The future of the luxury watch industry

June 13, 2019

In the 1800s, farmers began assembling handcrafted mechanical watches during harsh winter months and the Swiss watch industry has dominated ever since. But with so much technology at our fingertips, what does the future hold for the luxury watchmaking industry?

An investment within reach

The combination of high-end Swiss craftsmanship and timeless design make luxury watches a desirable object that will stay with collectors for decades to come.

However, these timepieces have an implied cost. Price points for Swiss-made automatic watches can exceed 100,000 euros, but 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.

And 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.

For example, we looked at how to cut out the retailer and sell directly from the factory and thus launched on Kickstarter. We did this because we wanted to ensure that it wasn’t just those with six-figure salaries that had access to the watch.

By looking at innovative ways to connect with customers, and reduce costs without compromising on design and quality, there’s 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 like Vacheron Constantin or Laurent Ferrier, 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.

Innovation will drive future demand

 While the Swiss watchmaking industry is full of staggeringly creative and talented people, they often work for organisations driven by the bottom line and relying on their reputation and heritage – not their innovation. I believe an overreliance on profits translates into lost creativity and a tired routine of re-releasing best-selling models.

Unlike the technology industry, where Google, for example, encourages its employees to focus 20% of their time on side projects, traditional Swiss watch brands lack novel curiosity and innovation. For watchmaking talent, even a few hours a week focused on creativity and lateral thinking can lead to the uncovering of new and innovative designs that can transform a brand and its earnings.

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.

Watch technology

With ever-increasing demands on our schedules, millions of consumers are investing in the convenience of having a mini-computer strapped to their wrist, such as the Apple watch. 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?

But for traditional and new watch collecting aficionados, a smartwatch 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.

Thus, 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 rejects wearables that ‘ping’ us away from the present moment. Time is a treasure, and while a watch can keep time, it shouldn’t control it.

That said, 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. By utilising new technologies watchmakers can reach new, wider audiences, and can even help consumers ‘try on’ a watch – when they are nowhere near a retail outlet. This can lead to increased sales and help a traditional brand reach a tech-savvy audience.

The industry must remain relevant

The power of artificial intelligence (AI) to drive intelligent marketing has begun to evolve the watch industry as we know it. Emotional Analytics (EMO), a start-up based in Singapore for instance, uses artificial intelligence 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, EMO recently studied new watch brands with a price point below $500. This revealed some very interesting insights that watch brands can capitalise on to ensure they’re 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 colours 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 watch industry’s calendar, and while I enjoyed the palpable, passionate energy of Baselworld in March, many independent watch brands are choosing to forego the show altogether in favour of investing in contemporary online marketing channels. Exhibitions need to embrace the future and new technology if they are to remain relevant and attract the visitors that will make the cost of exhibiting worthwhile.

Unfortunately for Baselworld, 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.

 

About the Author

Matthew Cule is a passionate collector of watches and founder of CuleM Watches, an independent luxury travel watch brand. Culem’s World GMT collection of Swiss made dual time, automatic watches are designed for people who love to travel.  Culem believes there is nothing more meaningful and amazing than travel – and no object more special than a watch, so each watch is a masterpiece, a work of art and the perfect travel companion.

Web: www.culemwatches.com

Instagram: @culemwatches

Facebook: https://www.facebook.com/Culem-Watches-509036822900736/

Twitter: @culemwatches

LinkedIn: https://www.linkedin.com/company/culemwatches/

Kickstarter: http://30e.fnd.to/culemwatches

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