With 2018 coming to a close, we thought to look in our crystal ball and figure out what lies ahead for 2019 for the luxury watch industry. Or at the very least, make a best guess effort.
To predict the future, it helps to understand the past & present. Instead of compiling all the 2018 data ourselves, we looked at the work done by the statistical wizards over at the Statista HQ. Their data based recap of the state of the industry is difficult to argue with. “Growth in the luxury watches category has been stimulated mostly by emerging markets over the past few years, but a dramatic change in consumption habits linked to the anti-corruption campaign in China has put a dent in global sales. Only in 2017 did the segment return to growth, but persisting weak demand in the core markets of the luxury goods industry (North America and Western Europe), as well as the current uncertainty of the world economy at large, and possible future trade barriers indicate a relatively muted outlook for the industry.”
Add on top of that the stock market headed into Bear territory, it is hard to be hyper positive about this or most any other market. Based on Statista’s in-depth analysis revenue in the Luxury Watches segment amounted to US$43,246m in 2018. The market is expected to grow annually by 0.8% (CAGR 2018-2022).
I would estimate that there’s still a big treasure chest of low hanging fruit for the luxury brands to finally pick and I believe 2019 to be the year where that finally happens: The Online market. The big brands have been mostly toying with this market, we have yet to see what happens when they finally decide to fully embrace it.
Online sales are expected to make up 25% of all global luxury goods sales by 2025, according to consultancy Bain & Co. Yet until relatively recently it has been mostly ignored by the luxury watch makers. The past year saw a few key strategic acquisitions by more than a few players in this segment, marking a change from the past and setting the direction for the future. AP, Richemont, LVMH, Bulgari, Nomos and even eBay to name a few, have all clearly set their chess pieces on the board to take a piece of the digital pie. A few giants are now all set and ready to take up the digital challenge in full force.
Therefore, I’d say that 2019 will be the year where it’ll be all about that mostly untapped Digital Sales channel. A few major online players have already clearly proven the financial upside to this approach (e.g. Chrono24). On the other hand, this also means that 2019 will potentially be a very challenging year for the brick and mortar, traditional retailers. Will we see more drama filled stories such as the recent Nomos vs Wempe fallout? Time will tell.
As a closing note, most big brands have set the digital wheels in motion by now. Has anyone noticed there is one notable absent player in this entire Online drama? I’m talking about the one and only, Rolex.