Luxury watches in the digital age

The traditional watch industry, whose heart has to be found in Switzerland, has been synonymous of prestige, high-end service and exquisite sense of luxury for decades. Yet, the digital era has brought along some new challenges for the industry, both in its retail strategy and the technology of its products.

How big are those challenges and how is the industry facing them?


E-commerce and online presence.

E-commerce has been a game-changer for number of industries and companies. Although lots of them have developed new online tools quite fast to tackle this change, the luxury watch industry has been more reluctant and slower to adopt it. Watch brands have even actively discouraged consumers from purchasing online, to keep them from having bad surprises. In fact, due to counterfeiting and grey market dealers, the Internet was historically not perceived as a safe and proper place to buy such prestigious products. Besides, buying a luxury watch is traditionally part of a unique in-store experience delivered through a high-end customer service in luxurious showrooms. This type of service just appeared to be impossible to recreate online. Although a new McKinsey report has shown that, by 2025, 18% of luxury goods will be purchased through online platforms (three times the current figure), most watchmakers are still reluctant to go online. They tend to progressively, yet very carefully, increase their digital presence to seduce new consumers, while putting a strong emphasis on the prestige and feeling of trust they have developed through out the years.

Online strategies are quite different among brands. Some like Cartier or Piaget have developed e-commerce platforms and try to embrace the trend. Yet those platforms are usually quite limited both in their offers and the countries in which they are available. Tag Heuer has just announced a quite aggressive digital strategy, including the launch of a new e-commerce platform aiming at integrating all of the brand’s products in a maximum of countries.

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Others, on the contrary, like Rolex or Omega, focus exclusively on the development of their offline presence. Some others finally, not convinced by the relevance of e-commerce in their industry, try to improve their online presence to boost offline sales. For Daniel Riedo, CEO of Jaeger-LeCoultre, e-commerce sales are still marginal and will definitely not be a strategic distribution channel. According to Georges Kern, CEO of IWC Schaffhausen, «Selling online just don’t correspond to IWC, its products or its clients. IWC products need to be touched, felt and seen.” Nevertheless, to get in touch with the online clientele and meet its needs, IWC has developed call centers where a concierge is available for consumers desiring to conduct a purchase. This emphasizes their refusal to give up on a high-quality and personalized service. The brand has also partnered with Net-à-Porter offshoot Mr. Porter, a global online retailer for men’s fashion. At the launch of the new Portofino collection, a customer could go on and see how Mr. Porter could complete his ensemble with a fine selection of hats, bags and shoes. The goal was to enhance the experience of the customer and to give him a full view of the IWC universe.

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Will watch makers eventually develop their online presence? For now, luxury watches can be found on a series of non official retailer’s websites and watch brands cannot really prevent their products from being displayed like this. Their image is therefore at stake and so is their reputation. Going online could help them gain control over this and provide a more trust-worthy platform on which clients could rely on. Yet, buying a $5000+ watch is worth more than just a quick click on a “purchase” button and a lot of customers value the in-store service. There might anyway be a market for less expensive watches. Yet, seeing the current sales figure of the few brands that are selling online, one question remains: is the market ready yet? Probably not. More here:

Smart watches

“Luxury business is coming either from Paris, or it’s coming from Italy, and watches are coming from Switzerland. They’re not coming from the U.S. Silicon Valley — my God, what they’re wearing and everything! They really don’t have this culture of refinement. We bring something else to the story.” Peter Stas, CEO of Frederique Constant.

The smart watches market is about to explode, and according to a study from Allied Market Research, has the potential to reach $32.9b by 2020. In 2014, the concern about smart watches was shared by 11% of traditional watchmakers. Today it has reached 25%. The fear that history could repeat itself is omnipresent. In the 1970 – 80s, the Swiss mechanical watch industry was devastated by the rise of quartz watches, lead by Seiko Epson Corp, and employment drop from 90K to 28K. The industry only rebounded when the watch became more of a luxury item.

It has been a while since consumers have needed a watch to know what time it is. Indeed, any phone has been able to do that for some time now. However, a smart watch that rings when you have a new mail, can be quite useful and brings something more. Yet, luxury watch makers go beyond the utilitarian value of watches and market their products as deeply symbolic. It “is a piece of eternity in a box” Jean-Claude Biver, CEO of Tag Heuer. For the one who wears it, a watch carries the souvenir of a particular place, a heartwarming memory or even a family legacy.

Although the high-end market (>5000$) seems quite protected from smart watches, the many less-expensive quartz watches don’t seem to be so safe. Here are a few examples of how brands have managed to integrate technology to build connected luxury watches, while respecting their legacy.

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Tag Heuer has launched in December 2015 its own smart watch in partnership with Google and Intel. It looks like one of the brand’s most iconic models, but works just like every other Android Wear device.

 10.pngFrédérique Constant – The Horological Smart watch combines the function of a Fitbit with a traditional Swiss masterpiece. From the outside, it looks just like a traditional watch. Yet, it is full of tiny sensors that count steps and measure sleep cycles. This information is transmitted to a phone via Bluetooth. The phone controls the watch — resetting its hands in different time zones, for example.

Montblanc has developed an electronic watchband, which displays emails, has an activity tracker, can control the music in the user’s phone, and has a selfie-enabling trigger for the user’s phone camera. The e-strap goes for $390 and is for use with its TimeWalker watches, which range $3,700 to $5,800. Convinced by the out-of-time and sentimental value of luxury watches, Montblanc has actually put the technology in the strap, so that the watch itself cannot be outdated after a couple of years, just like any other tech product.

IWC Schaffhausen has announced last year the launch of IWC Connect, a small secondary device that attaches to the watch’s strap and adds such things as fitness tracking and network connectivity on top of the traditional mechanical watch. “Many of our customers are already wearing connected devices alongside their IWC watches,” said IWC in an e-mailed statement. “With IWC Connect, however, there is no need any more to have additional devices on your wrist.”

The biggest challenge is to come up with extremely good technology, usually through high-profile partnerships that can enable them to compete with Apple, Google and Samsung. Technology has to be extremely good to convince tech-savvy consumers. The risk is otherwise to weaken the prestige and the power of the brand. Luxury watchmakers don’t have the in-house know-how to develop such products and therefore stakes are high. Developing tech accessories might be more relevant to this type of brands, who forged their identity on timeless watches.

The rise of the Apple Watch may also bring around a new, and maybe younger, demographic to traditional watches, given time. By spending millions into convincing a generation that grew up with smart phones, Apple is convincing them that having something on one’s wrist is useful and fashionable again. This might come to serve the traditional watch industry. “Men especially have precious few things to indicate who they are. Traditional watches are one of the few and very powerful ways of designating your status.” (Ariel Adams, editor in chief of the horological blog “A blog to watch”).


  1. ajsalcetti · ·

    Definitely industry changing by the minute. I had a case on luxury watches last year in marketing class and while the focus was high end vs low end and how to differentiate, we did touch on the changing trends of move to smart technology and its ramifications. I certainly agree that this industry has been stubborn to their old ways, but they are finally starting to change given market share loss always gives a kick in the butt to management. There is definitely the sense that watches should be purchased in a storefront that showcases everything, has experts on hand, has the servicing and repair folks nearby, etc. It is similar to buying cars or jewelry – people want the in-store experience for security, comfort, and knowledge (and while cars can’t be counterfeited, jewelry and watches certainly can be). There may also a shift in demographics that less people wear stuff on their arms/wrists (I haven’t worn a watch or bands, fit bits, anything my whole life and have no plans to), especially with the smart phones substituting for the old watches’ primary function; with that said, apple, samsung, and smart watch firms have marketed very well and are capturing people with that desire to know things immediately, whether a text, phone call, calendar, steps, directions, etc. So to your point, the “time” aspect of the watch is basically obsolete, but it is the other amenities and features that will draw people to put something on their wrist – because why go all the way to your pocket or purse when you can just turn your arm!

  2. My sister actually worked in the watch industry for quite some time and she discussed a lot of concern about the smart watch revolution. Her company at the time tried to get on the smart watch technology and add in a “selfie” button which was an interesting yet impractical idea. I could easily see the old gatekeepers (timekeepers?) falling behind tech giants as we enter into this new wave of wearable technology.

  3. Interesting post! I thought the e-commerce section was especially thought-provoking. I think it’s amazing that so little of their business is done online. Obviously it makes sense that people want to see what they are buying in person (especially if the watch itself is going to cost thousands of dollars). But at the same time, I think people generally will know what they want to buy and could order it online. Especially for our generation, I think we do so much research online before we purchase that we could make an expensive purchase online without too much anxiety. I think it will be interesting to watch how this industry reacts because ultimately, if people are willing to buy online, this traditional industry is going to be forced to create an online marketplace.

  4. This post provides interesting insight into the changing nature of the watch industry. I definitely agree that watch sellers are going to need to increasingly rely upon reasons other than the ability to tell time to get people to buy watches. I used to sell watches at J.C. Penney and very few of the people who bought them were young people. It was mostly just people who buying them as status symbols and older people buying them to tell time (I think these older people all had cell phones but they are just not used to substituting a watch for a phone as a way to tell time). I think that smart watches will definitely become more popular and that they might even replace cell phones. Although for that to happen companies will need to make the screens on them bigger. I might not mind having what would basically be a smart phone strapped to my wrist as long as it was not uncomfortable.

  5. Wow, what a great, in depth post. I have to admit that, while I really like my Apple watch, I think I do like my old Tag Heuer better. Its perfect for the purpose and looks really good. Just gotta finally break down and take it somewhere to get the battery changed.

  6. Excellent post! I own, love, and use around 4-5 quartz watches, and I hated the idea of the smartwatch when it was introduced. Watches have always been timeless (ha) accessories that define who I am, as your quote very accurately stated, and I just saw no use in the Apple Watch other than as a small extension of your phone from your pocket to your wrist. Almost like a lazy way to check your phone without having to reach in your pocket. Regardless, I like the way that traditional high-end watchmakers are approaching the market. Staying true to your brand is without a doubt the most important thing they can do, and so making digital accessories that do not interfere with the classic watch face is the way to go. Actually, I read about Steve Wozniak’s (co-founder of Apple) opinion on the current position of Apple with the release of the Apple Watch and it seems that he thinks it’s Apple that’s straying from the brand they really are. I’ll leave you with his quote:

    “I worry a little bit about – I mean I love my Apple Watch, but – it’s taken us into a jewelry market where you’re going to buy a watch between $500 or $1100 based on how important you think you are as a person. The only difference is the band in all those watches. Twenty watches from $500 to $1100. The band’s the only difference? Well this isn’t the company that Apple was originally, or the company that really changed the world a lot.”

  7. This was a great, extremely well-detailed, and thought out post. I’m not a watch wearer myself, but I do notice the shift in what my classmates and acquaintances are wearing. I, personally, do not foresee myself buying a smart watch, but I do see the appeal. I take a lot of time to think about decisions that cost this amount of money and by the time I might make my decision, the watch could be obsolete.

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