The Coronavirus epidemic in the spring of 2020 shook the watch industry. If the major prestigious brands will only show a loss of turnover, for certain recent watch brands, it is bankruptcy that is at stake. We interviewed young Swiss and French brands to understand how they are coping .

Before talking about the economy, I hope that all MBA blog readers and their families are doing well in these difficult times. The various brands that answered our questions (Beaubleu, Lonis, Code41) fortunately did not have any cases of Covid-19 among their teams.

The containment and the closure of non-essential businesses for 2 months in France and Switzerland reduced to zero the turnover of watch brands using this traditional distribution network. Nicolas Phamcreator of Beaubleu, thus tells us that the closure of the UTINAM stores in Besançon or the Printemps stores in Paris and Deauville, where Beaubleu is distributed, would have had a strong impact on the resale of their model if their first collection had not already been completely sold out before the crisis. Many young watch brands sign this kind of partnership with a few specialized watch shops, for some brands, it was a cold shower. I take this opportunity to have a big thought for all the watchmakers who had their shops closed for 2 months, go visit them this Monday, May 11, they need you and we need them!

One would have thought that e-commerce sales would explode during confinement. In the end, we saw, in all markets, that this was not the case, with digital sales down slightly everywhere. We can cite as explanations that the loss of income of a large part of the population does not encourage spending and that the very poor postal service during this crisis did not encourage people to order a watch from a distance either. Among our young watch brands, Yannis Panigas of Lonis Watches tells us that "the impact was significant and was characterized by a sharp drop in sales, after 2 years of dynamic and pleasing growth".

Same verdict at Code41 where online sales of their collection Anomaly fell with a "conversion rate was -50% in March. However, we have seen a marked improvement since the end of April, and our conversion rate is only 35% lower than usual." according Amir Sfez the Digital Director of the Swiss brand.

With the confinement, it was also necessary to review the way of working. Teleworking has become essential and fortunately our young brands were ready on this point: very digitized and with small numbers of young companies, they were less penalized on this point than large companies where the rules of distancing are a real brain teaser. Code41 made a full transition to telework in mid-March. Amir Sfez tells us that "our entire work infrastructure is 100% cloud and therefore accessible by our employees from anywhere. Our teams continued their mission by teleworking with the greatest ease: the rooms of our offices were simply transformed into a video conference. Regarding the safety of our customers, our order preparation processes follow a very strict safety protocol: sterilization of hands after each contact with new merchandise, safety distance of at least 1 meter between logistics agents as well as a ban overall bodily contact."

The real lesson of this crisis is that the young companies that have relied heavily on e-commerce and pre-orders are the ones that will come out of it the best. The principle of pre-orders allows brands to pocket cash before stocking up on equipment and producing the right quantity of watches without overstock. Code41, whose pre-orders are phenomenally successful with each new project, achieves, for example, "80% of its turnover with pre-orders". Their latest launch, DAY41 in pre-order in February of this year thus garnered a turnover of 2 million euros in pre-orders !

The new collection Union of Beaubleu was also narrowly spared because pre-orders took place just before confinement, Nicolas Pham tells us that "the new collection has been incredibly well received. We achieved more than 300% of our expected goal, including 100% in just 18 hours instead of 35 days."

The pre-order system was already a winning system before the coronavirus crisis, there is no doubt that all the young watch brands will lean more and more towards this business model which has proven itself. It nevertheless requires a perfect mastery of digital marketing (social networks, relations with blogs, affiliation, SEO, online advertising, etc.), which is not the case for all young watch brands sometimes created by enthusiasts of watchmaking without advanced training in this fairly technical field, but essential in 2020.

Note that the 2 months of confinement had an impact on the production workshops and we can anticipate a slight delay on the various models pre-ordered from certain brands.

All of the brands that responded to us are very confident about their future. Obviously, there are still uncertainties for everyone about "post-Covid", Yannis Panigas confides to us, for example, that "it is rather the possible change in consumer behavior that will have to be understood after this crisis. We will make the necessary adjustments to best meet their desires, unless everything goes back to *as before* very quickly, as has often been the case after previous crises...". The co-creator of lonis believes in "a quick and positive recovery".

We note a great optimism in Nicolas Pham who tells us that "although Beaubleu is in a period of strong growth, we want to build the brand at our own pace, a long but healthy and sustainable process in our opinion. Take the time to make things and watches that have real meaning, both in our creation, our productions and our collaborations" Nicolas also salutes the solidarity of the watchmaking world during this crisis: "We talk about the difficulties of the environment, but the Covid has shown an astonishing mutual aid and solidarity between the different actors. I know that some of our ambassadors are your avid readers, I take this opportunity to thank them again on behalf of the whole team!"

It is Code41 who found the best solution to the ambient doldrums by throwing a new project in full containmentbaptized The Stopwatch ! The brand's thousands of fans are invited to "co-design" this future model by choosing the mechanical movement of the future model. We are also delighted that the votes are overwhelmingly in favor of a dedicated Swiss mechanical movement.

I hope this article has been of interest to you. I find it rather reassuring for young watch brands that had opted for a highly digitized model. Here are the sites of these 3 brands if you wish to order one of their models:

- Code41,- Beaubleu,- Lonis