Our man Adams is writing his take on Swiss watchmakers going belly-up – a group whose names have been conspicuously absent from WatchPro.com’s coverage. In fact, their February headline didn’t proclaim an early casualty: RJ watches. Let’s circle back and see what RJ’s collapse portends for the future . . .
Founded in 2004, RJ was a small company operating in the crowded market for beautifully built Swiss watches in the $12.5k to $97k msrp range, with most of their pieces falling in the middle of that range.
Some of the pricing was down to RJ’s licensing deals for its Pac-Man, Donkey Kong, Hello Kitty, Batman and Spiderman-themed watches. A lot of it was due to overheads – the cost of maintaining its Geneva studio.
Originally, RJ watches were “daring” to the point of insanity. (72mm watch above.) The company reined-it-in under Jaquet Droz veteran Manuel Emch, who found some measure of success with the aforementioned videogame and cartoon character watches.
After Emch’s acrimonious departure, RJ’s offerings remained split between cute, gimmicky and far out.
While their last catalogue ticked all the high-end luxury watchmaking boxes – grade 5 titanium and ceramic cases, diamond bezels, skeletonized movements and, of course, a tourbillon – it lacked cohesion.
No matter how you slice it, RJ went bankrupt because they took in less money than they spent. The demand for their products wasn’t sufficient to pay the rent and build enough equity – either cash or investor confidence – to sustain them through The Mother of All Retail Collapses.
With minimal brand recognition and a couple of months of zero sales, the watchmaker was doomed. RJ’s fate doesn’t augur well for other lesser known high-end Swiss watch bands.
In times of trouble, consumers shift their patronage to “name” brands (if they’re buying anything). From Rolex to Timex, known brands are a safe haven.
This is especially true at the high-end. Would you buy an expensive watch from a potentially defunct watchmaker, knowing that servicing might not be available?
With the forthcoming wave of watchmakers’ bankruptcies, the consumer move away from smaller, weaker brands will accelerate. It’s a death spiral. Back to watchpro.com last February:
The Swiss watchmaker announced today [February 27] that its financial backer, Alliance Investment Group SA, has decided not to continue supporting the business, leaving its board of directors with no choice than to shutter the business.
“Marco Tedeschi, CEO [above center] and the entire RJ team [not shown] deeply regret this decision, which cuts 33 jobs and ends a great journey,” the company said in a statement today.
Before taking the top job at RJ in 2017, Mr. Tedeschi was Hublot’s Regional Director for the Middle East & Africa. Alliance is controlled by Faisal Bin Fahad Bin Abdullah Bin Mohammed Al Saud.
I suspect Alliance’s dalliance with RJ watches was a bit of a pet project for a well-heeled watch collector. A global recession and oil price collapse can make an expensive hobby into an unsustainable luxury – especially after 16 years of negative cash flow.
While failing big watch brands will take a long time to give up the ghost, smaller brands will fold quickly. Like the Saudi Royal behind RJ, the money men and women funding smaller watchmakers will reach a point where they can read the writing on the wall. And see no point in throwing good money after bad.
There’s no sugarcoating it: the market for luxury watches has suffered a cataclysmic Coronageddon cratering. The global economy faces long-term listlessness. There will be other casualties. Other investors will “suddenly” pull the plug.
We’ve picked some potential winners and losers. We’ll update you as and when. Meanwhile, if you like RJ watches, chrono24 has deep discounts on discontinued models (i.e., all of them). In that fate, RJ watches won’t be alone . . .
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