FEATURE Watch Industry Report WATCH & LEARN: TRENDS IN TIME upheaval. ARABELLA RODEN explores how brands have adapted to the changes.
The world of watches is almost unrecognisable from what it was ten, or even five years ago. From design to functionality and marketing, the category has evolved significantly due to a combination of technological change, industry politics, economic uncertainty and shifts in communication. The decline of Baselworld – once the world’s premier watch and jewellery fair – became clear between 2017 and 2018, when the exhibitor number nearly halved from 1,300 to around 650. Shortly after the 2018 show, Swatch Group pulled out of exhibiting its 18 brands at future editions of Baselworld, followed by Raymond Weil, Corum and Maurice Lacroix. This year’s event has been cancelled in the wake of the coronavirus pandemic, which some industry commentators welcomed as a reprieve from what would have been a notably anaemic show, even when compared with previous years. Indeed, it has been heralded by some as a chance to reinvigorate and renew the show – and the watch industry. Perhaps the most notable trend within watches over the past five years is polarisation – the movement of consumer spending to the extremes of the category. Luxury watches have maintained consistent revenue – the Federation of Swiss Watch Industry (FH) reported that exports were valued at CHF21.7 billion ($AU37 billion) in 2019, topping a record set in 2015 – albeit based on smaller sales volumes. This trend indicates consumers are embracing more expensive models, as well as turning to the secondary watch market for choice. Meanwhile, mid-range watch brands – generally defined as those between $600 and $2,000 – have seen their market share reduced by competition from smartwatches, while fashion watches have been influenced by changing consumer habits and online competitors. However, brands have adapted to counter these threats. Ultimately, the challenge for retailers is to navigate the shifting sands of the watch industry hourglass, taking note of competitor trends while ensuring the product mix is relevant to consumers and marketed through the correct channels. Time to split: the exhibitor exodus The past five years have not only brought functional and material changes to the watch category, but fundamental differences in the way brands communicate with both retailers and consumers. The interconnectedness and immediacy of global communication has changed how watches, from luxury Swiss timepieces to affordable fashion watches, are marketed and distributed. For decades, debuting new models amid the hustle and bustle of Baselworld’s Hall 1 was aspirational; a statement of luxury and success, lending prestige to a brand and its products. It was also practical, ensuring marketing budgets could be focused on one major event, nearly all international retailers could be briefed on new products at the same time, and media representatives could report on a wide number of different brands without extensive travel. INDUSTRY STATS Annual Growth <strong>2020</strong>–2025 Traditional Watch Increase 9.92 per cent Smartwatch Increase 14.5 per cent Hybrid Watch Increase 14.5 per cent Data: Mordor Intelligence Images (from top): Rolex, Apple, Garmin But as the cost of exhibiting increased and global communications were simplified to more directly target consumers, Baselworld’s relevance receded. Suddenly, the crowds, noise and expense seemed less appealing, particularly when brands could host luxury retreatstyle product showcases for their retailers and distributors. Some of these events even took place in Switzerland around the same time as Baselworld, including Swatch Group’s Zürich-based Time To Move conference and Movado Group’s Movado Summit in Davos. At a time of unprecedented prosperity – 10 years after the Global Financial Crisis – the world’s most prestigious watch exhibition began to falter. Brands were no longer willing to pay Baselworld’s considerable exhibitor fees, reflecting the diminishing returns of the exhibition model itself. It was not helped by the intransigent attitude of show organiser MCH Group. Michel Loris-Melikoff, managing director Baselworld, told <strong>Jeweller</strong> last year, “MCH organised Baselworld and if you wanted to be part of the show, you had to accept everything – take it or leave it.” Yet the problems were not solely attributable to MCH. The Geneva-based Salon International de la Haute Horlogerie (SIHH) was not immune, losing Audemars Piguet and Richard Mille following the 2019 edition. Loss of exhibitors was among the factors prompting the rebranding of the show to Watches & Wonders Geneva late last year. In <strong>2020</strong>, it was set to include consumer-focused activities such as walking tours and a dedicated day of access to the show floor. The two shows were also scheduled to run consecutively this year, shifting into a late <strong>April</strong>-early May timetable. However, the change in dates was the final nail in the coffin for many long-time exhibitors, including Seiko and Casio. Both brands withdrew from Baselworld in late 2019, given the dates would coincide with a week-long Japanese public holiday. In January this year, LVMH – a long-term supporter of Baselworld – hosted its first ‘LVMH Watch Week’ at the company’s own Bulgari Hotel in Dubai. Bulgari consequently pulled out of the Swiss show, though TAG Heuer and Zenith were still scheduled to exhibit before Baselworld was cancelled in February. However, some industry commentators have noted the ‘individual showcase’ strategy benefits brands at the expense of their retailers, distribution partners, and ultimately consumers. Rob Corder, editor in chief of UK industry publication WatchPro, wrote earlier this year, “Rolex/Tudor, LVMH, Swatch Group, Richemont, Movado, Fossil, Breitling, Audemars Piguet, Grand Seiko, Kering and many others are refusing to come together into one, or even two, major trade shows, leaving retailers, consumers and press trawling the world for the first five months of the year. “Every one of the groups and brands will tell you they will be putting on a fantastic show, but none appear to be listening to the needs of their key retail partners.” He also dismissed the idea of Swiss exhibitions as consumer shows, stating, “Customer events should be in the countries of the customers and run by local teams, ideally in conjunction with retail partners so that people can actually buy the watches they see.” Indeed, the coronavirus pandemic may make that a necessity through its devastating impacts on the travel sector. <strong>April</strong> <strong>2020</strong> | 31
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