Watchmaking and the pandemic: #Resilience


“Digital natives and crowdfunding are opening up promising paths”

THIERRY HURON

Español
January 2020


“Digital natives and crowdfunding are opening up promising paths”

In our latest report about the transformation of the watch world, we selected six major issues which are having a profound impact on the industry’s present and also on its future and discussed them with about forty stakeholders of the industry. Here is the take of Thierry Huron, founder of Mercury Project.

ENTRY-LEVEL
“The 8.5 million loss in volume will never be made good”

“The 8.5 million watches lost from the entry-level range of the Swiss watch industry over the past five years as well as non-Swiss fashion watch volumes will never be made good. Among other things, this slide is a result of the irresistible rise of smartwatches, but also of the Swiss watch industry’s delay in embracing online sales. Innovations in functionality (hybrid watches) and materials (watches in recycled plastic), as well as distribution (online sales, Kickstarter and other crowdfunding sites, ‘affluendors’) are all sources of inspiration for further, much-needed innovation in this segment, where the shake-up isn’t over yet.”

POLARISATION
“Social recognition or economic turbulence”

“The historic success of watchmaking is due, at the very most, to 5 to 8 brands representing virtually 60% of global sales. With their strong identity and ability to play on the scarcity of their offering, they have everything it takes to accomplish their strategy. As vectors of social recognition and prestige in numerous countries, they will escape the turbulence affecting hundreds of other brands.”

Thierry Huron, founder of Mercury Project
Thierry Huron, founder of Mercury Project

DISTRIBUTION
“Recover the intermediaries’ profits and databases”

“The most powerful watch brands want to deal directly with the end customer in a dynamic of profitability and image control. That enables them to recover their intermediaries’ profits, gain far easier access to their customer data and exert greater control over their supply chain. The consolidation currently in progress is also working in favour of the most experienced retailers in the best geographical locations. The latter work with the most powerful brands, either by negotiating preferential locations in their stores (Rolex, Patek Philippe), or by managing proprietary stores (Omega, Breitling, Audemars Piguet). The current retailers in the entry-level range are facing fierce competition from networks external to the watchmaker/ jeweller ecosystem. As for the future of distributors in difficulty, that lies in partnerships with lesser-known brands wishing to add a conventional distribution network to their original online network.”

The current retailers in the entry-level range are facing fierce competition from networks external to the watchmaker/ jeweller ecosystem.

OPPORTUNITIES
“Duty-free offers the most favourable prospect

“Just one market seems to be offering a favourable outlook. That’s the duty-free and travel retail market, which is showing promising potential in the medium term, especially in Asia, owing to the growing number of Chinese and Indian travellers. But new and innovative paths are opening up elsewhere, driven by the digital natives. There are powerful examples in the entry-level watch range, such as MVMT in the United States and Paul Valentine in Germany (online pure players), or in crowdfunding sites (more than 240 watch brands were successfully launched on Kickstarter in 2018).”