The Watch Market Is Fast Evolving, Can Watch Makers Keep Up?
The watch market has gone through some considerable shifts in the recent years. While the advent of smartwatches has considerably changed the future course of the traditional watch industry, the Covid-19 pandemic has also played a significant role in what the watch industry will look like in the coming years. Soaring demand for luxury watches, online sales, and startups wanting to enter the profitable watch industry have all been instrumental in redefining the evolving face of the watch market. According to Reports and Data, the global watch market size was USD 62.11 billion in 2020 and is expected to register a CAGR of 4% over 2021-2028.
The Booming Pre-Owned Watch Market
During the Covid-19 outbreak, demand for high-end watches skyrocketed. However, the four most renowned watchmakers — Rolex, Audemars Piguet, Patek Philippe, and Richard Mille — have stuck to their limited production runs that has kept their watches rare and valuable. As a result, there is a growing number of start-ups seeking to become the leading digital marketplace for buying, selling, and flipping pre-owned and vintage watches online.
Pre-owned watch sales reached USD 18 billion in 2019 and is expected to reach USD 30 billion by 2025. Pre-owned watch sales will be roughly half the size of the market for new, retail timepieces by 2025, up from about a third now.
Retailing On The Internet
For decades, multi-brand shops have controlled the consumer relationship, making offline retail the lifeblood of the watch industry. Watchmakers will expand their direct-to-consumer channels and take control of the customer experience through a dynamic omnichannel approach as customers seek more direct interactions with brands and expect greater online shopping opportunities, while brands look for larger margins. This will be a difficulty for both brands and retailers, as multi-brand merchants are expected to lose USD 2.4 billion in yearly revenue to brands by 2025.
Smartwatches And Changing Consumer Behaviour
Consumer behavior is shifting as well. Smartwatches have revolutionized people’s perceptions of what a watch can accomplish, ranging from simple synchronization with phones and their ecosystems (iOS and Android) to complex health measurements like on-the-go electrocardiograms. As the population of the developed world ages, smartwatches with this feature become more popular. The “cheap luxury” mid-market is expected to be harmed by this type of device: Apparently, health is becoming more valuable than prestige.”
The importance of connecting with the rest of the digital ecosystem through their phones running iOS or Android is relevant for young consumers: a suite of services and apps are only available through those two platforms, forcing luxury brands to use the same operating systems, reducing differentiation.
Swiss watchmakers’ reactions have been mixed. Some of them are afraid of a repeat of the quartz revolution, which nearly destroyed them. Others see this as a chance to broaden their businesses’ appeal. Some companies have released smartwatches of their own.
While a luxury watch is still regarded as a status symbol, this may not be the case in the future. It may be difficult to reinvigorate interest in mechanical watches after younger generations have grown accustomed to wearing devices that are more functional than beautiful on their wrists. Other factors may be at play in the reduction in Swiss watch sales, but smartwatches are undoubtedly a factor.
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