What needs the luxury watch industry to do to soar and what opportunities does this present for both heritage brands and newcomers?
The Swiss watch industry has dominated ever since the 1800s when farmers began assembling handcrafted mechanical watches during harsh winter months. Today Swiss watches are synonymous with luxury and prestige. But can the Swiss watchmaking industry survive?
Millions of consumers are investing in the convenience of having a mini-computer strapped to their wrist, after all why would you wear a watch that can only tell the time when a smartwatch can answer your calls, text your friends and track your fitness goals? The release of the Apple watch, and the many other designs which followed suit, revolutionized watchmaking.
However, for traditional and new watch collecting aficionados, a smart watch is the equivalent of a factory van to an exotic car collector – it misses the point entirely. Even watches that integrate traditional craftsmanship with the functionality of digital technology will fail to capture the attention of true collectors.
Classical watchmakers have an opportunity to capitalize on and appeal to an emerging market of watch collectors: a generation that grew up with technology and rejects its omnipresence. As the popularity of mindfulness activities such as yoga and meditation peak, so too do the low-tech, slow tech, neo-luddite and tech-free movements. A growing swathe of people reject wearables that ‘ping’ us away from the present moment.
Although collectors may stick to classical models, consumers have come to expect a curated, technology-driven discovery and buying experience. For example, a magazine advert can now include augmented reality (AR) links, which mean if you put your phone over a photo, an immersive video about the watch can begin to play. This can lead to increased sales and help a traditional brand reach a tech-savvy audience.
*Creativity and innovation*
Season after season, classical watchmakers release a new edition of a vintage watch – “best-selling vintage watches reimagined.” However, mature brands can no longer afford to play it safe as independent watchmakers challenge them.
While the Swiss watchmaking industry is full of staggeringly creative and talented people, they often work for organizations driven by the bottom line and relying on their reputation and heritage – not their innovation. An overreliance on profits may translate into lost creativity and a tired routine of re-releasing best-selling models.
Watch brands that seize the opportunity to make the ideas of the past relevant in the 21st century are more likely to cement their place in the industry and its future. By looking to the future, rather than to the past, the watch industry has an opportunity both to remain relevant and to reach new consumers. By constantly looking backwards at design, it will fail to achieve either.
*Artificial intelligence (AI)*
The power of AI to drive intelligent marketing has begun to evolve the watch industry as we know it. A start-up based in Singapore for instance, uses AI to group data from billions of social content updates into topics of interest by mapping out the emotional engagement with each topic.
This insight can help ensure data-driven growth for industry players. For example, if we study new watch brands with a price point below $500, we can reveale some very interesting insights that watch brands can capitalize on to ensure they are creating watches that people really want. For example; people have a strong preference for Swiss automatic watches, like diving, pilot, and dress watches; they prefer 42mm watches or small 38mm watches and have a neutral opinion about 40mm watches; nato and rubber straps are the most popular; and the most popular colors are blue and black. This kind of insight can help reduce the risks when launching a new watch, and enables a brand to combine innovation with design aspects that consumers want.
Baselworld has long been the most important event of the industry’s calendar, however unfortunately it is not the only industry player which can offer behind-the-scenes access to new watch innovations and releases. Social media influencers, for instance, can target millions of people in a way that can be tracked and analyzed for impressions, engagement, and efficiency. Therefore, Baselworld must now reconcile its iconic existence connecting passionate collectors and watchmakers with novel forms of marketing and technology.
For instance, Baselworld might consider live streaming more of its sessions, or enabling exhibiting watch brands to host sponsored webinars for global audiences. More and more conferences are selling to an online audience as well as the offline visitors. Issues of time, the impact of travel on the environment, and the cost of visiting are all eroding visitor numbers, but an event can still be a huge success if it embraces the online world; opening up to virtual visitors from across the globe. Leveraging AI and new innovations in communications technology, Baselworld can ensure its offline event generates a wealth of digital data. In so doing, Baselworld may be able to offer independent brands actionable insights from one of the most valuable microcosms of the watch industry.
*An investment within reach*
Luxury watches combine high-end Swiss craftsmanship and timeless design into a desirable object that will stay with collectors for decades to come. Whilst price points for Swiss-made automatic watches can exceed 100,000 euros, watch collecting is no longer an investment beyond reach. Advancements in manufacturing and factory-direct retail business models have opened up luxury watch collecting to new markets.
These business model innovations are not about cutting costs or quality – it’s about finding new, innovative ways to sell direct to the customer, eliminating traditional retail outlets with large mark-ups, and delivering the savings to the customer.
By looking at innovative ways to connect with customers, and reduce costs without compromising on design and quality, there is an opportunity for start-up brands to create another tier in the watch collector market, attracting new buyers with a slightly lower price-point.
There will always be a place for the very high-end watches, but micro-brands in the 2,000 to 5,000 Euro retail price point will be fierce competitors as consumers seek value, relevance, and an alternative to the status quo.
Source: Jewellery Focus