Panerai relies on luxury demand to cushion sales

Italian luxury watch manufacturer Panerai is taking the road less traveled to boost growth in China, one of its most important markets, a top company official said on Thursday.

The company has built an 800-square-meter underwater abyss along the Huangpu River to showcase its extensive collection of luxury watches, making it the biggest expo of its kind in recent times.

It took the company nearly four days to create the underwater abyss, said Panerai CEO Jean-Marc Pontroue. Though it will remain for just two days, he said he believed that it represents what they are really in China for. The hostile marine environment, replete with sharks and shipwrecks, that is on display, showcases Panerai's identity as a disruptive and masculine brand, he said.

"Along with the US, China is one of our most important markets. That is exactly why we are showcasing the brand here," said Pontroue.

According to the CEO, the underwater abyss traces the brand's 159-year-old legacy when it started as a secret supplier to the Italian Navy before being acquired by the Switzerland-based Richemont Group in 1997.

Pontroue said he believed that it is an opportune time for the company to be in China. Shopping habits are changing with luxury shoppers diversifying their product selections from mainstream choices to new arrivals, said Pontroue, who worked with luxury brands like Givenchy and Mont Blanc earlier.

The company will open four to five stores annually over the next three years in the country. It has 50 stores across the country.

Richemont, Panerai's parent company, has a portfolio of eight luxury watch brands, including A. Lange & Sohne and IWC Schaffhausen. Last week, it reported a nearly 10 percent growth in sales from the watchmaking division for fiscal 2019 at 2.98 billion euros ($3.33 billion).

Global investment bank Morgan Stanley said nearly 40 percent of Richemont's watch revenue came from the Chinese market.

"China is gaining importance in our ranking every year. Even though our biggest market in the world is the United States, Chinese travelers and domestic shoppers are our top source of revenue," said Pontroue.

Chinese consumers at home and abroad spent $115 billion on luxury goods in 2018, accounting for 32 percent of the global luxury market, according to consulting firm McKinsey. It said the outlay will rise to $180 billion this year, accounting for 65 percent of global growth and 40 percent of total sales in the industry.

xujunqian@chinadaily.com.cn

(China Daily Global 05/24/2019 page8)