Luxury, steeped in years of tradition, is a sector that has resisted the allure of ecommerce. However, the industry appears to be experiencing a change of heart. Disruptive technology has been rolled out by major brands like Swarovski, Gucci and Burberry. The deployment of augmented reality has enabled consumers to try on clothing outside of stores and digitally customise their homes through smartphones. Plenty of luxury shoppers have embraced the digital lifestyle, causing retailers to adapt their products by enhancing digital experiences. However, there is still resistance in certain segments – one of those is luxury watches.
There are two major draws to buying products online: speed and convenience. These are qualities that, for the luxury industry, have historically been much further down on the list of priorities. Unlike buying a product from Amazon, shopping at Louis Vuitton, Coach or Balenciaga has been perceived as an experience rather than just a transaction.
In this age of rapid technological innovation, watchmakers and their respective retailers have been adamant in their separation from the smartwatches of Apple and Samsung. While those technological marvels deliver seemingly endless capabilities and continue to be an important source of growth for the watch market, they aren’t disrupting the value many consumers place on traditional timepieces. Besides, in light of mounting consumer pressure for luxury brands to become more sustainable, heritage and craftsmanship are critical values. A fine wristwatch will never need to have obsolete hardware or software upgraded – if properly maintained it will potentially live on indefinitely.
Those who foot thousands of pounds for a Hublot or Ulysse Nardin watch feel deserving of a much more authentic, human experience. This is also true among younger shoppers. In a market that has conventionally been dominated by collectors, there is a growing interest in high-end watches among younger generations – especially in the booming pre-owned watch market.
Brian Duffy, chief executive of Watches of Switzerland highlighted that “This is not a sector that is going to transition online in any realistic time horizon. People still like the service we offer and they want to see a timepiece on their wrist, to see if it is everything they thought it would be.”
Watches of Switzerland’s successful IPO a few months ago demonstrated that popularity of luxury watches has not been lost on financial markets either. Owned by private equity firm Apollo Global, the retailer achieved a market capitalisation of £647m on its first day on the London Stock Exchange. With around 125 outlets in the UK, the nation’s largest seller of Rolexes controls more than a third of Britain’s high-end watch market.
Demand for luxury watches is soaring and limited supply has caused a gold rush. The number of UK-based watch companies has continued to grow as entrepreneurs have realised the profit potentials of high-end watches with strong marketing. And as we’ve seen across the UK luxury industry at large, the recent decline of the pound sterling means that British brands stand to benefit from the huge influx of tourism seeking cheaper prices.
Demand for luxury watches is so high that sales assistants are being trained to handle customers disappointed due to lack of stock. Well-known for its limited supply, this year, Rolex went as far as discontinuing models despite their strong performance. The company, with an estimated sales value of $4.5bn, has committed to streamlining its collections in order to speed-up production. But in an environment where Rolex doesn’t even display some models because all of the units have already been sold, the watchmaker – much like many of its competitors – benefits from a limited supply.
Acting on what appears to be an issue of supply and not demand, other watchmakers, who have long-since embraced ecommerce and the integration of software, are trying their luck. Garmin recently entered the high-end market with five smartwatches – following in the footsteps of Tag Heuer and Louis Vuitton by offering the build quality, materials and price of a luxury mechanical watch merged with the internals and flexibility of a smartwatch. The tech company has designed each to fill a different role where traditional timepieces would typically live including diving, aviation and hiking.
Despite their innovative software, Garmin’s luxury range lack the longevity and style of a mechanical counterpart. Even more so, it is notoriously difficult to match the appeal of an authentic, traditionally crafted timepiece.