With the first quarter of 2017 behind us and both SIHH and Baselworld complete, now is as good a time as any to reflect on the state of the luxury watch industry. It’s no secret that the past two years have seen a steady decline in sales. Will 2017 continue on a downward spiral or will sales finally stabilize (and perhaps even grow)? What are watchmakers doing in response to the market conditions? What are the expectations of today’s luxury watch consumer? Let’s dig in.
Experts are (Cautiously) Optimistic
Judging by what some key players in the industry are publically saying, it seems the industry is cautiously optimistic. Nicolas Bos, CEO of Van Cleef & Arpels told Reuters, “We hope to see a year of stabilization and consolidation.” Jean-Claude Biver, the leader of all things watches at LVMH, added, “The worst seems to be behind the Swiss watch industry.”
Swatch Group—home to OMEGA, Blancpain, and Breguet—took it one step further. The company officially declared an end to the downturn and emphasized that 2017 has seen “very good growth” so far.
On the flipside, reports out of Baselworld cited a very different story. It was clear that there were fewer exhibitors and attendees at this year’s edition of the industry’s largest fair. Brands are being more cautious with their budgets, with many complaining that the cost of exhibiting at Baselworld is extortionate. In fact, Baselworld has already announced that next year’s fair will be two days shorter.
Adding fuel to that uncertainty, The New York Times reported that there’s been a 26% drop in Swiss watch exports to the US compared to last year. This is especially significant to the industry since the US market is the largest importer of Swiss watches after Hong Kong.
So do industry insiders know something the press doesn’t? Or are they just playing the marketing game and painting a rosier picture than reality calls for? As usual, the Swiss watch industry is frustratingly shrouded in secrecy.
Playing it Safe
One thing that isn’t a mystery? Luxury watchmakers are playing it safer this year than any other in recent memory. One look at this year’s releases and it’s evident that it was the year of “vintage-inspired” timepieces. Rather than new models, several brands are turning to the ones that have brought them great past success: Cartier’s Panthere, TAG’s Heuer Autavia, OMEGA’s 1957 Speedmaster, and Rolex’s “Red” Sea-Dweller, to name a few. This is probably further compounded by very vocal vintage watch collectors and horology press who actively yearn for “the good old days” of elegant timepieces.
Another tried and tested tactic to get more shoppers to is to drop prices. Many brands did just that by introducing more accessible models, including Jaeger-LeCoultre’s Master Control Date, NOMOS Glashütte’s Club Campus, and steel versions of the Rolex Datejust 41, Lady-Datejust 28, and Sky-Dweller.
However, “playing it safe” may actually be a dangerous move for the industry. Sticking to what worked in the past certainly does not guarantee future success—particularly when applied to a younger generation. Luxury watches are not necessarily appealing to millennials, who tend to seek exclusive experiences rather than just exclusive products. Many top timepiece brands don’t even have a comprehensive online strategy. Therefore, they are missing out on an opportunity to communicate with the next generation of potential watch enthusiasts. If the luxury watch industry is serious about attracting a younger audience, they will have to find ways to offer more value.
Consumers Want More for their Money
Speaking of value, it isn’t just a younger crowd demanding this. As luxury watch enthusiasts become savvier, they’re buying smarter. No longer satisfied with dropping five figures on a new watch just to wear a well-known label, consumers are becoming pickier—rightfully so.
And that’s more complicated than just a price point.
As illustrated by the booming secondary market, consumers are happy to buy pre-owned timepieces in solid condition. They’re also willing to spend more on real vintage (not just lookalikes) timepieces that come with interesting stories. Plus, serious collectors are prepared to spend a fortune on rare timepieces as demonstrated by record-breaking prices at auctions. Furthermore, independent watchmakers are gaining more attention from consumers who want watches that are markedly different from mainstream offerings.
While there’s plenty of uncertainty in the market, one thing is certain: brands have to listen to their audience. The industry will not survive if it retains the ethos of “if we build it, they will come.”
Consumers have more choice (and information) than ever before. Therefore, the luxury watch brands that will not only survive, but thrive, will be those that can continue to produce timepieces that people will want to invest in.
Image Credits: Header; Baselworld.