The Watch Industry feels more alive today than ever before. Yet, looking at it from a little bit closer, it has now become more than clear… the times they are a-changin’. As of this weekend, we are in the biggest and baddest bull market in history. Ten years of impressive financial growth. In order to balance against all that great financial news, I figured it was time to look at how the Watch Industry is doing in comparison to the overall market and why that may be so. A very sobering exercise.
As you might have noticed, we love watches over here, and we only wish the best for the industry. However, we do check up on the vitals of the industry nearly every month. And quite frankly while some brands are doing great work, many are at a very high risk of becoming irrelevant very fast.
In our recent interview with Jean-Claude Biver, we discussed the state of the watch industry. The man himself – the personification of the watch industry – stressed the importance and value of the Watchmaking Art (do have a look at the interview right here if you haven’t yet). The watchmaking art, he stated, that is the future of the watch industry. Everything else, so it seems, is at the doorstep of irrelevancy. It’s hard to disagree with that statement. So then, where is this supposed ‘Art’ in the watch industry today?
That Art is mainly found at a select few brands in the big Groups. That Art is also found, without question, at many of the smaller Independent brands. However, adding all of those up will still only get you to a mere fraction of the total brands that the industry still boasts today. Art requires more than cranking out more of the same, it requires creativity. This element it seems, is lacking across a wide range of brands seemingly shackled by their very own release history, doomed for perpetual sameness.
Creativity is further hampered by many brands being stuck somewhere in a Watch Group hierarchy. Where only its top brands are seemingly allowed to be truly creative, with the rest of the bunch being allowed to only go so far in their creativity (that is of course, because creativity in watchmaking costs a lot of money). It seems to me that the brands which until recently enjoyed the biggest benefits of the industrialization of the watch industry, now risk becoming entirely obsolete exactly because they have become so industrialized.
But wait, you may say, the Watch Industry is growing. Well yes, but please remember we are experiencing the biggest and best bull market (10 years!) globally. To grow is the very least you should do as an industry in these times. But look a little bit closer. Look at how pure watch groups such as Swatch and Richemont are doing, and how for example a much more diversified group such as LVMH is holding up in comparison.
Swatch Group is underperforming even in this incredible bull market. The (once) saviour of the Swiss Watch Industry is not looking that healthy compared to its peers. Richemont Group did a little bit better, sure. But essentially they also underperformed when compared against the S&P 500. The one and only watch group that did exceedingly well, LVMH, is the least watch focused one of them all. This alone speaks volumes.
Of course, the lack of creativity is nothing new to the Watch Industry. It is only now, with the ever improving Smartwatches that this ‘characteristic’ has become fatal. Any brand that sits in the price range of on Apple style watch should be on highest alert. Any watchbrand in that category that only tells you the time and lacks any sort of creativity, is absolutely and categorically doomed. Those brands are however a very large chunk of the watch industry as we know it today.
These brands have only one choice, get creative – fast. As I mentioned, creativity also costs a lot of money however. Therefore I would imagine that any brands currently priced in the Smartwatch price-range will as a direct result of trying to survive get (much) more expensive. To survive is to be creative, to be creative means investing and spending money, therefore, the survivors, will be (more) expensive.
How the industry will respond and evolve the coming years is a bit of a guess. That it will look dramatically different from today, seems to be certain.