The Digital Transformation of the Luxury Watch Markets
2020 has been a tumultuous year for the Swiss luxury watch industry not only because of the COVID-19 pandemic but also due to several external factors like political uncertainties in Hong Kong and the United Kingdom. The sector witnessed a decrease of 21% in value and 33% in volume in 2020 alone.
However, there are several outliers who outperformed the industry amidst the challenging climate.
Rolex, one of the most prestigious and recognised brands in the luxury watch market, remained strong despite having their production plans brought to a standstill. Remarkably, Rolex is thriving with rising sales numbers. With net sales of CHF 4.4 billion last year, Rolex has also emerged as the undisputed leader in terms of revenue for the luxury watch industry in 2020.
Tudor has also stood out as one of the rare Swiss brands that saw sales figures soar. TAG Heuer, on the other hand, saw a 31% dip in sales within the same period.
Taking the First Step to Digital Transformation
The luxury watch industry that was once resistant to digital transformation in fear of damaging brand equity and exclusivity saw the need to rethink its business model to appeal to modern consumers. Amid the ongoing uncertainties, consumer buying habits have gradually evolved, with affluent consumers becoming increasingly comfortable with acquiring high-ticket items like luxury watches online.
Brands who are early adopters of e-commerce have reaped its benefits. Watches of Switzerland a prime example. Although there was lower traffic in both its U.S. and U.K. stores, the brand saw its e-commerce sales increase by 65.4%, year-on-year, during a six-month period ending in October 2020.
While experiential in-store experiences remain imperative, the industry has come to realise that these channels are complementary and making a digital pivot will enable them to capture a wider pool of consumer groups – including time-pressed consumers who value the convenience of shopping from home.
Patek Philippe, the world-renowned Swiss watchmaker, has taken the lead by announcing that it would be authorising selected dealers to sell its current stock of watches online for a limited time period in April 2020. The industry giant who owns Cartier, Richemont Group, has also expressed its intention to further develop its digital capabilities.
The Rise of Digital Events and Virtual Live Sales
As COVID-19 brought international travel to a standstill, luxury watch brands had to find new ways to connect and engage with their valuable customers across the globe. The only solution was to do so digitally.
Fondation de la Haute Horlogerie (FHH) was one of the early adopters of the digital event strategy, with its 2020 Watches & Wonders Geneva Fair transforming from a live event to a digital one in less than six weeks.
Auction houses are, too, adapting to the changing tides by shifting their sales online. Although this was new territory for many players in the sector, virtual auctions proved to be a big success, with Sotheby’s global auction sales totalling at least $97.5 million – a five-fold increase in total value compared to 2019.
Trusted Platforms are Revolutionising the Industry
Digital media has enabled watch enthusiasts to remain connected with one another, propelling the passion for buying, selling, and trading of new and pre-owned luxury watches even in the midst of the pandemic. One influential voice of the luxury watch industry is Watchbox, which launched its Watchbox TV that hosts the largest library of luxury watch video content. Watchbox is the global leader in digital media, community and e-commerce of luxury watches, and has witnessed significant growth in revenue and profitability in 2020.
Backed by CMIA, a growth capital private equity firm based in Singapore, Watchbox offers an unmatched selection of hand-curated, expertly serviced luxury watches from brands including Rolex, Patek Philippe, Audemars Piguet, Omega, F.P. Journe, IWC, Hublot, Jaeger-LeCoultre, and many more, via its digital channels and offline Collectors’ Lounges, upholding brand image, credibility and quality customer service in every customer trade.
With more companies harnessing the potential of agile digital solutions and deepening their presence via e-commerce, the global luxury watch industry is entering into a new era of omnichannel, media-driven and community-centric commerce.