Luxury Watch Industry - Covid-19 Impact, Trend & Forecast
Posted on March 03 2021
As per some of the most recent reports, the luxury watch industry is anticipated to rise by USD 1.64 billion, advancing at a CAGR of approx 1% during the forecasted period(2020-2024). The affordability & disposability of watch labels make them a colossal fashion choice among users worldwide. The lower & mid-priced timepieces frequently gain market traction due to the growing demand for 'value-for-product' watches & accessories, especially among women.
COVID-19 IMPACT ON THE LUXURY WATCH MARKET
The pandemic has wreaked havoc on the bottom line for several industries. Still, some bosses see a silver lining amidst the economic fallout. In a recently held webinar that addressed some of the problems the luxury watch market faced & will be facing, Favre-Leuba CEO Philippe Roten said this global pandemic could present a unique opportunity for labels to overcome complacency.
Collectors, curious & bored newcomers & high-income earners who didn't waste cash on summertime vacations are fueling demand for timepieces that cost hundreds/thousands of dollars & sometimes six figures. Most of the timepieces are Swiss-made & as per the Federation of the Swiss Watch Industry, shipping of watches requiring more than $3,000 are now nearly back to where they were precisely last year, down a mere 0.1%.
One opportunity that we assume is, luxury watchmakers could capitalize on post-pandemic is the smart-watch-wearing customer base.
We must praise smartwatch labels for their inventions & for putting timepieces on the wrists of millions & billions of people. By accomplishing this, they have opened the watch industry doors to tap into the next generation, as they have commenced exploring other watch brands. We all must take this moment to innovate & capitalize on these consumers of tomorrow.
KEY MARKET TRENDS
SURGE IN PRODUCT INNOVATION
The progress in health awareness info among the user has increased consumer spending on health monitoring gadgets. This has further led to increased sales of smartwatches. Smartwatches have a wide array of monitoring functionalities. It allows users to control music, walk tracks, notifications—heartbeat rates & other functions, enhancing the market's growth.
The increasing number of the working population is more likely to embrace sports & fitness as a part of recreational activity. Endurance sports have also paved a firm ground for the enthusiast to grab the sports wearable segment's varieties, thereby escalating the smartwatch sales. Consumers have a higher affinity toward adventure travelling.
Along with seeking unique experiences & a changing technological environment, the market for smart & durable watches is expected to grow significantly.
OFFLINE SHOPS REMAINED THE MOST PREFERRED POINT OF SALE
Physical shops are likely to contribute critical advantages, especially for fast-moving user goods. In addition to in-store benefits, the absence of transportation fees, coupled with the implementation of sensory activities, is expected to match consumers & the products stronger. Customers are more likely to be somewhat more sensitive & selective while spending on consumer goods like watches. The goods placed on the counter shelves can be experimented with & tried as samples.
ASIA-PACIFIC IS DOMINATING THE WATCH MARKET
China is one of the most competitive markets globally. It offers enormous potential for producers of luxury watches to acquire & race. Rolex, Patek Philippe, Frank Muller, Cartier, IWC, Tissot, Rado, Longines, Blancpain & Piaget are leading luxury watch manufacturers.
According to surveys released by the Federation of the Swiss Watch Industry in Jan 2019, China is now the 3rd most significant export market, seeing 11.7 % from 2016.
Similarly, the exports of Japanese watches increased in units by 5%, amounting to 58 million units in 2019. It grew in value by 18%, amounting to CNY 163.7 billion, concerning the previous year.
EUROPE EMERGED AS ONE OF THE BIGGEST CONSUMER OF LUXURY WATCHES
The British watchmaking industry is proliferating. More players stock attractive timepieces with a stainless-steel case, quick-change strap system, scratch-resistant sapphire glass & water resistance property. Companies are repositioning their distribution network from relying on just stores to launching their own websites to allow consumers to purchase the products more conveniently & pick orders from the stores. The stores can also reserve the products for a short period, thereby providing the customers with the comfort of in-store shopping.
The global watch market is highly fragmented, with the presence of both international & domestic players. Some of the market's major players include Citizen Watch, Seiko Holdings Corporation, Fossil Group Inc., Casio Computer Co. Ltd, Timex Group BV & Movado Group Inc.
These players now focus on social media platforms & online distribution channels for their products' online marketing & branding to capture their maximum attention.
THINKING ABOUT TOMORROWIn the world of high horology, it is safe to assume that despite the actual complicated matter of creating unique timepieces to tell the time, nothing ever moves too quickly.
But desperate times call for desperate measures. The impact of the global COVID-19 pandemic on the luxury goods industry has been dramatic. In some of the newest luxury goods reports, the core personal luxury goods market shrank for the very first time since 2009, falling by 23% to 217 billion euros, marking the highest recorded decline since Bain commenced tracking the industry.
Nevertheless, online sales rose to 49 billion euros in the year 2020, up from 33 billion euros in the year 2019. According to Bain's latest report, the share of purchases made online nearly doubled from 12% to 23%. And its creators predict that online marketing will become the leading channel for luxury purchases by the year 2025, fuelled by omnichannel.
At a time when online is growing & uncertainty around store openings & closures lingers over the luxury market due to the global restrictions that are still in place, brands would do well to adjust their marketing strategies to navigate the new rules of luxury purchasing & explore meeting their consumers on whichever channels they choose to interact.
By looking at innovative ways to connect with customers & reduce costs without compromising design & quality, there is an opportunity for start-up brands to create another tier in the luxury watch collector market, drawing new buyers with a somewhat lower price-point.
Of course, there will always be a place for very high-end watches like Vacheron Constantin or Laurent Ferrier. Micro-brands in the 2,000 to 5,000 euro retail price point will be fierce competitors as consumers seek value, relevance & an alternative to the status quo.