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Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles Behavior trends for luxury watch consumers are changing. Brand marketers and advertisers should take notice. A recent article in The Economist discussed how, in many ways, luxury firms are reporting increasing profits during otherwise poor economic times. Many past studies have shown a direct correlation between increasing wealth and increased spending on luxury goods. While many sectors of the luxury industry are feeling the hurt, some of the world’s largest names in luxury seem to be trending in the opposite financial direction. What is to account for this? The Economist article does not suggest an answer to this riddle. Allow me to suggest one.

I propose that luxury consumption habits are changing in regard to why someone purchases a luxury item, in the first place. No, it is not that consumers are abandoning traditional practices, but as a result of current economic times, once less-common behaviors are being amplified, which accounts for the luxury product boom in certain sectors of the industry. First, some background on my thinking.

A number of years ago, an American watch retailer from the Midwest shared a piece of wisdom with me that I’ll never forget. We were in Las Vegas at a trade show and, according to this cheerful member of a then-bustling family-owned watch and jewelery store, “We are in the celebration business.”

As someone who entered the watch industry at a young age, armed mostly with timepiece-product enthusiasm, determination, and little life experience, I never thought of my interest in watches as related to celebrating something. Surely, in the sentimental sense I was “celebrating horology,” but I was really interested in the watches for what they looked like and how they made me feel. I wasn’t considering something important, though, and that is why people make decisions to buy watches — not why they like them (a different question).

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles

The decision to put a big chunk of change down for a luxury item is, in my opinion, a type of bargain you make with society. I’ll elaborate more on that in a moment. As rational consumers, we make the conscious decision to spend far more money than we need to in order to put something really nice-looking on our wrist. The precise reason consumers do this has eluded even luxury marketers for a long time. In fact, the funnel consumers go into, from discovering a particular luxury brand or item to actually buying one, is a bit of a mystery. Marketers may be able to predict at what point in their lives consumers might purchase a luxury item, but they are rarely able to predict what luxury items they will actually buy.

The social bargain we make when purchasing a luxury item is simple. In exchange for making this highly irrational non-utilitarian purchase, either you get to feel something special that exists outside the parameters of the product itself, or society will possibly treat you in a special way because they recognize something you own or are wearing. This basic concept is a core assumption of my larger argument in this article.

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What the Midwest watch retailer taught me to always consider is what the consumer is thinking when they decide to make a purchase. What compels a person to go from being interested in a watch and appreciating it from afar to actually owning it? Statistically speaking, consumers purchase something when they feel there is cause to celebrate. There are traditional celebrations such as birthdays, business deals, friendships, anniversaries, promotions, and other life milestones, and there are other types of more subjective celebrations such as, “I’ve earned it” or simply, “I want to celebrate myself to make me feel better.”

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles

For much of the last 50 years, people have purchased watches in order to celebrate something. Assuming a consumer has learned that a wristwatch makes a good trophy with which to celebrate something (and, historically, this was far more ubiquitous than today), there was a good chance they would choose a watch when they have reason to celebrate. Marketers can’t predict celebration moments but, statistically, we know the consumer will probably go through life having at least a few moments to celebrate. This is what kept the watch industry alive through the 1980s, 1990s, and much of the 2000s, thus far.

Luxury fueled by consumer celebration is necessarily reliant on a stable middle class, highly exclusive ultra-wealthy clients, or pool of nouveau riche eager to show the world that they have “made it.”

The notion of a consumer implicitly stating, “I have made it” through their fashion and accessories is actually the intersection between the more traditional celebratory reason for purchasing a wristwatch and the now-trending (though not new), “I have something new to say about my wealth and power” statement consumers on a different part of the spectrum are trying to communicate with their luxury purchases. “I have made it,” or, in other words,“I have arrived” is a statement about social mobility more than it is about personal success or satisfaction. It says, “I went from somewhere worse to somewhere better.” The intersection exists because “I have made it” purchases are a celebratory indulgence, but the resulting messaging value of the item is less about personal satisfaction and more about social proof to indicate one’s status in the membership of “people who have made it.”

Since the world is experiencing an economic recession and wealth isn’t growing as it may have in the past, what would account for luxury purchasing behavior? Evidence already suggests that when people have less money, they also tend to have less to celebrate (or at least less to celebrate with). If a consumer is not spending money on a luxury good to celebrate themselves, then they must, nevertheless, be purchasing it to send a message about themselves.

My belief is that the current trend of luxury spending behavior is meant to allow consumers to send the social message that, “I’m doing OK and not doing poorly” or “I’m one of the rich ones; you can treat me differently because I have money and power.” This suggests a shift from a more inwardly focused reason for purchasing a watch to a more outward reason, which relies on the luxury item’s messaging power.

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles

Where does this messaging power come from? This is where watch marketers will want to take notice. In order for someone to want to spend luxury dollars on something with a strong social message, a number of people need to be educated as to what seeing that brand or model means. Rolex is the perennial good example of this. The brand spends marketing dollars widely to ensure that people grow up seeing the Rolex name and that it is synonymous with success, achievement, and performance. Rolex has seeded the Rolex name far beyond people who can practically afford a Rolex during their lifetime. The result of this global seeding of the name and values is that Rolex’s reputation precedes it entering into a room. Because a population was trained to associate the Rolex name with a set of values, the population readily does so. This form of mass social education is incredibly effective.

The mass education strategy about a product’s luxury meaning isn’t only used by Rolex and isn’t only achievable through decades-long branding strategies (though that is the most secure and lasting version). Brands like Audemars Piguet and Richard Mille, which are also trending today, spend relatively little money on traditional advertising, though you’ll hear their names in rap songs (Rolex has their fair share of hip hop music shoutouts too) and seen worn on magazine covers. What these brands learned is that pop culture stars aren’t just entertainers to today’s youth, they are also business-leader models who teach about lifestyle and how to earn a living.

An Internet-addicted generation that consumes more infotainment than anything else is certainly going to view celebrities more so than business leaders, politicians, and engineers posting on social media. Much of the world is learning about how to find a job and what career to go into from the people they see featured on scripted programming and on social media. It’s expected behavior. What is also expected behavior is social mimicry, where consumers emulate the look and actions of people they want to be like as a shortcut to getting there. Whether or not such copying is a route to success is an open debate (can you “fake it until you make it?”), but it is well-established that consumers engage in this behavior.

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles

The above discussion is my attempt to demonstrate the potential volume of consumers who are learning about luxury from relatively new sources and at the same time, due to global economic outlooks, are increasingly interested in ways to protect themselves from looking as though they “aren’t making it” or, at the least, “I’m actually doing better than you may think.” These latter considerations are directly related to depressed global economic growth.

Culturally, the desire to socially prove oneself varies, but it exists in almost all cultures. China, for instance,, has what is known as “face,” which is a direly important public-facing persona. Not having been raised in Chinese culture my experience with “face” is as a third-party, but I do know that wearing a nice watch helps improve one’s “face.” In the United States expressing status through a watch can be more nuanced because overt signs of wealth are often seen as impolite. To be polite but still show off, people in the United States often need to find rare items or ones that have emotional stories behind them aside from being noteworthy simply for their value. It is as though wearing something overtly expensive becomes more socially acceptable in America if that item also seems to have real historical, sentimental, or artistic value.

Doesn’t it logically follow that during stagnant or poor economic times — in a society that so much values expressions of “I made it” moments on shared social media — consumers would be increasingly motivated to spend money on luxury goods even when they cannot afford it? Yes, I am suggesting that a lot of luxury consumptive behavior today is by consumers who have less disposable income than might be historically the case or expected by the brands they are purchasing from. Another implication of this behavior is that given economic strain, today’s luxury consumers are unable to be valuable brand loyalists, simply due to their inability to make multiple or regular purchases.

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles

For watch industry marketers, the implications of these changing consumer behaviors are profound. It means that marketing campaigns and messages should probably be more directed at improving brand awareness and making specific statements about how wearing it will make the wearer appear to the world. Remember, this is important because, in today’s paradigm of luxury purchasing, a core reason why someone makes a luxury purchase is a strong hope of what that item says about you. Marketers must, at times, create what those sentiments are, and share them regularly with consumers so as to educate the population. When done correctly, all advertising really does is properly educate a consumer.

Sometimes (or through indirect marketing) consumers learn a brand’s values from a third party. A celebrity wearing a luxury product sends the message that such a product is clearly expensive and for people with high taste. When spread widely enough, such a message is sent both to people who can and cannot afford the product. If the purchasing consumer does not feel that enough people will recognize the luxury item and its associated meaning, my argument holds that they are far less likely to make the purchase or even want the item to begin with. A serious implication of this argument is that a consumer might actually form no opinion about the aesthetic look of a wristwatch or the brand’s heritage if they can afford it and if they associate it with a personality they admire.

Watch Consumer Behavioral Shift From Celebrative To Status-Seeking Purchase Habits Featured Articles

Much of today’s wristwatch marketing focuses on a few narrow messages which actually do not serve the interests of many modern consumers. Classic messages boil down to things like, “We’ve been making watches for a long time;” “we make watches where watches have been made for a long time;” “our company has lasted a long time, so our watches will also last a long time;” “our watches are made by people who like art and nice things, so our watches are designed to go well with nice things. Or “People who feel important but also sometimes nervous about their stability like our watches because, at the end of the day, if you need some money, you can sell our watch and make enough back to leave town or get home.” None of these messages really connects with the social concerns of a lot of consumers today.

Consumers would rather wear a known luxury product on their wrist that either tells people they aren’t doing poorly or that clearly send the message they are doing extra-well (all things considered). Again, this doesn’t apply to all consumers, and celebratory purchases still happen all the time. That said, when a marketer or luxury brand executive is interested in consumer trends among millennials and other young people, they ought to take into consideration that motivations these days are more about social-status establishment and less about personal celebration. If watch brands are then able to make those consumers actual timepiece enthusiasts, they will profit all the more.

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  • Expat

    If it’s “all about the show”, I would have thought that all-gold and diamonds would be in high demand and fashionable, and that marketing-driven brands like Hublot and RM would rule the market. Instead, stainless steel sports watches and to a lesser extent complications from the usual historic brands dominate. So, for me, this article seems to miss the mark.

    • Independent_George

      Actually, diamonds are doing well. It’s just that culturally men, specifically white men, don’t wear diamonds.

      Gold is interesting because gold, over that last 20 years, has seen an annual increase in value of about 10%. Gold isn’t doing poorly either, and Cartier is one of the best performing brands in Richemont’s portfolio because they sell a lot of gold jewelry to women. But men don’t wear gold watches like they used to. I think it might be a cultural shift, where men see gold more as an investment tool and not something to actually possess. I mean, no one wears his stock portfolio around his wrist. But it is interesting that men don’t wear gold watches like they used to. And I’d like to see the ratio of white gold watches sold to yellow/rose gold.

    • Ariel Adams

      It really depends on what one considers showy. For some people those are gold and diamonds. For others they are pretentious-to-own and purchase steel sports watches. It really doesn’t matter what is currently “in” as a showy watch, but it is important to consider that what “showy is” changes with consumer tastes.

    • Jonny Bravo

      Actually the precious metal watches are the only segment that has grown this year, all others, including Swiss exports of stainless steel watches are dropping. The Rolex, AP RO and PP Nautilus craze is not representative for the whole industry.

    • Tony NW

      Gold became quite gauche a decade ago. Perhaps due to all the fake gold in the blingey hip-hop culture. As did zircon-diamonds. They connote more a Pontiac Firebird with a T-Top vibe than security.

  • What fresh hell is this?

    That’s pretty sad.

    Also judging from the industry’s advertising, brand marketers and advertisers already know this.

  • Luciano

    What are you talking about? Economic crisis? The income of the top 10% (which are the people with buying power for a luxury watch) has been increasing. If they don’t buy more watches is because their interest went in a different direction and/or watchmakers are not meeting their needs/wants.

    • Ariel Adams

      If you are referring to income inequality all that does is put more money in the hands of people who famously spend very little of it. The rich getting richer rarely if ever means appreciably more consumer spending. You can disagree but I don’t think your argument will get very far with skilled economists.

      • Luciano

        I didn’t mentioned anything about inequality, just stated a fact (which anyone can check on their own).
        I clearly mentioned the top 10%, not ultra-rich billionaires. We’re talking about a segment of 33 million people in US (your market).
        How many luxury watches are bought annually by the rest of 90%?

      • Berndt Norten

        There’s lots of evidence supporting Luciano’s statements. Consider the work of the highly regarded Cornell labor economist, Robert Frank. He shows quite clearly that the concentration of wealth among the top 10% (he regularly uses the top decile as a line of demarcation) has led to quantifiable increases in consumption of living space (mansions, McMansions, second or third homes), automobiles, and luxury items of all sorts, including wristwatches.

  • Ruediger Bruss

    This is the Veblen-effect (google it). Nothing new really.
    Another aspect is missing in Ariel’s report, though. Due to the broader economic climate, there are little opportunities to invest at decent interest rates. With the – still available – disposable income of many, these people buy watches (the usual suspects from producers like Rolex, AP, and Patek) as an investment. Buy a GMT Pepsi for 8k, flip it for 16k, great deal. Or buy it at 16k and hope that prices will increase even further.
    This is of course rife with risk. I can’t wait to see changing consumer tastes (away from steel sports watches and back to precious metals for example) and all those poor sods will need to offload their “investments”.

    • Independent_George

      I read about this in a WSJ article, watches as an investment because high-risk/high-reward investment opportunities for the Ultra Rich are tapped out. The article emanated, I think, from the discussion surrounding a social media post by the bald, AG dude on Shark Tank, writing about finally acquiring a blue Nautilus at list price.

    • Ariel Adams

      Indeed there is the trend of considering watches to be akin to asset investments. Pretty much anyone who has dealt in watches over the long term will tell you it is an unwise avenue for investment. With that there is no education required to purchase watches under the belief that they can be resold later for a profit. I covered this topic in detail here:

      https://www.ablogtowatch.com/how-scalpers-speculators-are-ruining-the-watch-purchasing-experience-for-many-consumers/

      • Nicholas Barkly

        Ariel, what watch brand is in the very top photo , left please ?
        Grey sweater. Upside down.

  • SuperStrapper

    An interesting perspective, and certainly not incorrect. There are far too many factors to nail something like this down across the entire industry of course; cultural and environmental influences will have a lot to say, as well as how people tend to tribe up in their hobbies.
    Nice Sunday read. Need MOAR photos.

  • NaJo

    Its sad if thats what is happening. I realised and learnt the biggest lesson of my watch collecting hobby when i bought my first rolex hulk after a 2.5 year waiting and couldnt find more than couple of days of wrist time a month! Had to sell it and replaced by a datejust that i love! I dont care that everyone else respect hulk way more than a datejust and if anyone think myself less successful since i have somekind of lesser a watch. My rescent seiko urushi enjoyed more wrist time than my speedmaster during business outings!

  • John L

    Sorry but does anyone know what kind of watch is in the top picture to the left? Looks carbon.

    • Timestandsstill

      Looks like AP Concept

  • VladimirRPetreski

    So, if your thesis is true (and I tend to agree with you), then this type of luxury watch buyers are (1) social climbing show off a**holes in a hunt for status and one needs to ask her/himself what else are they ready to do, how many bodies are they ready to trample on, for example, to succeed if they don’t have a problem with spending thousands or tens of thousands of dollars maybe they don’t even have just to appear successful and (2) all the sacrifices they force upon their families and loved ones just to satisfy a selfish luxury watch fixation. And yeah, Rolex is great in creating more a**holes like these by positioning their watches as “aspirational”, despite the fact that connecting ones life aspirations with a watch is infantile, stupid and generally ridiculous.

  • Jared

    thats exactly why Rolex is doing as well as it does…because everyone knows Rolex, so its the first “time to show off” product they buy. But in the end Rolex really isn’t all that special and that bubble will pop sooner rather than later

  • Pedro Lambareiro

    Oh… the turns and twists of the world…

    It doesn’t make much sense, all this watch-based Ponzi-scheming. An exact copy of a Rolex Daytona, that will fool an AD will set you back a couple of thousand so if that’s so easy and cheap to copy it can’t have my respect.

    I love JLC and there aren’t any proper copies of them. The reason? Too expensive to fake. Not too expensive, mind you. But the process by which they come to be isn’t profitable to the Chinese factories.

    So anything that costs hundreds of thousands and can be replicated for 600 bucks isn’t worth it. Check RM, there are tonnes of perfect replicas of those things around for those exact $600.

    • ray h.

      To mee it is not about finding a watch the Chinese don’t find to be a good investment to replicate. I t is why are Swiss charging suck extreme premium for their product that I am sorely tempted to by the copy and see if I even have the enthusiasm I think I have for it. If I did maybe I could invest 20x more to by the original but maybe not. The whole thing with Swiss just feels like greed.

  • Ariel Adams

    This article has nothing to do with the survey and was written entirely outside of the scope of that project.

  • cluedog12

    Everyone in North America is conscious of consuming for the sake of status and insecure with appearing insecure. Today’s marketing is designed to sell based on social status, but not appear to sell based on social status. If you look below the tip of the iceberg, the messaging is already clear.

    In the 1970s, you could put out an ad that basically said, “This costly watch is worn by boardroom dragon slayers, those of quick wit and tastes refined beyond the obvious gold Rolex.”

    https://www.google.com/search?q=nautilus+ad+1976&sxsrf=ACYBGNQen1qt35HNktOMHP1Ew_93Jxa5qQ:1572901383065&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiG8dChutHlAhVDop4KHREnB1cQ_AUIEigB&biw=1440&bih=743#imgrc=rLj2gvgf49tA_M:

    So what are you calling for? Give an example of today’s “targeted” Nautilus ad. Are we going with, “I was going to take to the streets, but then I looked down at my watch and I realized, ‘It’s gonna be ok. I’m ok.'”

  • Berndt Norten

    He’s a ‘Dane’ like me.

  • Andrew Steel

    Unfortunately status buyers have turned Patek, RM and Rolex into LV and Gucci. They are now status fashion. Makes one want to buy analog digital Breitlings or Certinas, Omega x33s. My status projection is smart. Pencil behind the ear.
    To may people buy so someone will like you. Funny thing is you stick a bunch of status buyers in a room together and no one will give a f**k about the other. They can’t one up the other.

  • PeteNice

    Many purchase watches as a “wrist resume.” It instantly conveys achievement and trustworthiness to others, both socially and professionally. Of course, this has to be measured carefully, as the age of the wearer should be commensurate with the cost or status of the timepiece.

  • PeteNice

    Wealth inequality will always ebb and flow. What won’t change is human nature, and it’s need to peacock.

  • PeteNice

    LOL. Asians love big watches. Something compensation something something

  • Sat P

    This article is spot-on. I have several watches ranging from a $50 Casio World-Time to a $800 Orient Star (both of which I found on this website!). I want to buy a Rolex Yacht-Master Rolesium but will only do so when I realise my dream of getting big revenues from a self-made business. I estimate I’m 2 to 5 years away from that. I am exactly the kind of person you’re describing above and I don’t feel that any brand addresses me directly.

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