Explaining What’s Wrong With The Watch Industry In 2014

Explaining What’s Wrong With The Watch Industry In 2014

Explaining What's Wrong With The Watch Industry In 2014 Feature Articles

One of the things that is really important to us at aBlogtoWatch is to discuss more than just what new watches are available and what we think you should consider when making purchasing decisions. No, we aren't going to tell you how to dress or how to be cool, surely you are doing fine when it comes to those things already. Rather, we'd like to talk about the watch industry overall, as well as things you might like to consider as collectors, or simply as people who like to own nice things.

The luxury watch industry is a very complicated and interesting entity, and frankly, I've never experienced anything else like it. Despite the billions of dollars involved each year, the watch industry operates unlike most other major verticals out there - but that is entirely a different issue. More salient is the fact that, in many ways, the industry alternates between periods of feast and periods of famine. Essentially, they are "economic bubble chasers" and will seek to go after markets and demographics that appear to be surging with new money or income. If that makes the luxury watch industry sound a bit like a shark feeding frenzy, then you get the idea.

This isn't necessarily a matter of shortsightedness, but in many instances an economic reality, because when you are in the business of selling luxury items, you are also in the business of attaching yourself to new success and rapid growth. What we all know about rapid growth and surging profits is that very rarely are they sustainable for the long term. Watches aren't things people strictly need, anymore than people need jewelry, expensive hand bags, yachts, and vacation homes. These items come when the people buying them feel comfortable to freely spend money, and loose wallets are often a result of consumers feeling confident that their coffers will be quickly replenished.

So that means economic booms are attractive to luxury watch companies and they look all over the world to find them. Since starting aBlogtoWatch, I've seen this happen in the United States, Russia, Brazil, the Middle East, and of course, China and other parts of Asia. As one economic zone collapses (think Dubai), luxury brands such as watch makers pack their bags and head to the next fertile pasture. China was a pretty massively impressive feeding ground, and it is still very important. Actually, let me rephrases that, Chinese people are what is important, China itself is less important.

Do you know why there was such rapid expansion and growth of the luxury industry in China over the last few years? Because luxury brands more or less started from nothing there. Take a place as large as China, with as many people, and grow a market. The result will of course look amazing. So China was to be the golden land of opportunity for luxury watch makers because of massive amounts of money, especially new money, and a culture that was uniquely receptive to the "good word of Swiss watches." With an almost religious fervor, many Chinese clients appreciate the values and status associated with owning a fine timepiece. The problem is that with legal and political limitations of "high-end gifting" and stabilizing business growth, the Chinese markets are "maturing." That translates into a situation where luxury watch brands aren't seeing the double digit growth numbers they were hoping for.

Chinese people still love watches though, and "shopping tourism" is still huge. From what I understand a huge percentage of the luxury watch sales in Europe and the United States are due to tourists - often Chinese - who come to the United States for good prices. In fact, from our own research it looks like the United States is currently the best place in the world to buy watches when it comes to prices.

So that takes me back to the original question of what is wrong with the watch industry in 2014? Is something wrong at all? Well, yes. Let's just point out a few of the issues that exist. First of all, interesting new watch models are scarce, prices are still unreasonable, distribution is poor, marketing efforts are often ineffective, and consumers are increasingly confused. So let me go over each of these issues in brief. This article is not meant to be an academic treatise discussing all of the problems that exist and how to fix them, but rather a starting point for discussion and to offer an aBlogtoWatch opinion on what is going on in the industry that we are a part of.

The Design Desert

A visit to SIHH and Baselworld this year in 2014 revealed to us that there is a deficit of new watch models. That means brand new collections and models are not only scarce, but so is design innovation. The translation is that brands are cautious about releasing new products because, in our opinion, they aren't able to predict what will be selling over the next few years. This is sad, because we'd like to think that brands produce the products they want to and hope that people find value in them. Unfortunately, much like car makers these days, watch brands are susceptible to considering demographics they want to appeal to and market holes they want to fill. So seeing a deficit of a lot of new products means there is considerable question about these areas.

It can also mean that watch brands are highly hesitant about spending. That is actually true. I've personally interviewed a lot of watch designers and design agencies, and they've said that for the last few years business from watch brands (to design new products) has been at an all time low. I don't think that means that watch brands are engaging in design in-house entirely. Rather, I believe that watch brands are scared and hesitant to invest in new designs and new products. It is a sign that the market does not know what is around the corner.

Skirting Around New Watch Prices

Are watch prices are too high? Of course, as a consumer it is easy to feel that way, but as an economic question, it is a matter of determining if the market can bear current price levels. So are watch prices too high for the market to bear? Yes, it seems. One of the things that we have seen in 2014 is a subtle lowering of prices, of course, in addition to an expected increasing of prices. How are prices lowering? Brands often do this by releasing new models at more entry-level price points. Even the most admirable ultra luxury brands are focused on new "entry-level price points." That doesn't meant they are cheap, but it means that brands are realizing that pricing was getting a bit too ambitious.

It brings up an interesting question of why prices go up in the first place? The watch industry is actually very price sensitive because of materials, manufacturing, and currency fluctuations. The weak dollar has been tough for the watch industry that is mostly based on the Swiss Franc or the Euro. A still weak dollar has a lot to do with increased prices, especially because doing business in Switzerland is so expensive. As is the price of materials, such as gold. So over the last few years, the high price of gold has translated into higher prices, but the problem is what happens after gold goes down in price.

Unlike lobster sold at "market rate" watches have set prices. So when luxury companies increase prices they find it really hard to lower them. Part of it is emotional, and part of it is because, from a marketing perspective, it is almost impossible to do. So right now, because gold and material prices are down, it is easy to say that many watches are too expensive.

More important is the market's overall ability to bear the prices of luxury timepieces. Prices over the last decade or two have doubled if not tripled or quadrupled for some iconic models that have been in production for periods long enough to measure their prices against inflation. One reason that prices are going up is that brands are trying to constantly upgrade their own personal image.

Marketing studies show that if you increase the prices of your product, you can often increase the consumer's perception of your product. The problem is that watch brands have often taken this to a rather extreme level. Thus, watches that people recall as being in the $2,000 - $3,000 range are often in the $5,000 - $10,000 range now. The hope is that with lower volumes of sales and higher prices, brands can reach more affluent customers and sell fewer items, but it is a risky move and many fail.

Prices are so high that core watch collectors (used to high prices) are often getting frustrated. The current surge in auction sales that you may have noticed is not about about a bunch of new collectors wanting to buy million dollar watches, but more about the surge in the pre-owned market. The majority of watch auction sales are for relatively new pre-owned watches, with some historic and valuable vintage models being auction highlights for news purposes. The success of the pre-owned watch market is directly related to consumer unrest with new watch prices. So people are still really interested in watches, but they are doing whatever is possible to pay less. That is perhaps only natural, but watch companies will also tell you that sell-through in boutiques is unpredictable. There are a few showboating watches that people get very excited about each year, but prices for the less exceptional new models are receiving consumer backlash in the form of them looking to alternative sources to buy the watches they want.

Marketing Black Hole

The good news is that watch demand is still high, and potentially growing. Much of this is spurred by the continued large spending of marketing dollars by (mainly) the larger brands. I've always been personally skeptical of marketing as being directly related to sales, but it is a proven and necessary part of a brand's strategy. The thing which is important to understand is that marketing does not create demand, marketing creates awareness, which can result in demand if a product has merit unto itself.

Marketing dollars do more than attract customers; they also attract people who want marketing dollars. Watch industry marketing personnel are totally inundated with requests for marketing dollars because many other advertisers have become increasingly unavailable. We are at an interesting point in the history of media's relationship with its advertisers and it is unclear what the future holds. Content creators such as magazines and newspapers are suffering because money is drying up. One major reason for that is that the shift to online distribution of content removed a publisher's ability to make money from subscriptions. At the outset of the internet, publishers mistakenly believed that by offering consumers free content they would be able to increase the amount of people looking at their content and thus advertising related income. That didn't happen.

In fact, what happened was a total democratization of publishing that helped make impressions an almost infinite commodity. What does that mean? It means that prior to the internet there was a much more manageable grasp of what consumers were looking at and how to reach them with relatively understandable data. Today, there are 1001 websites that claim to reach the right demographic and they fight with each other to be the lowest bidder. To make a long (very long) story short the result over the last 20 years has been the total erosion of advertising value, and a publisher's ability to charge for content. How does that go back to the watch industry?

Because watch brands are disproportionately large advertisers given their market size (a typical watch brand can put 40-60% of their income back into marketing), they are represented in many media outlets (you see watch advertisement everywhere). This has produced an entire industry dedicated to getting watch and other luxury brand dollars, and it isn't always to the benefit of their actual marketing goals because these companies are more directed to getting ad dollars than using them to spread brand messaging.

Watch brands are further increasingly reliant on outside agencies to help them make advertising decisions, which can be good in theory, but often doesn't work out that well. So the moral of the story is that despite watch brand advertising budgets being so high, it is often the case that money is mismanaged or allocated in ways that don't produce the results brands need because of publisher oversaturation, and only a small number of watch brands truly understand how to market themselves properly.

Where Can I Buy This Watch?

Watch brands have also been asked to be more vertically integrated over the last several years. That means they are being asked to design, produce, distribute, and sell their products. That is actually entirely unfair. I firmly believe that there are companies that make things and companies that sell things, and it is rare that a company is good at doing both. Watch companies really need to focus on just making things, but market realities are forcing them to do so much more.

The internet has removed regionalism in a way that has made traditional country by country watch distribution difficult. It used to be that a watch brand sold its products to a distributor, which then sold them to retailers in their territory. That is still often the case, but you can understand how the internet has messed that up. Large brands don't have issues finding distribution partners, but it is hell for small to medium brands. Thus, they have turned to direct distribution, selling to retailers personally, or have attempted to sell direct to consumers online.

What this has produced is a confusing ecosystem where, for many brands, the watch purchasing experience is unclear or unavailable for many consumers. So often potential customers are left hanging because they don't know where to buy a watch, or simply can't buy it. Ideally, the next decade should see a solution to these issues so that more people can buy more good watches on a regular basis.

Appeal To Your Base

A final topic I will discuss is the issue that watch companies often seem to be releasing products with very unclear consumer profiles in mind. When I, and a range of watch experts, see a new product by a major brand and don't understand it, that is a problem. Brands should focus on the maxim that the best products are ones that someone makes to satisfy their own needs. A product manager should be dedicated to a product he or she wants, and brands should always look to their core customers for what people want. When brands try to be something they are not, problems occur. This has happened time and time again. In fact, one of the major reasons for the recent "retro watch revival" is that brands and consumers are mostly interested in proven design. They are looking for watches that have passed the test of time because modern watches can seem oddly positioned.

Some brands are fantastic at producing watches that their core consumer base wants. Others keep trying to reinvent themselves each few years and they fail most of the time. A brand is often like a person and should stick to what they are good at and known for. It isn't a rule of nature, but is a guideline for finding the path of least resistance.

So those are some of the aBlogtoWatch opinions on what is wrong with the watch industry today, in 2014. Feel free to add, object, or elaborate in the comments.

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  • If there is a dearth of design innovation from the established brands, take a look at the independents. Sure the high end independents make cool stuff for 6 digit prices, but I’m talking about the under $10K market where there are still fresh ideas. 
    But if you are looking for those tried and true designs from a known brand, expect to pay for such “heritage” as the big brands have figured that they all wan to be Rolex and move prices (and prestige) ever northward. 
    A big problem for new/small/independent brands is the “Never heard of ’em” factor which makes customer unsure about buying a luxury item without name recognition. Wanna see what has name recognition? Look at what is faked: Rolex, AP Royal Oak, Omega Speedmaster, etc. Status value is still a big part of watch buying decisions. 
    What I find interesting is the “inside baseball” (as Ariel and John say on HourTime) industry stuff. The watch industry is all about perception, not manufacturing and cost realities.

  • ZL

    So many different interesting points in this article. For now, I just want to say that I personally love this year’s focus on vintage-inspired watches. Just over a year ago, I was wishing for just such a vintage revival, and then my wish came true. (If only I could afford more of them…)
    People complain that it is a lack of innovation, and I am all for innovation and new, modern models, but it’s not like that is mutually exclusive with what we are calling a “retro watch revival.” I couldn’t be happier with new watches based on super cool old models, updated for modern tastes and with all the latest technology. I hope that in the future, we will of course see more creativity and innovation, but that these companies will also continue to bring watches back to life. Because there are just so many awesome designs from the past that would be even better in bigger cases with sapphire crystal. So if the watch industry is listening: more please!

  • FadiBassil

    Amazing article, i fully agree.
    Regarding new watch releases, in my opinion you cannot say you released a new watch when you only changed the bezel color and used new material. The Rolex Pepsi isn’t a new watch!!!!!! The Rolex Cellini collection is indeed a new collection!

  • slcbbrown

    Outstanding and useful article.  It’s hard to disagree with much, and it’s nice to see the business discussed in some depth and intelligently.

  • srvlf

    Interesting points.  I think the appeal of retro or classic watches is something like buying an indexed mutual fund.  It isn’t sexy, but it should be good today, tomorrow, and down the road.  We may be better off than we were 5-7 years ago, but I think many people are still pretty careful with their money.  As mentioned, watch companies feel the same and are releasing more “safe” bets.

    Swatch Group seems pretty good at focusing on their customers.  Meaning their brands seem to know who they are and to whom they appeal, and stick to it.  And when a person is ready to move up from Tissot, there’s Omega and others within the family.

    Pricing is tough.  The internet has created transparency which for many things is very good.  However, when watches increase in price way beyond inflation and for no other apparent reason than to inflate the perceived value/prestige of the brand, then there is a problem.  But I think that ultimately, the market will decide.

  • PlanoTXWX

    Analogize the watch industry to the old car/muscle car business. I think you may get glimpse into the future. A Barrett-Jackson for watches—yes, I think so.

  • vmarks

    But what about what are essentially dead-brands-walking that need to re-invent themselves?

    What about the process of establishing a new, different, reputation that is a split with the past?

    I’m thinking of Bulova. Bulova had a long and storied tradition as one of the fine American watchmakers, with a claim to being approved for NASA instrument use on the Moon Mission, and they squandered it. Now they’re going through the hard process of clearing old stock, changing retail channels (please, no more selling at Kohl’s and Ross Dress For Less), and weeding out the ghastly designs and materials.

    They have a harder mission than a young, new brand, because they have to not only stay true to their new selves, they have to change everyone’s minds that they aren’t their old selves.

    Smartwatches are another difficult one to square with this “build and maintain the reputation that you are true to yourselves” position. The smartwatch reinvents itself with each new technology advance, and the real reputation work here is, “sport dedicated, vs dress – interact-with-it-all-the-time, vs. passive information when you need it” philosophies. It’s nearly impossible to make a timeless smartwatch because the technology shifts require it to be timely.

    I’m uncertain that the best prices are in the US Market. I say this because if that were true, Costco wouldn’t have been able to make money on the arbitrage of supplying gray-market Omega watches to US consumers. A former employer who bought a Rolex Submariner would have bought one in the US instead of in a boutique in China. Although, the Chinese people I know are masters at knowing which market to buy in, Singapore for this, HK for that, Taiwan for other types of goods…

  • vmarks

    I think with the advent of the internet, the gray market eventually just becomes, “the market.” These artificial restrictions end up going away. There’s something very offensive about buying a legitimate product and being denied service or warranty because it was purchased through a non-blessed sales channel. Camera manufacturers have done this for years. If you bought the gray market version at a better price, you had no warranty, even though it was their product and they acknowledged it as such.

    The problem that the manufacturers face is ending up in a world where the sales channel is, “You can buy this from anyone, and we’re anyone!” Value is in part perceived from some scarcity, so they have to create the reputation of “you can’t get this from anyone but us,” which is the factory-owned boutique or direct sales route.

  • zznhl1

    Everyone would  likes a Rembrandt, a Piccasso, a Monet or a Carrot, but few of us can afford to put them up on the walls of our lounges. We buy copies, good quality coppies, and learn to appreciate the originals from them. 
    Modern technology should enable the high end time piece creaters to develope more obtainable versions of their master pieces.

  • Fraser Petrick

    In 1966 I bought an Omega manual wind watch for $95 at the Toronto International Airport Duty Free Shop. At the time, to me, it was just a watch. Almost 50 years later I bought a Timex for $65 and a Bulova for $400. Both are accurate timepieces; one looks cheapish and that’s ok; the other is gorgeous.
    As a can’t-help-myself watch wish list builder I salivate over a $30,000 Rolex, realizing that I am still a prisoner of that capitalist shell  game as when a New York newspaper raised its prices from 5 cents to 7 cents, and  sales went up because consumers ASSUMED that quality had gone up.
    General Motors is recovering partly because it has shed Pontiac, Oldsmobile and Saturn. The watch industry and the wallpaper industry share a common assault on the poor, dumb rube of a consumer; ie., there’s too much friggin’ choice out there! Go with what works rather than coming up with a watch-du-jour at  insane, anti-Calvanist prices. Come to terms with quartz being a better technology than old fashioned/dizzyingly complicated mechanical. Chip away at the trap that pretends that a $2000 watch is twice as good as a $1000 watch. And to consumers: realize that you’re being manipulated by bling. In the meantime I still want my Patek-Phillippe Calatrava. Ooo,  so sparkly!

  • BillyRay

    Why do I want a  Patek-Phillippe…because it’s a  Patek-Phillippe 🙂

    BillyRay

  • Fraser Petrick

    MarkCarson  The “Never heard of ’em factor” is a bitch. A local jeweler has an Epos watch. It screams quality, but there’s zip for marketing back-up. The Canadian distributor has cut the small Mom and Pop Swiss brand loose – for business reasons. The retailer has cut the price in half but consumers are reluctant because of the brand’s anonymity. I have come close to buying it as  gathers dust.. $5000 reduced to $2500 is still a lot of money. Do I take a chance with an unknown product though sold by a reputable local retailer – or go online for something well known and safe?

  • Fraser Petrick

    The crow (voiced by Dom DeLuise) in Don Bluth’s 1982 animation “The Secrets of NIMH” was always distracted by “sparklies”.
    Money aside, I am the crow to the current watch industry. Oooo, look how it sparkles in the jewelry store lighting!

  • vmarks

    zznhl1 Actually, Picasso and Dali are surprisingly affordable.

  • srvlf The Swatch Group is real good at telling their brands where they are to position themselves in the pecking (and pricing) order. Sort of like the way GM used to see their customers – start with a Chevy, then move up to a Pontiac or Olds along the way to a Buick before ending up with a Cadillac. Is that “appealing to their customers” or manipulating them and stifling the brands in their stable?

  • garph

    “…one of the major reasons for the recent “retro watch revival” is that brands and consumers are mostly interested in proven design.”   The end.  Nice Ariel!   g

  • Fraser Petrick Thanks Fraser. Epos is a brand I was unaware of. Looking at their website I see that they have a surprisingly large collection. And they are oddly/thankfully very up front about what movements and DD modules each watch uses. No “house caliber numbers/names” to hide the true origin of the movements used. Good for them.

  • Fraser Petrick

    zznhl1  Rembrandt, Picasso, Monet, Carrot….What’s up, doc?

  • zznhl1

    Fraser Petrick zznhl1 And whats wrong with the carrot in art!
    http://fineartamerica.com/art/all/carrot/all

    🙂

  • zznhl1

    vmarks zznhl1 For whom?

  • aleximd2000

    zznhl1 i don’t buy copies
    if I cannot afford a real thing rather I’ll buy a beautiful swatch and I have no complexes at all.

  • Lkcons

    Thanks Ariel for an excellent article!

  • zznhl1

    aleximd2000 zznhl1 …let them eat cake. Swatch is good for sure, but why be a victim of overpricing due to greed, driven by the perpetuated myth that if it costs more it MUST be good…see the other interesting feeds in this string 🙂

  • Ulysses31

    Novelty for the sake of being novel often results in whacky, idiotic ideas like, oh I don’t know, bullets in watches or watch straps stitched together with Lady Gaga’s pubic hair.  You know; stuff done to stand out and to shock while having no lasting appeal.
    I was perusing some vintage watch catalogue a few weeks back, and felt like I would’ve happily bought half the models featured.  There’s something more masculine, practical, and less vain about vintage watches than their modern counterparts (with the usual exceptions).  Many of the new watches being churned out look like they need a lot of babying.  The mechanical watch is a refined and for all intents and purposes perfected technology in the sense that it is acceptably accurate, reliable and robust.  Sure, you can still improve it with high-tech materials, but when you can make a machine with centuries-old tech and it still flies off the shelves, why bother?  The only reason is to attempt differentiation and that is only to drive sales, not an attempt to improve the mechanical watch further.  You may hear things to the contrary in marketing spiel but I don’t buy it. A second or two more accurate here or there?  I wonder if anyone cares that much.

    Some designs really are timeless; people are drawn to them no matter what the era.  That doesn’t mean we shouldn’t see totally new designs; just that there’s nothing wrong with a vintage-inspired design.  The chances are it will end up a lot better than something so radically different that it cripples itself in terms of practicality.

  • Fraser Petrick

    zznhl1 Fraser Petrick  You missed the apostrophe in “whats”. Your sentence should have ended with a question mark, not an exclamation point.  Furthermore, one never begins a sentence with a conjunction. (I blame, not you, but rather, the public school system.)

  • Fraser Petrick

    srvlf  “…to inflate the perceived value/prestige of the brand…” BINGO!

  • zznhl1

    Fraser Petrick zznhl1 seriouly sir, thats your answer to this discussion? Congrats on your grammer. Shame you dont speak good like what i do. I think ill go elsewhere to find more relevence! Bye yall.

  • bichondaddy

    “Appeal To Your Base”…one of the first things you are taught in Marketing school.  I understand it all too well….since my undergraduate degree was in Marketing.  But…one of the things we were also taught was not to alienate your base with stagnate  designs.  Right now, I personally don’t see anything offered by “Luxury Watch Brands” that would come close to tempting me to save up my “nickles!”  The design’s I am seeing right now either look like something that was offered in the 1980’s, or looks like something a hip hop artist would wear.  I either yawn…or throw up a little in my mouth when I see what is out there right now.  Guess I’ll stick with what I already have in my collection and put my “nickles” back in my artist supplies.

  • WimadS

    That might be true yes… however the question should be: are those brands that price themselves as being a “picasso” or a “rembrandt” actually the picassos and rembrandts of the whatch industry?
    Some might be indeed – let’s say the voutilainen from a few articles earlier.
    But most just pretend… – Hublot… Royal Oak…

  • zznhl1

    WimadS absolutely true, though, nailontheheadisms aside, people still fall for it to the detriment of us all. The nieve (however its spelled) and egocentric just drive those prices on up.

  • melias

    The guitar industry has been heading in the same misguided direction as well. While not much in the way of innovations have hit the stores, the prices continue to climb. The end result are companies like Fender and Gibson collapsing under their own weight (and debt). A quick walk through a Guitar Center store will see rows and racks of $2,400 to $5,000 Custom Shop-built or “Artist-endorsed” guitars hanging from the rafters. The trouble is the same models are there week after week. On the lower end of the spectrum, are similar models built in Mexico or overseas and in some cases using the very same parts. They generally retail in the $499 to $1,500 range, and turnover is brisk. 

    Yet we continue to see more and more high dollar rigs hitting the racks (but not the stage). What’s wrong with this picture, could be the same thing effecting the watch industry.

  • Fraser Petrick

    Again, you forgot the apostrophe in “yall”.

  • Tekky

    The prices are astronomical, with some quality internet-only brands such as Christopher Ward, bringing back some sanity.But there are two other problems.

    Culture has moved from quality to bling – hip-hop/rap wants the jewels but not the craftsmanship – bigger is better.  That segment doesn’t understand even HOW to recognize quality.

    Which has been compounded by Invicta and Swiss Legend misleading the public.  Both Invicta and Swiss Legend pushed (or still push) cheaply made crapola watches, with staple bracelets, low-end quartz movements, poor assembly and glass crystals, as having MSRPs starting at $600.  By not aggressively countering this, the watch industry committed suicide.

    So how do you reach the customers?  Perhaps by mocking the pretenders.  Tell the readers what the difference is.  Follow the car industry, where most people understand why an Audi S4 is better than a Chevy Impala, and can appreciate both while acknowledging that the Impala does it’s job well.

    And bring back entry level models.  In the late 70s/early 80s, Mercedes priced themselves too far out of the market, and eventually they acknowledged it.  Publically.  You can still pay a lot for a Mercedes, but you can also get one for less than a loaded Honda Accord.  Rolex has reinvigorated Tudor to that end, but it won’t work; it’s not a “Rolex Tudor”.  

    But any such thoughts would fall to accountants not liking the reduced margins on the new units, to marketing not wanting to tarnish the halo models, and to the exclusive white-glove B&Ms who move a few watches a year but make a killing on those and don’t want competition from other models being more widely distributed.  It would take guts to make such a move, guts that the “conservative” watch industry lacks.

  • Tekky Can’t argue with your logic. Except that logic does not equal market perceptions. Imagine if Rolls Royce made an “entry level” car to compete with a Kia Soul.That would destroy the RR name/image, so they won’t ever do it. In fact, RR is owned by BMW and they choose to brand their most affordable cars as Mini, not BMW. Tudor is as good as your are going to get from Rolex. Same problems trying to go up market too far or too fast. VW Phaeton is an example of that. Cheers.

  • Fraser Petrick Considering inflation and the dollar devaluation before the CHF, a $95-watch in 1966 would be a $2800-watch in 2014.  The problem is not that watche prices are being gouged up, but that Americans are getting poorer.

  • There’s another factor that is extremely cruel and fatalistic: demographics.  Developed countries have, for whatever reason, lost their pizzaz and joi de vivre decades ago and entered such a humdrum that they decided to not pass it along to future generations by not having children.  With the peak post-WWII generation in N. America and Europe retiring or passing away, the local number of young consumers is not enough to keep up past trends.  

    Watch companies, I assume like so many other industries, turned to emerging markets, usually with healthier demographics, to seek new buyers.  As many other industries have experienced, once the novelty of established brands being widely available in those markets fades, it comes a time when the new markets yearn for something else.  It just comes a time when the people in emerging markets start wondering if this is it and if that’s all that these so lusted-after brands can offer.  Then, as these new markets may have markedly different cultures or, more commonly, the traditional industries are too far away from such markets to understand their consumers, it becomes very difficult for them to satisfy the new demands coming from there, resulting in confusion and failed attempts.

    If the recent experience of other industries is any indication, some watch brands will survive, others won’t, some will survive by strengthening their core values, others by discarding them forthright.  Perhaps the Swiss and luxury watch industry in general is going to go through a shake down similar to the Quartz Crisis, only the cause is bound to be completely different.

    Interesting times, I believe that the Chinese would say to Swiss watchmakers.

  • MisterDeal

    MarkCarson Fraser Petrick I recently got an Epos watch and really like it! I am way more open to brands like Epos and Frederique Constant and think they are great for the watch industry.

  • emenezes Sad but true. The first time I went to Switzerland in 1976, the Swiss franc was about $0.25. Now its about $1.10. No wonder watches from the land of cheese cost more these days.

  • Watchie

    There is also another angle to the watch industry’s troubles, My self included and lots and lots of people I know will be very weary of Swiss high end product. A lot of us have “our” faverite watchmaker who serviced out watches, but now is being denied spare parts and sending the watch to manufacturers service center is very expensive. My $5000.00 Omega recently went for a service that costed just over $1000.00 after 3 years of service. My local watchmaker could have done all the work but was denied parts. So I am getting rid of my Omega before it needs another service and I am looking to add another Seiko to my collection.

  • TheChronoRegistry

    Excellent article Ariel, it sheds light on some aspects people generally do not consider.  

    If I may, I’d add one more characteristic about the watch industry that does not favor the watch enthusiast or watch consumer; the lack of a coordinated effort by the Brands to fight counterfeits and especially no help to recuperate lost or stolen watches.  

    I’ll start with the latter. As a watch enthusiast, I love my watches and if I were to lose one of them or have it stolen, I would be depressed because I have virtually no chance to get it back. No watch Brand that I know has implemented any type of global system to help you recuperate a watch in case it pops up on the other side of the world.  It may be because it is an opportunity to sell another watch.  As a consumer, if I had to choose to buy between two watches which I like but one of the Brands had implemented such a security mechanism for its clients, I would certainly be inclined to choose the one where I feel the Brand has taken into consideration my need for security (somewhat in line with “watchie’s” comment about not being able to get replacement parts for his Omega).

    In addition, the watch industry and watch Brands are not effectively fighting counterfeits that continue to enter the market at double digit rates through channels such as the Internet. Brands are not  “internet savey” and spend millions advising consumers to buy through authorized dealers.  Though this helps, consumers look for deals and are eager to find that desired limited edition watch for which they are willing to risk paying large sums of money over the Internet.  The worst part is that Brands do not “WORK” together to fight counterfeiting.  Each one tries to implement what it considers to be a secure anticounterfeiting technology; which many times is rendered ineffective by either the technology itself being counterfeited, or because it is too complex for a user to distinguish.  I could be presented a special warranty card for a watch with a special seal with a hologram and a serial number but what goes through my head is that this can also be counterfeited. Plus I am not an expert to know which is the authentic one.  The result is that I am always weary when buying a watch; Even if the seller gives me the serial number before I buy because I have no way to check that it is not a valid serial  number on a fake watch.

    I believe the watch industry needs to come down to earth, put their EGOs aside, and make a coordinated effort to fight counterfeiting and theft once and for all. As an engineer which has dedicated the last few years of my life to resolve this problem, i believe that the only possible solution is ONE global dynamic system, shared by the Brands and powered by the people such that in real time a consumer could check from his mobile,when buying in the boutique or over the internet if the watch he/she is about to buy is real or fake, legitimate or stolen.  If a watch were stolen, you could contact the owner using the system without even knowing who he is.  It would be great to think that one day I could be riding my bike and I’d receive and email stating that my watch has just been Identified half way around the world and I can contact the person to find out more.

    I can say that this technology now exists and what we need are two things; 1) have watch Brands participate by registering for free their new and historic serial numbers (absolutely private and invisible to any user but managed by the services platform)  and 2) change the mindset so that watch enthusiasts do not buy watches without being able to check the serial number before buying. This way you could even identify good serial numbers engraved on fake watches.  Even if watch brands do not participate initially, if watch owners registered their watches’ photos and serial numbers, they would automatically have a way to recuperate their watch. The system is very sophisticated and provides many more advantages to watch owners and the Brands and solves some of the market analysis problems mentioned on other posts.

    As a last thought, if the person selling you the watch will not provide you the serial number, walk away!  Would you buy a car without knowing the chassis number?

  • gadgety

    A very interesting article.
    However, I find the English, more specifically the grammar used in this article to be confusing: “This has produced an entire industry dedicated to getting watch and
    other luxury brand dollars, and it isn’t always to the benefit of their (whose? the watch manufacturers, I take it? the reference of “their” is unclear)
    actual marketing goals because these companies (which? the industry dedicated to getting luxury brand dollars) are more directed to
    getting ad dollars (to be paid to provide a service) than using them to spread brand messaging (well the the watch manufacturers need to be the ones allocating dollars to the channels they deem would give the highest return per invested marketing dollar, or are you saying the marketing industry should take that responsibility). I find that you need to be clearer in your writing. Furthermore, I suppose the marketing, advertising, and PR firms, and Google etc, “the entire industry dedicated to getting watch and other brand dollars” can be segmented into more and less effective. That said, knowing which marketing dollar has been effectively allocated seems to always have been a challenge.

    “Today, there are 1001 websites that claim to reach the right demographic
    and they fight with each other to be the lowest bidder.”
    Indeed. It would be fascinating to see how you, or the (other) industry analysts, position the various sites, and social media. Which is your own demographic? You certainly seem to be getting interesting watches of quite a wide range to review, so I suppose you cover a wide socio-economic demographic as well? To some extent I also guess that you are also using this article in a rhetoric to promote, or defend, this site as a marketing channel. It doesn’t take away the value of the article, it just makes the reading of it more challenging, and interesting.

    “Watch brands are further increasingly reliant on outside agencies to
    help them make advertising decisions, which can be good in theory, but
    often doesn’t work out that well. So the moral of the story…”
    Before jumping to the moral of the story, it would be worthwhile to articulate your understanding of why it can be good in theory, but why it would not work out that well? Because these agencies are part of the industry more interested in earning a marketing dollar, short term, than truly helping these brands?

    It’s a fascinating article. Thanks for putting it up here.

  • gadgety

    Watchie The watch industry has learned a thing or two from the automobile industry, I suppose, finding ways to increase the owners’ expenditure over time with the firm, and getting high margins from the servicing. It’s like buying a Lamborghini, Aston, or Ferrari and getting it serviced, buying tires, or a new exhaust quickly becomes very costly. For example a set of four tires for the Bugatti Veyron is 42,000 USD. Intriguingly it probably raises the status of owning the watch.

  • gadgety

    emenezes You bring up consolidation of a fragmented industry structure, at least that’s how I read it. In a way it’s already happened, because of the big luxury houses having bought up a multitude of brands, to get economies of scale in production and distribution, and to compete with Swatch/ETA. It is still really reassuring to see that new brands can still establish themselves as long as they offer something new, see for example, Ressence.

  • gadgety

    vmarks “It’s nearly impossible to make a timeless smartwatch because the technology shifts require it to be timely.” 
    Indeed. The pace of tech innovation will make them obsolete rapidly, so making classic smartwatches is going to be hard. I had a few Sony Ericsson MBW-150s when they came out. The OLED panel in them failed within a few years from date of manufacture. Planned obsolescence.

  • gadgety

    srvlf ” But I think that ultimately, the market will decide.” It always does, but market is perception, and it can be influenced by marketing, over time. Just look at Rolex. It’s mass manufactured, stamped out, classic design, and the perception is still luxury.

  • Watchie

    gadgety Watchie  sure, you are correct. It is status. Once we/status seekers have gotten our Ferraris, Astons etc, we can not show them off in the board room, so the watch becomes that. With a big difference, (not sure about Veyron) but you can walk into a dealership and purchase any part you want for your Mercedes with no trouble at all. where the Cartier, Rolex Jeager etc will flatly refuse to sell you parts. I feel that has to be effecting their sales. Like I said , I know wealthy people that can effort to spend big bucks but they refuse to be ripped of blindly, and that is what they feel is happening. I could be wrong but my watchmaker is pretty good and has had proper swiss factory etc training. I trust him but live in fear when the watch is in transit to the only factory service center which is no where near where I live and I know that I am paying for all the overheads that a service center may have to support the one or two actual watchmakers they have.

  • gadgety

    Watchie gadgety
     ” I trust him but live in fear when the watch is in transit to the only
    factory service center which is no where near where I live” Yes, me too. And UPS/DHL/FedEx etc aren’t really helping out either by limiting the value of this type of goods that can be dispatched. But it may be that quality control, or inspection,m at the factory center is higher. May be… And the value added of the distributor becomes less, so the power that resides with the manufacturer is higher.

  • gadgety

    WimadS Thankfully there’s space for the hand made, as opposed to the mass manufactured, marketed and distributed big brands.

  • gadgety

    MarkCarson srvlf You could say that is brand management per definition. If they cannot keep the identities separate, the brands will die… or be killed as did GM did.

    On a separate note, interesting then, that Tissot seems to be working hard to enter (and win) in chronometer competitions. Is that a way stay in the fold, or is it a way to move up?

  • outremer

    The prices are high, because the demand is high, and the demand is high, because of the emerging countries. It’s just that simple. The manufacturers should stick to it’s core values and design elements, and advancing them in a slow pace. I see the problem elsewhere, the companies sells more watches that they can service, and they often fail to fulfill their warranty obligations in due time, not to mention, that they can’t handle the quality control problems arising from the greater number of production, or they simply return to older technical solutions, e.g. using Incabloc shock protection instead of the more advanced KIF, outsourcing case manufacturing etc. The customers are being more knowledgeable and the information spreading fastly on the net, it is a self-defeating response.

  • outremer

    Quality, trustworthiness and good taste always finds a way, insulting the customers intelligence doesn’t pay off on the long run.

  • gadgety

    “I firmly believe that there are companies that make things and companies
    that sell things, and it is rare that a company is good at doing both.”
    Could you give specific examples which support your belief, preferably outside the watch industry?

  • gadgety

    outremer Demand wise, perhaps. You’re oversimplifying. Remember, there’s a supply side to any market. And there’s a perception of supply side in a Veblen goods market.

  • gadgety I think the is Tissot wisely maintaining street cred within their price segment. So long as their prices stay where they are the won’t “move up” relative to their competition. Within the Swatch group their position seems to be well defined: Tissot/Hamilton, Longines/Rado, Omega/Glashutte Orginal, Blancpain, Jaqout Droz, Breguet.
    No matter how accurate their chronometers, Swatch won’t let them price themselves and market themselves into the higher Swatch brand ranges. I’m not saying this is a bad plan for Swatch, just that it limits now innovative each brand can afford to be.

  • gadgety The ad agency industry is based upon this premise. Manufacturers make stuff and ad agencies create marketing campains that sell the stuff make by others.

  • TheChronoRegistry I’m not saying any of that is a bad idea per se. But we still have stolen cars and the auto industry could do what you are talking about. And the insurance industry would certainly have a big stake in doing so if your system would truly work. Not any easy task, even there there are big insurance company dollars to be saved.
    Good fake watches can be hard to tell from the real thing. If you copy a serial number of a watch which has NOT been stolen (or reported stolen), then the serial number checks you suggest are moot. In the end, a close inspection of a watch is called for. A store where my watches are sold also carries vintage Rolexes and they have had customers come in and state that they think the Rolexes are fake. The store personnel have taken the backs off of Rolex watches in order to prove to customers that they are real (have Rolex movements, etc.). Fakes and stolen watches present different challenges but I agree that both are valid concerns and the industry would work better together. But there is no single “silver bullet” which solves all watch buying concerns. 
    Cheers.

  • emenezes I’m not sure that stable/declining birth rates makes a given country less of a watch buying market. I would think its per capita income and exchange rates are more of a factor. For example the polulation growth in Nigeria is crazy but that does not make it that number 1 emerging watch market.
    Growing economies, especially in countries that have newly affluent middle and upper classes are great markets for luxury watches. Like China. But when their economic growth rate slows the Swiss look back towards their mature markets (like the U.S.) again.

  • dukdlx

    What was not discussed is that the purpose of wearing a watch has evolved over the last 30 years. Young people don’t wear watches, they use their cell phones to monitor time. This has transformed watches from a utilitarian item to a fashion item. Walk through a department store and you see hundreds of “fashion watches.” They are oversized, gaudy and colorful. The other end of the spectrum is the watch aficionado who appreciates, has the financial resources and will buy a luxury watch. The shrinking middle sector is quite satisfied with a reasonably priced quartz watch like Citizen and a Seiko. We now have smart watches showing up on the scene, like the Sansung and the rumored version from Apple. The watch manufacturers need to be looking farther down the road and figure out what the consumer is going to want if they are going to survive.

  • gadgety

    MarkCarson gadgety Ah, so that’s an alternative reading, that Ariel is referring to the ad agencies. Sure, then it makes sense that you can read the market as the “makers” of watches, and the “sellers” of watches.

    On the togher had then I guess there’s an implied contradiction, or at least a tension in Ariel’s argument, because in the article it’s also stated (at least it seems so, but it’s not crystal clear, as I have pointed out previously) that “This has produced an entire industry dedicated to getting watch and
    other luxury brand dollars, and it isn’t always to the benefit of their
    actual marketing goals because these companies are more directed to
    getting ad dollars than using them to spread brand messaging.” Meaning that at least parts of those companies supposed to “sell the stuff”, aren’t doing this in the best possible way, from the maker’s stand point. 
    It also depends on what is meant by “make things”, because most watch brands are exactly that, brands, packaging and SELLING someone else’s movement in a nice wrapping i.e. designing watches. If they can’t sell it, they won’t survive. There are very few independent “manufactures” that actually make their own movements, as we all know. 
    Advertising is not enough to market and sell watches. It takes much more, both strategy and tactics. I would argue that to survive a company has to manage the selling part. It can’t be outsourced to an advertising agency, although it can be done together. Companies that only make things will die. They have to sell to someone, even if it’s an industrial company, and not to a consumer.

  • gadgety

    MarkCarson TheChronoRegistry Recovering stolen goods, specially wrist watches is very, very tricky. I have a friend who had his Rolex stolen, and never retrieved. This despite it being very personal, with his name engraved on it, having received the watch when winning the Olympics. Several jewlers refuse to sell wrist watches because they are too attractive to steal, and insurance becomes a hassle.

  • gadgety

    Ulysses31 “watch straps stitched together with Lady Gaga’s pubic hair” That certainly would be a novelty. How about braiding a wrist band. I’m sure it would sell, though. And Lady Gaga’s market value would also rise in the process.

  • gadgety

    MarkCarson So Swatch, referring to Ariel’s statement about either make or sell, is one very successful counter example of both making and selling, and being successful at both.

  • gadgety I would argue that just because a watch brand uses a movement that they don’t make, it does not mean they are just putting it in “a nice wrapping”. With the implication that movement making is watch making and every other part of the process in fluff. If so, two brands with very different watches that use the same movement would be equal in your eyes. Certainly not in mine. Outside of watch geeks like us, the average watch buyer is less concerned with the movement and more with the design of the parts they can see. 
    Even BMW buys piston from Mahle and wheels from BBS and gearboxes from Getrag. So outsourcing some highly technical components is not always a bad thing.

    And you have to cut Ariel some slack. He is a lawyer by training and we all know how easy legal documents are to read, ha ha ha. Cheers.

  • gadgety

    MarkCarson gadgety I agree. They are building cred by participating in those chronometre competitions, while not pricing themselves too highly. It would be interesting to see the matrices used inside the Swatch group to segment the market.

  • gadgety

    MarkCarson  As for cutting Ariel some slack, I’m not trying to be tough on him, just trying to better understand this highly interesting piece he wrote. I want MORE of this, and the ensuing discussions. It’s so refreshing to read.

    To clarify what you selected to comment on from my point, remember it was a reply to the “make” vs “sell.” My main point is selling as a whole cannot be outsourced as a whole, or else the brand will die. 
    The nice wrapping part is both selling and making. Design is part of sales. It’s also part of making. Sure you can use an external designer, just as you can outsource the movement, or parts of the movement, manufacturing steps etc.
    As you yourself provide the BMW example, following Ariel’s statement are they a “maker” or a “seller”? I would argue they are both, even though they buy parts, outsource parts, use advertising agencies.

  • fritsveer

    Hi Ariel et All,

    Thanks for the interesting and informative article!
    If you ask me, I would like you to be even more “harsh”, I don’t mind any name dropping (would applaud it) and/or more examples of who is doing good and who is doing less good (or even bad) 
    You know the watch world like clock work and. in my humble opinion you can be/are allowed to be  critical to the bone.

  • Fraser Petrick

    emenezes Fraser Petrick  Americans and Canadians with our frugal, immigrant, pioneer backgrounds are not beyond blurting out in the up-scale watch store, “Holy f-word! For that money I could buy a new car! We may or may not be getting, as you say, “poorer”; we may be getting smarter.

  • pablogs

    Very thoughtful piece Ariel. What I find fascinating about the high-end watch industry is that it perfectly represents the monopolistic competition market model. Why is that? Because there is an overall demand for high-end watches, depending of course on income of the current bubble as you point out, but where also customers display a taste for variety. We do like to have different watches, and the diversity of models and designs neatly captures this. 

    However, that same demand for variety from customers allows watchmakers some pretty hefty market power. They do have to extract rents to fund the variety developments and brand plus marketing costs. The vertical integration process is also a result of this, as watchmakers struggle to control the distribution end of the process so as to fix prices, likely as a margin over their (swiss franc) cost structures. It is intriguing how watch prices are not all that different across markets, even with wildly different purchasing power by the customers. This reminds me a bit about Apple, one of the epitomes of vertical integration.

    The unfortunate side effect of this market structure is that the distribution system is clunky (heck, it took me five years to actually find the 42mm Radiomir I had been longing for!), brands increasingly try to move distrbution to their own stores instead of chain stores, development of new varieries is scarce as you say, and brands focus on limiting their production runs to a few hundred. Prices are very sticky as margins over swiss franc costs. And all this only becomes worse in downturns when the overall size of the market shrinks.

    But in the end, we only have ourselves to blame, as our taste for diversity is what creates this market!

  • evandowen

    Nice article Ariel.  My favorite marketing phrase is, “Your perception is your reality”. Our individual perceptions are shaped by the perceptions of society and more importantly by one’s circle of influence.

    If the average guy wanted to place a watch on his wrist that would symbolize an elevated status to his/her network of friends, family, and co-workers it would likely be a Rolex.  Why?  Because the average perception, and hence the groups reality, is that Rolex makes the worlds most expensive watch.  Of course, anyone reading this comment knows that isn’t the case.

    If the average Multi-Millionaire wanted to place a watch on his wrist that would symbolize an elevated status to his/her network of friends, family, and co-workers it would likely be a Solid Gold Rolex.  Why?  Because the average perception, and hence the groups reality, is that Rolex makes the worlds most expensive watch.  Of course, anyone reading this comment knows that isn’t the case.

    If the average horological nerd and avid watch blog reader wanted to place a watch on his wrist that would symbolize an elevated status to his/her network of other horological nerds and watch blog readers it would likely be….. not the most expensive, still unique, an independent and conversational.  Why?  Because we are watch nerds and variety is the spice of life. 

    Wash, rinse and repeat the above sentence and replace with any number of brands and various circles of influences, etc. and it illustrates why the watch industry does so well and how it can support so many brands.

    Yes, prices are heading North (feast), however, at some point a bubble will ensue (famine).  The brands that survive the bubble are those whom are authentic regardless of price.  In the current market, it’s the high-end where there will be the most bloodshed.  Don’t fret though.  Any brand that doesn’t make it, but has a loyal following, will be scooped up at pennies on the dollar by one of the major brands.

  • mgennone

    gadgety MarkCarson A very good example would be consumer goods. P&G….$98 billion manufacturer is great at making diapers etc but they rely on retailers (Walmart et al) to sell those products.

  • pablogs

    mgennone gadgety MarkCarson

    Hum but diapers are a very different market. Very little differentiation between brands, wafer thin margins, bulk makes transportation costly. Diapers are like a commodity, say grain or metals, watches are more similar to cars. Hell they cost like cars!

  • leicaman

    MarkCarson gadgety A great example would be Apple, which has had a long relationship with TBWA/Chiat/Day since the late 80s. And now they are pulling in people from various agencies to form a 1,000 person in-house advertising group. Their recent ads reflect this new approach.

    When you have $150 billion lying around, you can afford to do it yourself.

  • somethingnottaken

    gadgety I interpreted sellers vs. makers to mean (in the context of watches):

    makers = companies (brands) designing, assembling, and/or manufacturing watches
    sellers = retailers

    Historically the sellers were mostly jewelers and their shops. Some chains, some independant. However, in the watch market jewelers are being increasing displaced and replaced by online and boutique stores owned by the makers.

  • somethingnottaken

    gadgety MarkCarson BMW are a maker. The sellers are dealerships. The dealers are (for the most part) franchises – independant business that have purchased or otherwise negotiated a contract to use BMW branding and sell BMW cars.

  • somethingnottaken

    Watchie At those prices the watch is essentially disposable. One might as well forget about service, wear the watch until it breaks, then toss it in the trash and buy a new one.

  • somethingnottaken

    Tekky Swatch Group have both entry level (Swatch, Tissot, Certina, Mido, Hamilton) and top tier (Blancpain, Breguet) brands, like the GM of old. Richemont, LVMH, etc. are luxury goods companies and thus have no interest in entry level products, leaving that market to Swatch and a plethora of small brands (including Christopher Ward).

  • somethingnottaken

    Fraser Petrick emenezes On average we’re getting poorer. Taxes and the cost of living have been increasing faster than salaries since the mid or late 1980’s.

  • somethingnottaken

    TheChronoRegistry While the occassional buyer gets scammed with a counterfeit watch passed off as a genuine item, it seems to me that most counterfeit watches (and even moreso most other counterfeit goods) are sold to buyers who know the goods are fake. Many people who want an item but are unable or unwilling to pay for the genuine article will happily buy a cheap fake.

    A site that listed known counterfeiters would both help customers looking for genuine watches avoid fakes, and help customers looking for fakes find them (it would be free advertising for the honest counterfeiters). The second is likely why watch brands are unwilling to setup such a site.

  • CG

    All this hand wringing and gnashing of teeth! They will still make plenty of watches to go around for you to buy or reject. Be assured they’ll tell you all about it…. just keep the cash moving. That’s all Folks!

  • gadgety That is a good question. A company like Walmart and Amazon are excellent at selling things. Even the items that Amazon makes (the Kindle, etc…) are design to sell things (digital content). Then you have companies like Canon that makes camera. They don’t really sell direct to consumers but rather produce good hardware that is sold through a later network of retailers. Canon is good at making things, but relies on others to do the selling. Among the few companies that are good at both making at selling are those like Apple, that have actually been highly successful at both.

  • fritsveer That is good to hear. I’ve learned enough to be brutally honest right? I used to be more so, but I wasn’t making that many friends. I think the best think to when taking various elements of the aBlogtoWatch business into consideration is to offer good advice to brands. My tactic is not to disparage them, but to praise their virtues, while not ignoring their weaknesses. If people such as me aren’t going to give them constructive feedback, pretty much no one will. In the end, I just want them to be better and keep making great products we love.

  • dukdlx I’ve struggled with the concept of “young people don’t want watches.” I don’t think a lot of older people want watches either. I think it is established that we all pretty much need to be aware of the time and that there are different ways of getting the time. It can be via an electronic device in your pocket, or a mechanical instrument on your wrist. Maybe both. Watches are necessary, but in most instances neither is a nice guy. Nevertheless, most people still aspire to own more than just “basic transportation.” When it comes to young people, they are struggling with a poor economic climate and aren’t part of a generation know of desiring major luxuries. Some are, and for those who attain the disposable income required for buying nice watches, I think many of them will discover this passion like the rest of us.

  • gadgety I suggested that there are companies which are good at selling and those that are good are producing. If I continue with that logic then it makes sense that watch brands perhaps aren’t the best at making their own marketing campaigns, and that a specialist should be consulted for such projects. Creative agencies are of course interested in making money, but they are also interested in performance and making their clients happy. You don’t get much referral business with clients that aren’t thrilled about the income. While good fits are necessary, I strong believe in the value of highly specialize firms dedicating to doing just a few things really well, rather than those who claim to be good at everything. Generalists are rarely good at doing it all.

  • TheChronoRegistry I don’t really know how much fear the general consumer has that a watch they are buying will be fake. I suppose it has to do with the customer, their experience, and where they are buying watches from. Outside of one experience in a retailer in Hong Kong I have pretty much known that an area I was in was going to be selling fakes. Then again, I am a general expert and know how to determine if a watch is fake or not. 

    Having said that, I really don’t know how much of an issue exists with people accidentally buying fakes. I don’t hear about that happening very much at all. Maybe it is a larger issue that one might expect. 

    I am sure that brands could come together to right counterfeits better. Though personally I would rather have brands fight the replica people on merits and simply push forward with watches so good, or with so much value they are too difficult to copy. Alternatively, the watches would be so expensive to copy, it wouldn’t be worth it to the criminals.

  • aBlogtoWatch I think that’s right. It’s easy to bitch and take pot shots at watches you don’t like. But perhaps a better tactic to suggest actual improvements (some of which aren’t that major) to make a given watch better. Which should help it to sell better.

  • emenezes It is true that watch brands target emerging markets, but they have learned that in modern times emerging markets are prone to the same ups and downs of established markets, and sometimes in much more drastic ways. The majority of watches are still sold in the major markets. Part of that of course is because of tourism and people traveling to buy watches were they are more available or less expensive.

  • Tekky I certainly agree in regard to bringing more entry level models in a big way. I think the major brands each need to have certain gateway products that are an affordable entrance to their brand. This uses to happen with many brands but is rare now. In the 1980s a TAG Heuer Formula 1 was a fun, cheap, quartz way to enter TAG Heuer. Today the Formula 1 is much more expensive and not as fun as its historical counterpart. I have suggested to Omega that they keep their original Speedmaster Moonwatch at a rather affordable price. Keep it simple and manually wound with a plastic crystal and a basic kit. Make it $3,000 retail or so. Then allow people to move up into fancier watches but still have a really cool entrance model to aim for as a first step.

  • Fraser Petrick Just wanted to say thanks for mentioning both the Secret of Nimh and Mr. Bluth – big fan.

  • gadgety

    aBlogtoWatch gadgety Thank you for replying! I’m still trying to decipher this:

    “This has produced an entire industry dedicated to getting watch and
    other luxury brand dollars, and it isn’t always to the benefit of their
    actual marketing goals because these companies are more directed to
    getting ad dollars than using them to
    spread brand messaging.”

    Could you be more specific. No need to name names as I guess that could be sensitive, but what type of companies are you referring to as wanting to get ad dollars, but not assisting in the brand messaging? Ad agencies? Publications? On line sites?

  • gadgety

    somethingnottaken  Thank you, good point. I guess it’s partly how one defines “selling.”
    BMW has to device a strategy to make it attractive to the franchisees to invest and take the risk. BMW probably needs to educate them on the product, co-ordinate them through the franchise package, including advertising, promotion materials, plan product launches etc, even though the actual interaction between the sales person and the prospective customer is not BMW.
    I imagine the watch brands have to choose their retailers carefully. Are Cartier and Piaget stores franchises? No watch company owns their own stores?

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  • Good write-up Ariel. I’m curious what the near future will bring us, and with us I don’t exclusively mean the (online) watch press, but also collectors and less obsessed watch buyers.

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  • cheerss

    A bit late to see and read this, but this is hands down the best piece I have read on the watch industry to date.

    Hats off. You have another humble follower.

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