During the pandemic the luxury watch industry is one of the industries that shows a decline as the sales of Swiss watches in 2020 compared to the previous year fell by 21.8%. The retail industry was one of the sectors that was hit the hardest amongst the economy. However, compared to for example the fashion industry whose sales declined by over 50% more compared to Swiss watches, the watch market shows its strength and resembles an investment opportunity in a time of uncertainty.
A watch is primarily seen as either a status symbol or an investment opportunity. The ladder one, is a reason why people who were not able to spend their money on holidays, restaurants or other free time activities may consider buying a luxury watch instead to give their loved ones a gift. It is further an investment opportunity which has shown resilience over the last 300 years – a watch is seen as timeless and valuable. On the other hand, this industry stands before a time of change and adaption. Due to the age and tradition of the sector, the watchmakers and retailers are less likely to adapt as quickly as for example the dynamic and always changing fashion sector.
With less brick-and-mortar stores and communication moving towards omnichannels, the watch industry still has a traditional approach to sales. An omnichannel includes several different channels to reach a customer such as online marketing via social media as well as traditional advertising and physical stores. The luxury sector of watches has been mainly operating on brick-to-mortar stores via exclusive distributors in prestigious locations before the pandamic. However, with the shift towards flexibility and less physical interaction between a customer and a shop assistant, the need for change is apparent. As the luxury fashion industry is a pioneer in adapting to live streamed fashion shows and e-commerce retail, the watch industry relies on loyal customers and demand surplus. But how long will they be able to keep on operating their Business models like this? A rethinking process is starting within consumer’s behaviour and evolving and innovative watch businesses may overtake them in the future.
“The Covid crises has changed our world forever and digitalised our industry faster than anybody would have imagined possible. In a way this crisis has helped us tremendously to evolve,” Pascal Ravessoud (watchmaker expert and external affairs director of “Fondation de la Haut Horlogerie FHH”) said. “Those who were already seeing the need for change were agile enough to best cope with the new normal. Those who were already struggling to adapt to the world pre-Covid have sometimes paid a huge toll. Some of them are not here anymore.” (Forbes, 2021).
By Antonia Kuffler