Digitalisation unlocks new opportunities for Swiss watchmakers
Zurich, 23 March 2017
With Baselworld opening its doors today, all eyes are on the watch brands’ freshest gadgets and designs. It’s a good time to reflect on the latest trends the Swiss watch and jewellery industry faces after a relatively turbulent year. Whilst smartwatches was the talk of the town in previous years, the focus has now shifted to how watch brands are responding to the new era of the ‘digital consumer’.
Swiss watchmakers have been facing difficult economic conditions in the last two years, and the exports continue to falter. Industry experts though expect this trend to somewhat stabilize in the near future. The fundamentals of the Swiss watch industry such as the attractiveness of the Swiss Made label, the undisputed leadership of Switzerland in the luxury watch market as well as its innovation capacity all remain strong (read more in our article from January 2017, “Will the Swiss watch industry turn around in 2017?”).
In parallel to the smartwatch trend, which continues to attract the interest of some of the Swiss watchmakers like Tag Heuer with the new Connected Modular 45 or MontBlanc with the recent introduction of the Summit Smartwatch, the digitization of commerce and marketing channels is where the spotlight is on at the moment.
The digital consumer…
The Swiss watch industry is the standard of elegance and refinement that continues to reign in the global luxury industry. Rooted in history and success, the brand heritage model was for a long time unchallenged.
But times are changing, and the role of the luxury consumer has shifted from one of passive observance to empowered dominance. Consumers are no longer content with merely buying exclusive goods; the exponential use of digital technologies has empowered them. They want to interact, belong and be the brands they buy from. Informed, selective, and in charge, they care about their perception in the public light and social media, and the perception of the goods they buy and own.
… and the Swiss watch industry
In the Deloitte Swiss Watch Industry Study 2016, social media was listed as one of the most important elements of watch companies’ marketing strategy. Watch brands have streamlined their marketing strategies to be lower cost and higher impact, with a special focus on helping regain control over social image.
Bloggers and social media have gained great influence on young peoples’ buying decisions: In five out of six countries they are the most important marketing channel among people aged between 18 and 29. And a vast majority of luxury consumers are likely to purchase a watch through digital channels – and the percentages of digitally influenced and generated sales are very likely to grow significantly until 2025. 1
Clearly, the rise of digital technologies has significantly impacted how consumers interact with luxury brands. Swiss watch companies have to combine omni-channel consumer engagement services, cross-category propositions, and the technology that binds them in order to affect consumer behaviour across the spectrum of content, communication, sales and service channels, which will lead to deeper, more meaningful relationships between luxury consumers and watch brands. And today, this has to happen fast. Because new competitors, disruptive channels, and demands of the luxury consumer for responsiveness are unfolding at lightning speed.
So what now?
This comes with great opportunities for Swiss watchmakers. Luxury watchmakers have indeed started to conceptualize and execute new ideas: We’ve seen unexpected partnerships between luxury watchmakers and tech companies emerge(e.g. Samsung and de Grisogono and Apple and Hermes), partnerships between luxury watch-brands and blogs for limited editions (e.g. Vacheron Constantin and Hodinkee, Omega and Fratello Watches), virtual reality worlds created (e.g. Roger Dubuis’ “Dare to be Rare”), and products more individualized (e.g. HYT’s “Bespoke” or Jaeger LeCoultre’s “Atelier Reverso”) –to name a few.
These are all great examples demonstrating the power to change – and making an impact. The ability to conceptualize, engineer and execute innovative ideas might lead to bets worth investing in - and many companies have already been lured by the promise of profits from playing these bets. But unlocking true growth ambitions requires an integrated plan that influences all aspects of the organization. It will derive from the definition of a holistic strategy knowing where to play and how to win, increasing the ultimate understanding of balance between the execution of transformational change and the creation of innovation bets. Nurturing the power to redefine business models that truly empower organizations holistically will help the Swiss watch industry in the acceleration to reach maturity in the digital age and retain the ability to set a standard beyond the watch industry.
1Source: Consumer survey of the Deloitte Swiss Watch Industry Study 2016
Navigating through stormy waters