igital media are playing an increasingly important role in the purchasing process for luxury products in general, and watchmaking and jewellery in particular. Whether by acting as a source of information, through social media, or the official websites of retailers and watchmakers, or by facilitating the act of buying itself, digital tools are playing an increasingly important role for consumers of watch and jewellery products.
In view of this rapid and profound change in how decisions are taken and purchases are made in the luxury universe, how are watch retailers responding to their clients’ current expectations – particularly those of the millennial generation, who are more invested in the digital world? What role do retailers play in the multi-channel strategies developed by watch brands? And what is their approach to online sales?
This latest chapter of the Mercury Project, which is based on a June 2017 survey of watch retail points of sale in Switzerland, gives a picture of the online engagement of the watch industry’s main actors. It points to a segmentation of the experiences of independent retailers and retail chains, depending on how their sales offering is pitched in terms of price.
A comparison with the online activities of Swiss watchmaking companies, for whom strategic positioning continues to be a clear priority, also gives an indication of the opportunities and threats that watch retailers face.
- Figure 1
Even though it is a vital communication tool within the watch industry, the use of a corporate website has not been a priority for all Swiss watch retailers. Two-thirds of watch industry corporate websites are adapted to current digital usage..
Among the 976 watch points of sale that were active in Switzerland as of 31/07/2017, more than two-thirds (68% – Figure 1 ) operate what are know as “responsive” websites. This means that the size and orientation of all the pages on the site is configured automatically for all types of digital browser (including smartphones and tablets). This makes it easier for visitors to find information (reviews, technical specifications, price, availability) and, for those websites that offer a selection of products for sale online, facilitates payment.
As seen in Figure 2, all the points of sale belonging to chain retailers and mono-brand watch boutiques have responsive corporate websites. Website content can thus be publicised more widely by virtue of its integration into a consistent digital strategy, which includes the use of social media.
- Figure 2
Finally, it should be noted that a significant minority of watch retail websites (17%, rising to 30% for independent retailers – Figure 2) are not configured for current digital devices (including smartphones). These websites are optimised for browsing from a PC, which severely restricts their utility to the millennial generation (those born between 1980 and 2000, who are between 17 and 37 years old today), who are heavily invested in the digital world.
15% of watch retailers have no corporate website
Figure 1 shows that 15% of watch retailers have no official website. This figure rises to more than a quarter (26% – Figure 2) where independent retailers’ points of sale are concerned.
While a small percentage (4%) of these do have a substantial social media presence (e.g. a Facebook page) in place of an official website, which would be more complex to manage, these shops, which probably have a very loyal but ageing client base, are out of step with the behaviour of younger consumers, who are highly likely to search the internet for information before making a watch or jewellery purchase.
- Figure 3
Actors in the luxury sector are focusing on online sales as a new marketing channel. In the watch industry, the use of online shopping platforms remains highly segmented according to the retailers’ price positioning. 30% of watch points of sale have an online shop.
In some cases, an online shop is included as part of the corporate website. Almost one-third of watch points of sale (30% – Figure 3) have some online sales activity, which in the majority of cases also extends to jewellery.
This includes more than two-thirds of shops affiliated to watch retail chains (68% – Figure 4), which are very active in this area, while online sales remain a minority activity for independent retailers (13%), and for watchmakers’ own-brand boutiques (23%), with the exception of those in the Economy sector, offering watch brands with a median price below CHF 800.
- Figure 4
Economy segment leads online watch retail sales
Generally speaking, retailers operating in the Economy sector (70% – Figure 5) are by far the most likely to engage in online sales. The Value segment comes a distant second, with 23% (watch brands with a median price of up to CHF 5,000).
To date, shops working in the Premium price bracket (median price above CHF 5,000) have been reluctant to venture into online sales. They represent just 6% of points of sale operating online sales, despite comprising 26% of physical stores in Switzerland. They have developed a different approach, based on informing potential clients online, through social media or blogs, and encouraging them to make their purchase at a watch retailer or in the brand boutique, in order to guarantee exceptional customer service.
- Figure 5
The growth in the use of digital devices has driven the expanding influence of social media. These new communication channels play an increasingly important role for people seeking information, particularly millennials and younger clients. The approach of Swiss retailers is currently evenly balanced between independent retailers on the one hand and retail chains and watch brands** on the other. 51% of watch points of sale have a presence on several social media platforms.
- Figure 6
A survey of watch retailers with a social media presence shows that 51% are active on several social media platforms (Figure 6), with Facebook top of the list, followed by Instagram. Looking at Figure 7, which shows this information by distribution network, it is clear that chain retailers (95%) and watch brands** (98%) are the most advanced in terms of social media penetration. By working with experts and using well-researched procedures, they are increasingly able to benefit from their presence on digital communication networks to dialogue with potential clients and place them front and centre of their commercial and marketing strategies. For many of them, their social media presence has become a core element of their marketing strategy.
- Figure 7
Independent retailers on the back foot
More than a quarter of watch points of sale (28% – Figure 6) have no social media presence, and 21% have a limited presence on a single site (mainly Facebook, which in 2% of cases is used as a substitute for a corporate website). These figures correlate directly with the lower activity levels of independent retailers, as highlighted in Figure 7: 48% have no social media presence, and 36% are active on just one platform (generally Facebook).
Low priority for independent retailers
While social media activity tends to increase in line with the price segment in which the shop operates, it nevertheless remains poor across all price segments, as Figure 8 shows: 57% for the Economy segment (median price up to CHF 800), 47% for the Value segment (median price up to CHF 5,000) and 31% for the Premium segment (median price over CHF 5,000).
- Figure 8
Up to now, the use of social media seems not to have been a priority for this segment (contrary to the strategies of watch brands* and chain retailers), which represents 52% of the retail offering in Switzerland (source: Brand Density Score – 2017 Watch Retail Market), particularly for points of sale operating in the Economy and Value segments.
Looking at those independent retailers who are most heavily engaged in this form of communication, which means mainly those in the Premium segment (69% of whom have a social media presence, 27% on more than two platforms), a detailed analysis of the content they share nevertheless reveals their role as a vehicle for the multi-channel strategies deployed by the watch brands they carry, as well as for the promotion of their own stock, particularly jewellery lines.
** The watch brands represented in this distribution survey are only those with mono-brand boutiques.
• Brand Density Score (BDS): The score takes into account the
total number of watch brands displayed in watch & jewellery
stores. It indicates the density of the watch brands in any segment,
category or geographical area.
• Chain retailer: This refers to any group of retail outlets operating 5 or more stores in Switzerland or abroad. Chain stores have similar architecture, store design and layout, and overall choice of products.
• Economy segment: Market segment of watch & jewellery stores or departments carrying watch brands at a median retail price below CHF 800.
• Independent retailer: These are retailers that operate a maximum of 4 points of sale, regardless of location.
• Mono-brand or flagship boutique: This specific type of point of sale is featured in the store locator pages of the corporate website of the brand concerned.
• Numeric distribution (ND): Brand presence as % of stores in the watch retail universe handling watch brands.
• Premium segment: Market segment of watch & jewellery stores carrying primarily, but not exclusively, watch brands at a median retail price higher than CHF 5,000.
• Responsive website: Web pages detect the visitor’s screen size (PC or mobile) and orientation and change the layout accordingly.
• Value segment: Market segment of watch & jewellery stores or departments carrying watch brands at a retail price below CHF 5,000.