Nayla Hayek: the Backbone of the Swatch Empire

Innovation, passion and creativity -- these are the qualities that Nayla Hayek, daughter of the Swatch Group’s founder Nicolas G. Hayek, has brought to the world’s number one watchmaker.

 

In her interview with Today’s Outlook magazine, Hayek talks about the company’s accomplishments, strategies, and expansion plans in the Middle East. Hayek has been a member of the Swatch Group's board of directors since 1998. She is also an international Arabian horse judge with top-level contacts who contribute to the business and promotional activities of the Swatch Group. 

 

The Swatch Group History

Nicolas G. Hayek, founder and chairman (and CEO until the end of 2002) of the Swatch Group, is a man of vision and perceptive foresight.  Hayek refused to accept the static nature of the Swiss watchmaking industry.  He saw new relationships between seemingly unrelated things. To equip cheap, colorful, fashionable plastic watches with the expensive, high-quality Swiss-made movements represented a truly revolutionary idea and changed the then stagnating Swiss watch industry upside down. Swatch was created.

 

Nicolas G. Hayek, often referred to as the father of Swatch, was born in 1928 in Lebanon to a Lebanese mother and American father.  Hayek laid his ground work for success by studying math, chemistry and physics at the University of Lyon, France. After graduating, he moved to Switzerland where he was destined to take the world by storm.

 

By the early 1980s, competition from Japan caused the lower-priced segment of the Swiss watchmaking industry to suffer. At the request of the Swiss banks dealing with the two bankrupt Swiss watch giants SSIH and Asuag, Hayek carried out a study in 1983 to determine the future potential of these groups. To assess the importance of prestige and reputation in the watchmaking purchasing process, Hayek formulated an innovative experiment. He took three identical watches and labeled them “Made in Switzerland”, “Made in Japan”, “Made in Hong Kong” and priced them $110, $100, and $90, respectively.  The watches were sold in Europe, the United States and Japan. Through the monitoring of consumer purchases, Hayek noticed that watches made in Switzerland commanded a premium price based on nothing more than their origin. 

 

This observation was suffice to convince Hayek that the Swiss watch industry could regain its lost glory. He merged the two existing Swiss watchmaking firms (SSIH and Asuag) to form the Swatch Group. Both groups included traditional watch brands and companies between 150 and 200 years old, as well as the fashionable plastic Swatch. The merger, together with the control of the majority of the shares through the Hayek Pool and the nomination of Nicolas G. Hayek as CEO, not only created new possibilities and a new culture, but also made the Swatch Group the most highly valued watchmaking company five years later. 

 

Hayek intuitively knew it would take more than just Swiss craftsmanship to compete with the low-priced watches from the likes of Timex, Seiko and Casio. He decided to target the newly emerging fashion-conscious consumer groups with eminently stylish plastic watches in an ever-changing range of colors and styles. It was this idea that made Swatch a household name in any language. Profits skyrocketed and people from all around the world began collecting Swatch watches and changing them like socks.

 

More Success Ahead

The Swatch Group has successfully positioned its watches in every price segment, knowing that having a key brand for every market segment was an essential measure to maintain its position as a leader in the market and to protect the company from competitors. 

 

Each brand in the Swatch Group kept its original name.  “Just as a watch’s origin affects consumers’ willingness to pay, so too do brand names. In fact, brand names are the most important factor for many customers,” explained Nayla Hayek, “which is why, when we developed and/or acquired the 18 brands that today make the Swatch Group, we refused to rename them all Swatch.” In catalogues, each brand is linked to the Swatch Group with nothing more than ‘A company of The Swatch Group’.  “We are all one family,” she said, “but each brand has a history that is vital to keep.”

 

Today, the Swatch Group has become the largest manufacturer and distributor of finished watches in the world. In terms of sales, the Swatch Group represents some 25 percent of the watch production sales worldwide. The Swatch Group has over 20,000 employees and 160 production centers situated mainly in Switzerland, but also in France, Germany, Italy, USA, Virgin Islands, Thailand, Malaysia and China.

 

The Swatch Group produces almost all the components required by its 18 watch brand companies. The company offers watches in all price and market categories. In the luxury and prestige top range segment there is Breguet, Blancpain, Jaquet-Droz, Glashütte-Original, Léon Hatot, and Omega.  Longines and Rado make up the high segment range. Tissot, Calvin Klein, Certina, Mido, Hamilton and Pierre Balmain make up the middle segment, while Swatch and Flik Flak are the basic segment.  There is also Endura, which produces "private label" watches with varying prices. 

 

The activities of the Swatch Group go beyond watchmaking. Research and development of state-of-the-art products and technologies play a major role in its activities. Microelectronics and micromechanics represent another important segment of its operations. “The Swatch Group is also active in sports timing at various international sports events and most of the Olympic Games,” explained Hayek. The Swatch Group was the official timekeeper and data handling operator for this year’s Olympic Games in Athens.  The Group is also a leader in the automobile sector; its latest innovative creation, together with Mercedes of Daimler-Chrysler, was SMART -- a small, very environmentally friendly city car.

 

Presence in the Middle East

Some 50 countries, more than 440 reporting units, 160 factories, and over 20,000 employees -- that’s the Swatch Group today.  Even though it enjoys a presence in every corner of the world, the Swatch Group continues to open flagship stores in key cities.

 

In the Middle East, The Swatch Group has recently opened its regional offices on one entire floor in the prestigious Emirates Towers in Dubai, with a big showroom displaying all of its brands.  “For every brand, we have one brand manager in Dubai,” explained Hayek, who is in charge of all Swatch brands distributed in the Middle East. “It is important for us to have local people working with us because they help us identify people’s preferences.”

 

Some brand managers are very involved in communicating with the head offices in Switzerland, said Hayek. For example, the brand manager of Longines “was very involved in the new collection because he came and showed us what style of watches people there preferred.” In general, clients in the Middle East seem to prefer the more expensive brands such as Longines or Omega with their special collections and limited editions.  Opulent timepieces adorned with lots of diamonds also seem to be a favorite for the wealthy Arab clientele.

 

Along with a new presence in the market comes sponsoring, which, according to Hayek, is a concept on its own. In the Gulf region, Swatch has been involved in sponsoring sports events. “Sponsoring definitely affects the face of a brand,” she said. “This is why we choose really carefully what we sponsor.” Different brands of the Swatch Group sponsor different events.  For instance, Omega sponsored the Endurance Horseracing in Dubai and Qatar whereas Blancpain sponsors some of the Arab road shows.

 

According to Hayek, the Swatch Group will open more shops in the Middle East, in line with the Group’s objective of reinforcing its presence in the top prestige and luxury segment.  For example, the jewelry collections of Breguet, Omega and Léon Hatot will be expanded. Certainly, the Gulf region has the most receptive clients for this undertaking.