Luxury brand stays true to its roots

Established in Paris in 1847, Cartier is one of the world's oldest luxury jewelers and watchmakers. Appreciation for the brand and its designs crosses over from the commercial market to the art world, as exemplified by the new exhibit at Prague Castle, "Cartier at Prague Castle: The Power of Style."

The brand has long enjoyed a royal association, designing unique pieces for aristocrats throughout the ages. King Edward VII of England famously called the house the "jeweler of kings, the kings of jewelers." But beyond the romantic notions tied to the name, the company is a financial powerhouse that has managed tight but gradual growth across the globe, all the while maintaining the brand's integrity. CEO Bernard Fornas, who was in Prague briefly to help open the exhibit, sat down with The Prague Post to talk about the luxury market and Cartier's careful expansion.

The Prague Post: Over the past two years, the recession has hit the retail sector especially hard, but in some markets, such as Prague, the luxury goods market fared better than the general retail. Was that the case for Cartier?

Bernard Fornas: The maison, the brand, has had very good resilience. We have strong authenticity and strong values. There are not so many on the market, but those brands that have these qualities have done much better on the market. We've done much better than the overall luxury market and 10 times better than the other markets. We have been very fortunate.

Do not ask me if there will be another recession; I don't know this. The only thing we can always do is be ready for the worst that can happen. In other words, prepare the company for the worst scenario. Be sure that today things can worsen even like they did one year ago, and your company must be ready. That was the case with Cartier and why we have done so well now and even have gotten more market shares.

TPP: In what way was Cartier better prepared for the downturn?

BF: Because we put the right money in the right places to prepare it. There are many respects in which we were prepared, a whole list. We were really very careful not to dilute the image of the company. That means other companies, for example, went into hotels. I was approached by companies that said, "We have hotels for you in the Middle East. They will have the Cartier sign and be a Cartier brand hotel, and you will get the royalties." But at the end of the day, you are the king of jewelers, not the king of hotels. And when everything goes wrong, there's damage to your image. Some of the jewelers diluted their image, and they paid a great deal.

For us, our supply chain has been very important. We must always have the right product at the right time at the right boutique. We do weekly deliveries to all our boutiques all over the world. That's a very quick and easy sentence to say, but there is so much work that goes into that.

If you tell me how sales will be in the second semester of a year, the only thing I can tell you is that our growth will be better than the others. If the market is [flat], we will be [growing]. If the market is [down], we will be [flat]. I cannot go against the economy, but what I can do is be better than the other brands.

TPP: Cartier recently introduced a new prototype watch, the ID-1. In interviews since then, you've mentioned that important luxury brands are also innovative. Is innovation central to Cartier?

BF: We have a very big think tank at Cartier for watch-making. There are a lot of people working to find new ways of making watches. The ID-1 is really incredible. I don't know if you're familiar with the automotive industry, but we're basically moving from the carburetor to fuel injection. In the past, carburetors were used to regulate very carefully how much fuel goes into the engine, the right amount of air going in, etc. That had to be adjusted. Now, with fuel injection, you set it once, and it's done for the lifetime. For the ID-1, it's the same. Eighty percent of the time spent by watchmakers assembling your watch is fine-tuning each part to make sure the watch is on time. But they are human beings, and whether we like it or not, it's not always perfect. With our new system, because all the pieces are done at once and perfectly adjusted, when you put it together you assemble it once, and it's set for life. It's more or less what happened with car engines, and that changed the car industry. I believe, in three or four years, we'll put this system in all our standard models. When we do concept watches, it's not just for show, to be later put it in the drawer. What I want out of concepts is that one day it goes in all of our watches.

TPP: The big story in the luxury goods market is the growing importance of Asia. Is expanding in Asia Cartier's biggest focus right now?

BF: When you go fishing, you go to the place where you believe there are fish. Ten years ago, when we started doing this, we decided to move forward in China. Now, 10 years later, we are the No. 1 luxury brand there. We have also been able to move to other regions, not just mainland China but also Hong Kong, Macao, Malaysia, the Philippines, Taiwan and Singapore. That has been a good strategy; it has allowed us to compensate for regions that were in trouble during the crisis, like the United States and Europe. The beauty of Cartier is that we are like a plane with five engines, which is better than one with two engines. Because we are market leaders in these five regions - in Europe, the Middle East, Asia, Japan and the Americas - if one engine has problems, we have another four. This happened two years ago: the United States was weak, Europe was weak, and Japan was also quite weak, but the Middle East and Asia were growing hugely. That helps our resilience.

TPP: How is Europe doing today?

BF: Europe is doing great, mainly because of tourists coming back to Europe. You look at Paris, Italy and Germany, and these are places where so many tourists are coming. The euro is weak, and so the Chinese are coming by the millions.

TPP: Is it correct to say the Chinese are driving the market in Europe?

BF: Absolutely, but also the Americans are back because the strength of the dollar, and the Japanese are back on the strength of the yen. Europe is driven by tourists more than locals. We're strong in those countries where tourists like to travel in Europe. For example, we're the No. 1 luxury brand in China, and when the Chinese go to Paris, they see all of our boutiques, and we have staff in there that can speak Chinese. It's like what happened 20 years ago with the Japanese: You would see huge queues of Japanese outside the Cartier boutiques in Europe. It's just like that; except it's now the Chinese as opposed to the Japanese.

TPP: Do you have to market the brand any differently in Asia?

BF: No, beauty has no boundary. When you do something right and have a beautiful product, it is equally well accepted around the world. I do not want to sausage the brand and make a product for China, a different product for Germany, for the Czech Republic. No, there's only one Cartier. The second rule is nobody is allowed to talk for Cartier except the maison. It's not Mr. or Mrs. X selling Cartier in an advertisement. In our advertisement, the hero is the brand; the hero is the product. It's not Mr. or Mrs. X, because Mr. and Mrs. X will die. Not Cartier, our product is forever. We don't even talk about so-and-so being the designer of this watch or this piece. Cartier is the designer. That's very important. We're not in the fashion business; we make everlasting products. Your skirt will go in the garbage one day; my shirt will go in the garbage one day, but this [points at watch] will stay. I will give it to my son, or who knows, it will continue with someone else. That is our mindset: What you create, develop and manufacture has to stay for a very long time.

Claire Compton can be reached at
ccompton@praguepost.com