Following on from the Swiss Watch industry Fighting back article where I briefly mentioned the added pressure the SmartWatch was putting on the already besieged industry. I want to look at how against all odds the luxury watch market is surviving the digital age.
While I was researching my piece I came across an interesting piece by Simon Garfield of the Guardian about the survival of the luxury watch industry. His main bone of contention was our reckless consumerism and addiction to all things that glister which really stuck in my craw. Not as you might expect, I wasn’t insulted, angry or dismayed, but I was captivated by his clarity of thought and honest portrayal of our own human needs and flaws.Join me as I take you on a short journey through the psyche of the not so average consumer.
Making A Spectacle
Every year for 8 days the big players in the watch industry congregate at their annual ‘Baselworld’ exhibition in Basel Switzerland. Their aim of ‘showing off’ their latest objects of desire seems works well, as organizers say they attracted 150,000 paying visitors at 60 CHF a head and 1,800 brands this year.
Baselworld 2016 saw many of the usual brand exhibitors, Breitling with its pavilion, Omega’s obelisk, and a palace for Rolex, obviously. TAG Heuer draw some attention using to their booth by parking up a Formula 1 racing car. Other brands, Breguet, Hublot, and Longines where there plying their version of luxury lifestyle as the beautiful men and women attracted the attention of potential customers.
Breitling was showing off some 60 or more of their latest timepieces, among those models on display was the Avenger Hurrican for £6.500, and the Superocean Chronograph M2000 Blacksteel at £3,850, demonstrating the classy and expensive way of telling the time. That’s just the beginning if you visited the Rolex Palace you could have picked up the Oyster Perpetual Day-Date 40 in platinum for just £41,700, while the platinum Patek Philippe Split-Seconds Chronograph was available for £162,970. While these prices seem out of this world for a lot, if not most of us, for some collectors this is an entry-level buy in.
Celebration Of Precision
The show is a celebration of two things. Firstly, the mastery timekeeping that includes the refinements and years of training, the skills passed down through generations to create objects of beauty and precision.
But also, it’s about all the things that make humans what we are. It’s about conspicuous consumption, a celebration of excess and unnecessary bling, that says, just because we can, we should. Or as Oscar Wilde said,
“Moderation is a fatal thing. Nothing succeeds like excess”
So, here we are, the modern human at the peak of our civilization. We can design and produce intricate timepieces with complications only serving to confirm our ability to create functions beyond usefulness, but by the same token, these complications are pleasing to the eyes and soul. If you came face to face the Aeternitas Mega 4 from Franck Muller, assembled from 1,483 components, you would celebrate our human ingenuity, and gorp at the 36 functions, that serve little purpose, and a price that makes ones’ eyes water at £2.2m.
In these uncertain economic times, and competition with SmartWatches like the Apple Watch, Baselworld showed little sign of bowing to the idea of cut-price concessions. In fact, it would appear the converse was true, making the exhibition a case study in how the recession barely reaches the top of the tree. See how the Apple’s SmartWatch’s fortunes how turned as it sees a 72% decline in sales compared to the same period last year.
What’s With The Bad Attitude?
Hold on there, I’m not dissing the Luxury market or those blessed to have the cash to take advantage, I’m not finished yet.
I’m just making a point here about the stability of this robust market that’s been through a rough time but seems to be weathering the story better than expected.
The Big Question.
Why are we still interested in buying these over-engineered and redundant mechanical devices when we can get much more, for much less by using technology? And what’s the secret keeping the watch industry alive and flourishing in the digital age, against all odds?
Well, ‘Baselworld’ sends a message that the market hasn’t stumbled and still forges forward. ‘They‘, just like ‘you‘ and ‘I‘, don’t need a Swiss Watch to tell the time, nor a cheap $10 piece for that matter. No, we all have a cell phone and access to accurate time from any of the devices we carry on a daily basis, but that’s never stopped anyone wanting the best timepiece they can afford. It’s something way beyond having the correct time. Watches, like words, half reveal and half conceal something about ourselves.
With a healthy sense of irony, I can see the main point of accuracy is sidelined in favor of a move base need. The Luxury watch has a secondary function to many wearers, providing a status symbol, a badge of honor and achievement. It’s something that says “I’ve arrived!”.
Still, a further irony to this story is ..While the master watchmakers of yesteryear put accuracy above all else, they had no real concept of full schedules, multiple unbreakable deadlines, and certainly not “quality time”. No, Back then the craft and precision were its own reward and its own reason for being.
There is a ton of data out there that illustrates how the Swiss Luxury Watch market is managing all the pressures on it, through their early arrival, through the Quartz war, the recent global recession, up to current day peaks and troughs. All of this is very interesting if you’re into data analysis.
If you want to know why the Swiss Watch industry has survived and still survives today you need only look at their response to the Quarts war in the 1970s. After the Swiss market share fell from 50% to 15% after the introduction of the cheap Quartz battery powered watches, they fought back with something out of character, in plastic, it was cheap and also powered by quartz and battery. It was called the Swatch.
After breaking all their own paradigms, the Swiss pushed forward the now famous Swatch brand creating colorful, youthful watches advertised on MTV to create a desirable product that reinvigorated their bank account.
Today the Swatch group are:
Prestige and Luxury Range: Breguet, Harry Winston, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Omega.
High Range: Longines, Rado, Union Glashütte.
Middle Range: Tissot, Balmain, Certina, Mido, Hamilton; Calvin Klein watches
Basic Range: Swatch, Flik Flak.
The Take Away
Creating precision hand engineered pieces on a small scale requires skills and time, so costs a great deal of money. The good news is that people who appreciate and can afford this work are happy to buy these pieces. After the introduction of the Quartz movement, accuracy was affordable to a wider range of consumers.
The life or death battle that followed, the Swiss Luxury market bounce back and remain on the forefront of watchmaking for a multi-layered marketplace. Since this time, recessions have hit and a new digital age has risen to take on the old school, but they continue to prosper.
Their prosperity is a result of a never ending fight to maintain and better their products. They have entered into the SmartWatch market to meet their competition, they continue to create fine quality timepieces to meet the demand from their loyal customer base, and lastly, we see they have allowed their product to enter the gray market.
To gain and maintain the greatest reach across markets the Swiss Luxury Industry still maintains its high prices and exclusive boutiques. However, in addition to these, many brands can be found on discount watch stores at heavily discount prices through bulk purchases by online retailers. These retailers are very rarely authorized dealers, which allow them to save money on bulk buys and pass on the saving. Authorized dealer can not buy at lower prices or set their own retail prices.
It looks like everyone wins.
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