In an exclusive interview, Nomos Glashütte boss Uwe Arendt talks to QP about how the controversial Autobahn has surpassed all expectations, his watches’ rising prices, and why he’s convinced his decision to embrace the grey market is the right one
By Robin Swithinbank
In 2011, Nomos opened the doors of its converted railway station factory to the British press for the first time. It had launched in the UK at SalonQP the year before and it was looking for some coverage. I was one of half a dozen or so invited to explore this unconventional German watch company, and found a brand very comfortable in its own skin.
The story of watches that were the philosophical descendants of the pre-Bauhaus Deutscher Werkbund movement was convincing. They were fuelled by pretty movements made in-house and cloaked in Spartan cases and dials, and then tagged with industry-low prices. The brand had a sort of understated swagger about it. There was even something in the Shell Cordovan leather straps, taken from ‘the noble buttock area’ of a horse, as the press release had it. The press – and consumers – were smitten.
Since then, Nomos has had a good time of it. It’s introduced a suite of in-house automatics (the Neomatiks), a raft of new models and special series (such as Ahoi and At Work, alongside low-volume fine watchmaking party pieces Lux and Lambda), a state-of-the-art manufacturing facility on the outskirts of Glashütte, and even its own escapement, dubbed – with the brand’s typical irreverence – the Swing System.
But exactly how good can only be judged with a finger in the air – the company remains independent and these days gives little away. In 2011, chief executive Uwe Arendt told me he did 20,000 watches a year and had plans to hit 50,000 within five years. Such figures are hidden now. All we’ve seen recently is an annual report showing that in 2016 turnover was up 24 per cent – not bad in a year when the Swiss watch industry took a hammering (down 9.9 per cent).
A number of things have changed in those seven years, besides the corporate reticence. Mr Arendt was adamant prices would stay low, but there’s no doubting they’ve gone up. What we can say, and QP can reveal exclusively, is that the investment in the Swing System, now tallying €12 million according to NOMOS, was funded to the tune of €3.2 million by the EU. While we could debate the way the EU spends its euros, someone there was clearly impressed by the NOMOS business plan.
Nomos, therefore is growing up. Once a quirk, it’s now a player.
Last month, I went back to Glashütte and to the company’s creative hub Berlinerblau in Berlin to talk again with Mr Arendt and to ask what his company stands for these days. With its indulgent design, is the Autobahn really a NOMOS watch? Why have prices gone up? And what’s the deal with the highly public Wempe break-up?
QP: Mr Arendt, good to see you. How’s business?
Uwe Arendt (UA): Business is good, thank you. Our new calibre DUW 6101 [the first Neomatik with a date] has been a success, as has one of the new watches it sits inside, Autobahn. This year, Autobahn has sold out, which has surprised us because it’s on the expensive side for a Nomos watch.
QP: Yes, it caused a bit of a stir at launch at Basel this year – not just because of its price, but because its design is more indulgent than typical NOMOS models and many people said it didn’t fit the brand. What was the thinking behind it?
UA: It’s true that Autobahn is not what you’d expect from Nomos in terms of design. Werner Aisslinger, the designer we worked with on it, said you’ve done clean, straight dials for so long and now it’s time to step away from that and to be a little braver, to focus more on the design. That was the idea behind it. But Autobahn is still clean in terms of design. It still speaks the Nomos design language.
QP: Does this set a precedent?
UA: No, Autobahn is probably as bold and brave as it’s going to get for Nomos. It was important to do something new to speak to a slightly different audience, an experiment. It’s a watch that we really like and will continue producing. The whole collection is still focused on Bauhaus and understatement, though.
QP: Has it brought in a new customer?
UA: Of course, you can never really tell who’s buying your watches. In this case, is it someone who’s previously bought a Tangente and is now buying an Autobahn? Talking to customers, talking to retailers, I get the impression Autobahn customers are people who’d never really looked at Nomos watches before.
QP: What is it about the watch that has done that?
UA: Mainly the size, as well as the whole design of the dial. That draws people in, attracts attention. You notice it more than Tangente. It stands out more.
QP: Are your watches too small, then? Are we going to see bigger watches from Nomos?
UA: Yes. It’s a simple change, but the new DUW 6101 movement was designed for larger watches. Men buy our watches now who didn’t before, because the watches were too small for them.
QP: Since we spoke last, your prices have gone up, even taking into account inflation, when you said they wouldn’t – why?
UA: You’re partly right. We still have a focus on the hand-wound models between 1,000 and 2,000 euros. Tangente is still our best-selling model. In the time you’re referring to, we’ve introduced watches with the Neomatik movements, and of course we’ve had to increase the prices because the technology behind them is more complex and more expensive. The Autobahn has a complex dial shape and so it’s more complicated to produce. So we’ve had to adapt the prices in the end. But still, all our watches remain between our established price range between 1,000 and 5,000 euros.
QP: The introduction of the Swing System must have affected prices?
UA: The development of the Swing System had no impact on the price of our watches at all. It was a huge challenge to develop it, but actually we can produce the Swing System in-house for the same price as the Nivarox supplier.
QP: Why doesn’t everybody do that then?
UA: I don’t know! But to be fair, there was an investment of 12 million euros behind it, and not everybody can do that.
QP: How are you accounting for that investment then?
UA: With every watch, just a little bit. It’s been like this since 1992 when we launched our first watches.
QP: Do you think there’s a perception that because your watches aren’t so expensive, the quality is lower?
UA: In some markets, yes. There’s something to it that in some markets you put the price up and people will buy it because it’s more expensive. But that’s not what we do. Our prices make sense and cover costs, with a margin on top. For the Autobahn, it’s £3,800, but that’s calculated in a very fair way. I don’t believe that increasing prices without improving quality will give the brand longevity. Nomos is known for being between the 1,000 and 3,000 euros range, with some watches up to 5,000 euros. That’s what we’re good at. Lots of the Swiss companies come up to us and ask how we do it, because they can’t offer that quality at that price.
QP: Is it partly because you’re in Germany rather than in Switzerland, where wages are higher?
UA: No. Lange is based here, and it’s the same as Patek in price range terms. Production costs are lower, but still. We couldn’t just increase the prices – people wouldn’t buy them then, because it wouldn’t be Nomos. We have our design position and our price position.
QP: How many watches are you making now?
UA: That’s confidential.
QP: Ok, in which case, can you tell us how much you’ve grown – over the last 12 months, say?
UA: In 2017, results were the same as the year before. But in 2016 we were up by 24 per cent.
QP: The industry had a terrible year in 2016 – how did you achieve these figures?
UA: The Neomatik arrived, for starters, but also we’ve never been too dependent on the Asian market, so when the Swiss went down, we were able to go up. Our biggest market is still Germany, followed by the US where we have a New York office. The UK is our sixth or seventh biggest market. More than half our business is in Germany.
QP: That leads us inevitably on to the fallout with German retailer Wempe after you announced you were partnering with grey market online retailers Chronext and Chrono24. Why did you decide to do that?
UA: The fact that brand-new and sought-after Nomos watches were being offered on Chronext at discounted prices had always been a matter of great concern to us. All previous attempts to solve the problem had been unsatisfactory. Now, as an official partner, Chronext adheres strictly to our full-recommended retail price when selling new Nomos watches worldwide. By contrast, our Nomos brand boutique on Chrono24 offers refurbished timepieces that have previously been used at trade fairs, on press trips, or which have been returned by our retail partners. We tell customers the history of the watch, provide a two-year warranty and clearly display its unique registration number. This way, customers can enjoy all the benefits of purchasing directly from us, and makes the prospect of buying from a grey market seller on Chrono24 considerably less attractive. We believe the strategy will result in a dramatic reduction of grey market sales over the longer term.
QP: Are you surprised at the reaction to your decision?
UA: We have clearly communicated our business strategy – specifically with regards to the grey market – with our whole retailer network, and the response has been generally positive. We were surprised by Wempe’s decision, but it has proven to be the exception rather than the rule.
QP: Do you think other brands should do the same and work with grey market retailers?
UA: We see the grey market as a significant challenge for the watch industry as a whole – this is by no means a problem that only affects us. Furthermore, online sales are not going to stop – but continue to grow. It is for each brand to develop a strategy that works best for them. For us, the most important result is that Chronext is no longer a major source of grey market sales for new Nomos watches.
QP: There are clear tensions between the established bricks and mortar retailers and their disruptive online competition – for the likes of Wempe, isn’t this a case of adapt and survive?
UA: While we do not want to speak on behalf of Wempe and their business strategy, we do know that they are planning to launch an online project in the near future as well. More generally, a significant number of our retailers do already have an online presence to support their in-store business.
QP: Do you expect to be able to repair the relationship with Wempe and work with them again?
UA: Nomos Glashütte and Wempe have worked closely and successfully together for a long time. We deeply regret their decision to stop working with us. For the time being, however, there are no further updates.