing our customers who are unknown to us but loyal and passionate is, for me, the biggest challenge right now.
In a pragmatic way, how A. Lange & Söhne manages the demand? Do you want to keep the production at a certain level and thus have to manage allocations? Or do you plan on increasing the production?
Our strategy is fundamentally based on the way we build our watches. And that’s why people admire us. That’s the good side. The flip side of that coin is that it will always be the restriction of our own growth. I cannot just ramp up our production because I would need much more specialists and they need to be trained.
It’s not about facilities and a number of machines. It’s about hands. Hands that decorate, hands that finish, hands that engrave, hands that assemble… It’s that whole process that you need to manage in order to eventually produce a few watches more. We are growing year by year but when I say growing, we talk about 2 to 4 per cent. Because that’s what we can generate with the additional watchmakers we have each year. And that will never fulfil the increase in demand we’re facing right now.
And strategically, we’ve decided to do everything possible to protect our way of making watches. That’s the core of our business. We will not accept shortcuts. We will challenge everything else, but not this.
“Pleasing customers who are unknown to us but loyal and passionate is, for me, the biggest challenge right now.”
So, in a very direct way. You’re not there to manage a constructed rarity of your watches?
The scarcity is the result of our way of making watches. Because human beings can work 8 hours, with focus and concentration. And they need a break, and they can get sick, which we experienced unfortunately in the past months quite heavily. These watchmakers are not machines. The whole process of watchmaking is about hands that build what we admire so much. And that will always be the restriction for our output.
In total, we talk about 5,500 watches a year. Maybe we’ll be able to make 5,700 or it can also be less if we produce more complicated watches. If you go through our collection, there’s a hierarchy of watchmaking capabilities. We have great watchmakers but not all of them have the experience to build a minute repeater. Even there, we have capacity issues. This is why the Odysseus and the Lange 1 have delivery schedules. It’s the same class of watches and thus the same watchmakers behind them. They can either work on a Lange 1 or an Odysseus but both watches are in short supply. And I just have to live with it. There is no chance for me to give extra capacities because we’re utilizing them entirely now.
Aren’t you a bit disappointed that the Odysseus attracted the wrong attention?
It’s a question that has been raised by so many of our loyal customers. But the few hundred watches we build will not create hype. In the end, I think it was the right moment for us to introduce a family like this. As clear and focussed we are with our other 5 families of watches, the Odysseus gave us the oxygen to also try different things. Such as the titanium edition we launched in March. That would have been unthinkable in the other families. It increases the scope for our watchmakers and designers to address topics.
“We want to know them (the collectors) by first name”
Finally, how does A. Lange & Söhne take care of collectors?
We have a very clear goal. And it’s a very German goal. We want to know our customers by their first name. And for a German, that has a very special meaning because first name means you really know each other well. And that’s our key interest. It’s something we’re really working on. The whole organization is built around that. Not only do we want to know them by first name, but they also should be able to know us by first name.
With the number of watches we produce and the organization that we have now, we’re probably the only brand that can do that. Because you’re mostly either too big or too small.
For more details about the brand, please consult our dedicated page here and www.alange-soehne.com.
Do me a saxonia thin black gold flux please.
I’ve been an admirer of Lange, their timepieces and their watchmaking approach in general. I think they make some great watches and I’m lucky to own two already.
However, when the brand introduces a steel sport watch, and then potential clients of the brand (including existing clients) are being asked by the direct boutique sales’ employees to buy “specific” models at “specific minimum value” so they can be put on the allocation list; then respect to the brand will be lost and with it any brand admiration or passion!
Other funny tactics include selling watches that usually could come with a discount below list price, at strictly list price which would then help the client in getting “better” profile. Also, it seems that for Lange; those clients who buy a ladies watch get an extra bonus that brings them closer to those currently popular sport watches!
I think it’s important to mention that I’m personally not after an Odysseus myself, neither consider myself known to the brand as per Mr Schmid definition since I prefer to get Lange watches from my authorised dealer for better pricing, but I did see the allocation strategy first hand in different boutiques in 2 countries. I also heard the same from many other collectors, and it seems it’s public knowlege now as I also heard several journalists talk about the same in different popular watch podcasts.
Lots of nice words and ideas by Mr Schmid but anyone who is in the watch world, collectors or media, knows that the reality on the groud in Lange boutiques has nothing to do with what Mr Schmid is claiming here. The way I see it is simply a me-too strategy that is now being used to push the sales of less popular models.. Just a standard sales strategy no more no less..
AP and PP have been in the steel sport watch game for years, and while their versions range from extremely-difficult to almost-impossible-to-get compared to the Odysseus; I never experienced or heard that AP or PP have “directly” asked a client to buy or spend specific amount to get a guaranteed allocation! They have their own selection criteria for sure and their loyal clients who buy more and spend more will always have preferred access to hot pieces, but they don’t do it in such direct way!
I hope Lange figure this out and learn from the experience of other brands because the watches they make are great, but such practices will lead to them losing passionate collectors and clients; the exact people the CEO is claiming he is after!