Buchbauer’s plans have met stiff opposition from other members of the family, who accuse him of causing irreversible damage to the components business run out of Wattens. While his critics concede that the company needs an overhaul, they say the cuts are too deep.
“The Swarovski family is shocked,” Paul Swarovski, a member of one of the Austrian arms, said in an interview. “There are still lots of opportunities to sell billions of high-quality crystal components around the world, and Robert Buchbauer has to come up with ideas on how to gain these customers rather than shutting things down and laying off expert workers.”
Whether Buchbauer gets his way remains unclear. His detractors say he needs approval from a shareholder meeting, which may be hard to come by given the splintered nature of the family. Buchbauer claims he has the required backing from key stakeholders.
Back in Wattens, there’s growing concern that the good times have crumbled, with 1,800 out of 4,800 local jobs in jeopardy. In a part of Austria heavily reliant on tourism, Swarovski long promised well-paying jobs for skilled workers. Employment at the crystal emporium meant a good salary, with perks from free child care to company housing to subsidized loans. There’s also an elaborate crystal-world experience in Wattens that has drawn 15 million people since it opened in 1995.
“It’s a massive shock for us here, and many families will feel the pain in coming months,” Wattens Mayor Thomas Oberbeirsteiner said. Because of the dwindling returns at Swarovski, the town is losing 2 million euros in revenue this year and has to reconsider planned investments in everything from public swimming pools to roads, he said.
The conflict raging at Swarovski coincides with changing trends in consumer behavior. Today’s shoppers like to mix high-end designers with fast-fashion alternatives, often at the expense of the more affordable branded players that occupy the middle of the market, according to Zuzanna Pusz, an analyst at UBS Group AG focused on the luxury-goods industry. The rapid rise of e-commerce has diminished the relevance of physical stores and third-party retailers, long a stronghold for Swarovski. Social media has leapfrogged print advertising and many glitzy events, where Swarovski and its shimmering swan emblem were a fixture.
Then there’s the push toward premium products and recognizable names, particularly in China. Richemont acquired Italy’s Buccellati to expand its portfolio of high-end jewelry, which also includes Van Cleef & Arpels. LVMH last year agreed to acquire Tiffany & Co. for $16 billon, picking up one of the best-known names in the jewelry market that still remains highly fragmented.
If Swarovski wants to have a future and retain its status as a globally recognized brand, it needs to make the painful cuts now, even if it risks sparking a cross-Alpine family feud, Buchbauer said.
“Bad news always creates lots of emotion,” the CEO said. “But in the end it’s about the long-term survival of this business.”
This article was provided by Bloomberg News.