McKinsey and Business of Fashion have joined forces to analyse the global fashion industry. In particular they took a deep dive into the world of.. you guessed it.. watches and jewellery. Their nearly 100-page report “State of Fashion: Watches and Jewellery” nicely outlines the opportunities and challenges that the industry needs to manage the next couple of years.
The three main take-aways from the report are listed hereunder. To anyone reading along here on a regular basis, none of this should come as a surprise.
Direct-To-Consumer:
DTC has been growing for the past few years, and we also saw that Covid even accelerated this sales channel for many brands. This was pretty much the only way to deal with forced shop closures due to the pandemic. As we all know, the internet never sleeps.
“Offline retail has been the life source of the watches industry for decades, with multibrand retailers owning the customer relationship. But as consumers demand to interact more directly with brands and expect better online shopping opportunities and brands aim for higher margins, watchmakers will grow their DTC channels and take control of the customer experience through a dynamic omnichannel approach. This will be a challenge for both brands and retailers, as $2.4 billion in annual revenues are set to transfer from multibrand retailers to brands by 2025”.
Pre-owned:
It looks like the vintage bubble still has absolutely no intention to burst. “Once the preserve of private dealers and small-scale retailers, the second-hand watch market is joining the mainstream. Not only that, it is set to become the industry’s fastest-growing segment, reaching $29 to $32 billion of sales by 2025. Brands must work hard to capitalise on this shift, and digital platforms need to sharpen their business models in an increasingly competitive environment”.
The midmarket squeezed:
The midmarket brands (representing watches priced between $180 – $3,600) are looking at some turbulent times ahead. “Amid intense competition from digital-native players, fashion brands, and the fast-growing smartwatch category, the traditional watch midmarket is under rising pressure. Many of the segment’s customers, meanwhile, are “trading up” into the luxury segment. If they do not react now to revitalize their segment, we expect traditional midmarket brands could decline by $2.5 billion in revenues by 2025”.
For more information, read the full report right here. It is an interesting read!
I’ll have to read this in detail, but I wonder how they categorize mid market? Because some brands have watches in $4K starting but the higher levels are in $10K within the same brand?
Any/all watches priced between $180 – $3,600 – not brand specific as such but purely price based.
Added to the article for clarity, thanks Jeff!