The Luxury Watch Industry Will Have To Shrink Before It Recovers
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  1. #1
    Member pardayan's Avatar
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    The Luxury Watch Industry Will Have To Shrink Before It Recovers

    Circa 2017, the once proud luxury watch industry is in its weakest position since the late 1970s and early 1980s. At that time, the prevalence of inexpensive quartz movement-powered watches produced in Asia versus Europe almost completely decimated the mechanical watch industry. Cost and better technologies prompted an event called the "quartz crisis" which assaulted an industry that specialized in the production of spring-powered versus battery-powered timepieces. In short, better, cheaper watches unsurprisingly outsold less accurate and more expensive products to a mainstream market.

    Some compelling evidence of strong consumer interest and demand for timepieces can be seen in the relatively high performance of online watch retail. The ironic reality is that despite the fact that watch companies are notorious for strict control of their brands, the kings of watch sales today are unauthorized retailer transactions - mostly online. This is in contrast to the way that most watch brands prefer to sell their goods, via authorized watch retailers (i.e., transactions that mostly happen "offline").

    The biggest problem in the area of satisfying consumer demand for watches is the "minefield" of online watch retail options available. Consumers are regularly confused about how or where to buy a watch, and at what price. The watch industry has created an extremely "dirty" marketplace where the same timepiece might be available at any given time online via a series of different retailers for vastly different prices. This causes severe erosion of consumer confidence, which leads to fewer sales, as well consumers who feel they need to be in a constant "holding pattern" prior to buying a watch they otherwise want - with the intent of waiting for the right price. Said in another way, consumers want watches, but the watch industry has made it confusing and uncomfortable to know what to buy, where, when, and at what price.

    As I've tried to illustrate, the luxury watch industry will need to shrink its number of ineffective employees, shrink the number of factories and production employees it has, shrink the number of retailers and distributors it has, shrink its pricing margins, and shrink its reliance on outdated ways of approaching marketing and advertising - prior to being able to first plateau and eventually recover. The winners will be those brands that authentically take risk, get real about the failures of the outdated business practices, get to know their consumers better, and embrace the fact that the appeal of beautiful old-style items must be met with a modern approach to doing business.

    Source: Forbes
    The whole article can be found at: "
    https://www.forbes.com/sites/arieladams/2017/06/23/despite-consumer-demand-the-luxury-watch-industry-will-have-to-shrink-before-it-recovers/#7a50eb2f2c75"


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  2. #2
    Member 6R15's Avatar
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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    Not sure how dated that article is, because sales and demand of all major brands are up in this economic bubble and it has beyond recovered. Secondary prices are also much stronger than they were a year or two ago.
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    Quote Originally Posted by 6R15 View Post
    Not sure how dated that article is, because sales and demand of all major brands are up in this economic bubble and it has beyond recovered. Secondary prices are also much stronger than they were a year or two ago.
    I would challenge to say this isn’t universally true. Some brands/models are experiencing a drop in retail and secondary pricing, like IWC’s Portuguese Chrono for example.

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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    I think we are the last generations to appreciate mechanical watches.

    The things that tell me the watch industry may not be getting better are -

    *The Rolex dealer here closed shop.

    *A Barnes & Noble book store I went to only had one watch magazine when the used to carry at least four.

    *I did not see any watch magazines at the airports I stopped at between Alaska and New York.

    I know print is dead but successful industries still have magazines. If they are not advertising, they are not selling.
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  6. #5
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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    Yeah, that article is dated now. That said, we are seeing shifts take place, and online being considered a central part of marketing strategy by some. Yes, I think we'll definitely see most brands streamline their distribution nets, but this may also have been happening anyway. I believe Rolex used to have at least 2 dealers in El Paso; it's one now. There's only 1 in ABQ/Santa Fe; used to be more, IIRC. There's still 4 in Phoenix/Scottsdale, tho.

    There was a trend towards *somewhat* more affordable entry-level offerings; it may be interesting to see whether the Baselworld announcements continue the pattern.
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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    There will always will be a demand for watches for the masses. Look at brand such as MVMT, Vincero, Tayroc. ENORMOUSLY successful companies, at least when you look at their balance sheets. It's very very hard to justfiy spending $200-400 on a seiko, an entry level watch, when compared to a $100-200 watch that is stylish and trendy no matter what .... movement is in it, especially when their favorite youtuber or personality is marketing it to their fan-base. Most people don't know what a seiko is. Most people don't care either. It is the truth.

    What is seiko doing to advertise? Promoting their watches with this guy:

    Name:  Jimmie-Johnson-Seiko-Coutura.jpg
Views: 52
Size:  130.1 KB

    Like come on. What does that even do for your brand? Who is this guy... and how much are they paying him? Seiko is out of touch with the masses. Maybe that is a good thing, we get to stay a small group of minorities who have discovered the treasure that are seiko watches. I dunno. Myabe seiko intends for it to stay that way. It would be nice if people on the street besides watch enthusiasts could recognize a seiko though.

    But really,
    Face it, only a real small minority of watch wearers care about what is inside a watch, which makes sense. To most, a watch is only a piece of fashion. Hardly do people ever buy one because they need it to check the time nor do they give a crap about how accurate their watch is as long as it is not that bad. They have their phones to check the time or they can buy a $10 casio which works just fine.




    Watch brands like Seiko could market themselves more, especially considering they have high quality stuff compared to fashion brands. But then again the trade off is becoming a fashion brand itself and becoming "the watch that everybody wears".

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    Member Tonhao's Avatar
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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    Quote Originally Posted by Medusa View Post
    I think we are the last generations to appreciate mechanical watches.

    The things that tell me the watch industry may not be getting better are -

    *The Rolex dealer here closed shop.

    *A Barnes & Noble book store I went to only had one watch magazine when the used to carry at least four.

    *I did not see any watch magazines at the airports I stopped at between Alaska and New York.

    I know print is dead but successful industries still have magazines. If they are not advertising, they are not selling.
    I just assumed the watch community moved online. I did try to find a watch magazine whenever I’m in a bookstore and usually there’s nothing related to watches. What kind of magazines are out there?

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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    There's WatchTime. I'm a print subscriber. If there's anything else totally dedicated to watches I don't know about it. Robb Report always has some watch coverage.

  10. #9
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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    Quote Originally Posted by Medusa View Post
    I think we are the last generations to appreciate mechanical watches.

    The things that tell me the watch industry may not be getting better are -

    *The Rolex dealer here closed shop.

    *A Barnes & Noble book store I went to only had one watch magazine when the used to carry at least four.

    *I did not see any watch magazines at the airports I stopped at between Alaska and New York.

    I know print is dead but successful industries still have magazines. If they are not advertising, they are not selling.
    I disagree. You are highlighting a media format problem not a mechanical watch retail problem. And a Rolex store closing is meaningless because their revenue and profit numbers are off the charts. They probably had good reason to close it.


  11. #10
    Member timefleas's Avatar
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    Re: The Luxury Watch Industry Will Have To Shrink Before It Recovers

    A fairly common business model, then, and now (taken from the OP's text).

    "As I've tried to illustrate, the [fill in blank here] industry will need to shrink its number of ineffective employees, shrink the number of factories and production employees it has, shrink the number of retailers and distributors it has, shrink its pricing margins, and shrink its reliance on outdated ways of approaching marketing and advertising - prior to being able to first plateau and eventually recover. The winners will be those brands that authentically take risk, get real about the failures of the outdated business practices, get to know their consumers better, and embrace the fact that the appeal of beautiful old-style items must be met with a modern approach to doing business."

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