Watchmaking and the pandemic: #Resilience

“The obsession with China is harming the rest of the watch market”


December 2019

“The obsession with China is harming the rest of the watch market”

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 Andrew Block, President & CEO of Second Time Partners.

Too many irrelevant brands”

“I actually see a very dim future for the affordable Swiss watch segment, but it is not all attributable to the strength of the Apple Watch. First, this segment is too crowded with many irrelevant brands. Second, there has been little innovation or excitement: many of the Swiss brands within this segment are part of luxury groups that show no signs of escaping the internal strategic paralysis that has impacted brand performance globally. I also believe that ‘Swiss’ as a label is a ‘non-factor’ in the consumer mindset within the affordable category. My advice: fewer brands, more innovation, embrace digital as the primary distribution channel and start understanding the market demographics for this segment and how to approach them.”

“Auction vs. grey market”

“The simple explanation is that the phenomenon is limited to four brands: Rolex, Patek Philippe, Audemars Piguet and Richard Mille. All have been active players in the global auction market and have seen their watches either maintain or increase their value. They have operated directly within the auction market, helping rising prices. This strategy has obviously worked. The other (more complex) explanation is that these brands have mostly refrained from using the grey market as a channel to eliminate inventory issues. Those that have been active on the grey market have seen their brand value erode dramatically.”

" ‘Swiss’ as a label is a ‘non-factor’ in the consumer mindset within the affordable category."

“Look at the consumer studies”

“Distribution of Swiss watches has been a strategic rollercoaster for over ten years. But studies have shown the following: consumers want choice when selecting a watch, they want to see at least three brands before deciding what to buy and half of them are unsure of what they want when they enter a store. So there is a place for multi-brand retailers, especially as they hold long term relationships with consumers. They can coexist next to mono-brand boutiques, which play a role in building brand awareness. Unfortunately, many brands have exited multi-brand stores to support their own direct-to-consumer strategy, which they still know so little about. E-commerce has also a huge role to play in the distribution mix.”

Andrew Block, President & CEO of Second Time Partners
Andrew Block, President & CEO of Second Time Partners

“A viable new channel for watch brands”

“Pre-owned owes its recent popularity to the lack of strategic focus by the brands in their distribution. Retailers have embraced pre-owned because they have lost brands and need to satisfy consumer demand. Brands have only now begun to focus on the secondary market as a viable channel, which they previously totally ignored. Preowned has proven to be a market that new and young consumers have embraced and specialised digital platforms have done a good job marketing this category.”

“Focus on the United States and digital”

“The Swiss watch industry has focused on China as the next emerging market for well over the past two decades. It has affected watch brand strategy in ways that have not always proven to be beneficial to selling watches to the rest of the world, with less allocation to other countries and reduced margins, as China has always had a lower margin structure from the rest of the world and less marketing support. Where is the next market opportunity?

"Where is the next market opportunity? Focus on the United States and digital!"

Focus on the United States and digital! The penetration of fine watches in the USA is still minuscule. Yet for the longest period of time, it has been looked upon as ignorant when it comes to luxury and too expensive. Digital is also a huge opportunity.”