After over a decade covering the Swiss luxury watch industry I can say one thing for sure, Americans and Swiss in this industry will never see eye to eye on most things. A perpetually contentious relationship between those who are responsible for producing most of the world’s fine timepieces and the market most responsible for selling them has advanced to a state where one by one, fewer and fewer Americans are actually working in the American luxury watch sales industry – an industry that by most accords is necessarily shrinking and ideally regrouping its efforts.
Tim Cook recently commented that Apple now sells more Apple Watches than the entire Swiss watch industry combined. It should come as no surprise that technologically modern connected wearable computers will resound better with mainstream audiences as compared to collectible mechanical timepieces or luxury status symbols. With that said, I have written extensively that the pains of the luxury Swiss watch industry are not due to the market presence of smartwatches. But rather, the luxury watch industry has been experiencing deep systemic business structure and strategy problems for up to 15 years. Never having updated their distribution schemes to fully take into consideration globalization and the internet, and hungrily injecting large (and often unsold) volumes of ritzy timepieces to developing markets within mostly the BRIC nations (Brazil, Russia, India, and China) have in large part been more direct factors that contributed to the current depressed state of the watch industry.
One of the most interesting ironies I mention to those who claim the woes of the watch industry are “smart” by design, is that some of the biggest selling wristwatches over the last few years have been quite dumb by comparison. Between Daniel Wellington, MVMT, and Filippo Loreti, inexpensive “fashion” watches mostly under $200 in price have outperformed comparatively superior timepieces from legacy brands in both Switzerland and Japan. Using paid social media marketing to send carefully tested messages along with high investments in pay-to-have-them-say internet celebrities, these grass roots efforts have beaten the Swiss watch industry at its own game – lifestyle marketing. While smartwatches are certainly taking a bite out of traditional watches retailing for a few hundred dollars or less, there hasn’t been much evidence to suggest that several thousand dollar-plus luxury watch sales are at all affected by smartwatches.
Shrinking Office Staffs
Industry dysfunction on the other hand is more to blame, and nowhere is the inability to manage a foreign market more obvious than in America for Switzerland’s great horological maisons. Perhaps the biggest problem facing the American luxury watch sales industry is the fact that Switzerland controls all operations and budgets. This almost universally translates into under-staffing and under-spending. In other words, the Swiss watch industry is woefully under-investing in the United States. Typical responses by industry leaders to this conundrum mention that the United States “is a challenging market.”