Swarovski: Brilliant Disruptors

swarovski logoBecause of its strategic location and impeccable free-market credentials, Austria has long been a popular destination for the international investment community. Now, thanks to government efforts to improve the regulatory business environment, the volume of FDI flowing in is again rising.

One of Austria’s principal attractions has traditionally been its arts and crafts sector, particularly the cutting-edge customised jewellery pioneered by Swarovski. An independent family-run business that started out 125 years ago as suppliers of cut crystals to the garment industry, Swarovski moved into the business-to-consumer (B2C) domain in 1976. Since then, it has won a well-earned reputation for its commitment to design, creativity, and technological innovation that shines through its lines of jewellery, watches, accessories, figurines, and writing instruments.

The Swarovski Group’s Consumer Goods Business (CGB) division is well positioned to benefit from anticipated economic growth both at home and abroad. “There is a palpable sense of optimism among the Austrian business community about the country’s growth prospects, and the likelihood of further investment,” says Robert Buchbauer, member of the executive board and CEO of Swarovski CGB.

CGB has a solid platform to build on, with 3,000 retail outlets in 170 countries across Europe, the Americas, and, critically, Asia Pacific. “The rise of the Chinese middle class has had a profound effect on both the domestic market and global markets,” he observes. Recent estimates indicate that some 145 million Chinese annually vacation abroad, where they spend a staggering $115 billion.

Robert Buchbauer CEO SwarovskiThere is another reason for Buchbauer’s optimism: the company’s track record of honoring its founder’s commitment to quality and innovation. Buchbauer is the fifth generation of the family to hold a senior management position, and he is immersed in the traditions that his great-great grandfather Daniel Swarovski initiated. By hiring Nathalie Colin as creative director in 2007, he has instilled inspiration and innovation into the entire Swarovski design process.

“Swarovski was founded on disruptive technology,” Buchbauer explains. “Back in the 1890s, everybody was hand-cutting crystals, but with limited capacity and uneven quality of production.” His ancestor’s breakthrough was the invention of a machine that used hydro-powered cutting technology, which allowed him to supply his clients with many more quality crystals with far greater consistency. “He revolutionized the industry,” says Buchbauer.

The company has been innovating ever since, and CGB itself owes its existence to the engineer who decided to melt two crystals together into the shape of a mouse. That small act of creativity coincided with the Winter Olympics in Innsbruck in 1976. Almost as an experiment, the company placed some of its figurines in shops in the Tyrol capital and surrounding ski resorts; they were an instant hit, and Swarovski’s Consumer Goods Business was born.

In 1999, Buchbauer, a visionary innovator in his own right, masterminded the launch of CGB’s first watch collection. “Previously, our watches were rather simple, with a little bit of crystal and specific Swarovski design—but we looked at the strong figures and asked: What would happen if we took the watches segment to the next level? So we evolved this part of the business, and we are now turning over close to $200 million. It was a good move for the company.”

Buchbauer is also responsible for instilling this same spirit of innovation into the 6,000-strong workforce at Marigot Jewellery in Thailand, one of the largest and most innovative manufacturers of fashion jewelry and accessories in the country.

Swarovski watchesUnder his stewardship, CGB is enthusiastically embracing new technology. A visit to one of its design studios would have delighted and astonished Daniel Swarovski, as he watched a new range of jewelry being created on a giant touch screen (often remotely connected to another studio elsewhere in the world) and the prototype being assembled by a 3D printer.

A stroll around Swarovski’s flagship store on London’s Oxford Street or its new store in Chengdu, China—featuring intimate shopping experiences at “sparkle bars” that offer try-on jewelry collections, high-definition screens showing social media feeds, and a dedicated stylist consultant—also would have impressed the founder.

“If you are not willing to change in the way that your customers want you to, then you are going to run into problems,” Buchbauer says. “Today, it is not just about the product, it is also about functionality, the store, and the whole retail experience.”

Daniel Swarovski’s legacy is clearly in capable hands.