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Why are fashion brands so interested in watches?

The main safe haven of a huge, durable but very traditionalist market

Why are fashion brands so interested in watches?  The main safe haven of a huge, durable but very traditionalist market

A few days ago, Gucci announced the launch of a new line of fine watchmaking whose pieces, all produced in Switzerland, will be presented in an ad hoc store that will soon open in Place Vendôme. In the same days both Hermès and Louis Vuitton presented new watch models, respectively a leather-free sports model and a jewel watch with an alligator leather strap named Tambour Carpe Diem. 

Meanwhile, Cartier has launched an online platform called Watchmaking Encounters on which to virtually present its watch collections while, last month, the Swatch Group reported a "very strong" sales growth on the recovering American market and, already in January, LVMH digitally held the second edition of Watch Week 2021 dedicated to the new Bulgari line-ups, Hublot and Zenith. Many of these presentations took place in the context of the Watches & Wonders Geneva 2021 fair, which is held digitally these days – yet they suggest renewed interest from fashion brands in the Swiss watch industry. 

A resistant market

The production of watches by fashion brands is nothing new, Gucci has been producing in Switzerland since 1972 while Hermés, which has been producing watches since the 1920s, acquired a series of specialized ateliers and watch manufacturers in Switzerland between 2012 and 2017 to create the Les Ateliers d'Hermès Horloger. At the same time, brands such as Rolex, Patek Philippe, Audemars Piguet and Jaeger-LeCoultre already dominate this market with products that, in the face of very high prices, are safe haven goods whose value grows over time. Even during the pandemic, the price of luxury watches continued to rise with Rolex, which, for example, billed $8.5 billion in 2020, accounting for 24.9% of the global Swiss watch market, up from 2019, where it accounted for 22%; Cartier, on the other hand, sold 80,000 more watches than in 2019, while Omega, despite a sharp drop in sales, still billed $3 billion. The category, in short, is more resistant than ever and it is perhaps precisely this resilience that fashion brands such as Gucci and Louis Vuitton have begun to plant on it their metaphorical flags, proposing jewel watches with all the chrysanthemums of Swiss manufacture. 

The challenges for newcomers

The watchmaking sector, as mentioned above, represents a very particular market in the field of luxury for two reasons: the first is that it always concerns audiences with a high purchasing power and, more often than not, composed of enthusiasts and collectors; the second concerns the strong level of technical specialism that dominates the sector, with a group of consumers who are less interested in branding and trends than the actual complexity and technical precision of a watch's movements. The main challenge for fashion brands in conquering this market will be to present themselves with the same credibility as their specialized competitors, thus working not only on the external side of decoration and materials but on the engineering side of technology and movements – characteristics that require huge research and development resources. 

A further challenge will be customer care, so it will be necessary to hire entire teams of watchmakers, and also the retail experience that, as we have seen in the case of the new Cartier e-shop, will have to move through particularly sophisticated e-commerce channels that win the prejudices of a traditionalist clientele and also include the option of reselling, an area that a Deloitte report has defined as the "next big thing". Especially the digital one is a hot topic for a very traditionalist industry but, as the Deloitte Swiss Watch Industry Study 2020 says:

Sales of high-end watches take place primarily in a physical retail location, something that has not been possible during the lockdown and there are still capacity restrictions in a number of countries. Normally seen as traditional, the watch industry must now innovate in the areas of digitalisation, e-commerce and digital engagement along the entire customer journey. This is why over 60% of brands in our survey are prioritising the development and strengthening of their omnichannel strategy.