A new generation of young — and values-driven — watch enthusiasts has been fueling demand, and they’re just as interested in raw materials and brands’ ethics as they are in the mechanics and digital tech capabilities of their luxury timepieces.
During a WWD panel discussion, “Challenges & Opportunities of 2022,” which took place at Watches and Wonders Geneva, leaders from Ulysse Nardin, Chopard, Tag Heuer and A. Langhe & Söhne offered their insights into the buying habits, and priorities, of the new watch customer, in the U.S., and worldwide.
They also discussed the enduring appeal of physical retail, and the potential of NFTs and the metaverse during a wide-ranging discussion moderated by WWD’s Paris bureau chief Joelle Diderich.
The pandemic did nothing to dim enthusiasm for high-end watches. Instead, the worldwide lockdowns only spurred demand, with customers and collectors spending even more time researching purchases, peppering salespeople with questions and buying online when physical stores were closed.
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In the case of the Omega x Swatch MoonSwatch launch earlier this month, customers were sleeping outside Swatch stores in the hours before opening time, then picking shelves clean of the $260 watch, which is now selling on eBay for thousands of dollars.
“I think the industry is on the cusp of a renaissance,” said George Ciz, chief marketing officer at Tag Heuer. “We are in a really good place in terms of demand, and I think the competition has really pushed all the brands to perform better, to be creative, to be innovative.”
He pointed to the brand’s collaboration last year with Nintendo on the Tag Heuer Connected Super Mario Limited Edition where 2,000 watches sold out in 30 minutes. “It was a real surprise to everyone. But it wasn’t just a surprise for the sake of it.”
Ciz said with collaborations, “you always have to have the end game in mind, you have to be looking at the impact on your core collection.”
Patrick Pruniaux, chief executive officer of Ulysse Nardin, said there is “a lot of excitement” in the market right now, with “the level of education of the consumer growing. A new customer is coming in. They know what they’re talking about — and even if they don’t — they still want to discover.”
Pruniaux pointed out that the new customers are “only 25 or 30 years old, but they have an appetite to invest and to buy watches, which is very new to us. It’s not only about inherited money, but also money that was made recently. And they learn so fast. That is great for the whole industry.”
Louis de Meckenheim, chief marketing and communication officer at Chopard, said these young customers are interested in collecting watches and jewelry alike. “It’s very new for us to see young collectors — especially those interested in jewelry, and we are very pleased to welcome them,” he said.
The young collectors are not only knowledgeable about what they are buying and collecting — they’re also concerned about the products’ origins.
De Meckenheim said Chopard’s clients sometimes “know the brand better than we do” and are also curious about the products’ origins, and the brand’s values, with sustainability becoming “ever more important.”
He said in 2018, Chopard began working exclusively with 100 percent ethical gold but, at the time, the move didn’t elicit much of a reaction from the end-customer. In the space of a few years, however, that conversation has changed completely.
“Now, for the very first time, we have clients coming in saying they want to learn about Chopard and its creations because of the journey it has made in sustainability,” he said.
Wilhelm Schmid, CEO of the Richemont-owned A. Langhe & Söhne, said he believes that the German brand’s high levels of craftsmanship and durability will always be attractive to buyers and collectors, especially in a world where so much is disposable.
“We have a great following in Silicon Valley, with customers who make their money by coming up with products that outlive their usefulness within six months. But they choose to spend their own money on the most traditional thing that you can buy, a mechanical watch — an anachronism in itself. I think that as long as we manage to connect with them, as long as we manage to stay relevant for them, I foresee a great future.”
He noted that authentic values are part of the brand’s DNA, and that it aims to be disciplined, and humble.
“We have to be careful with everything we do, which is why we focus so much on collectors. The watches we build are rare: We have 500 people making 5,500 watches, and there is no way I can produce [more] next year because I don’t have the [craftspeople] to do it. So, we focus very much on those people who have been loyal to us in the last 25 years. Of course, we welcome new customers, but we do it with care. I believe that if you have a great value system established at your company, it helps you to stay customer-friendly.”
Endorsements — celebrity or otherwise — have to be authentic, too, as customers can spot a fake a mile away.
“If you find the right one, the authentic person, then a brand ambassador can help to bring your values to life. It’s very important to do the homework and be honest with yourself and work with a brand ambassador for the right reasons,” said Ciz of Tag Heuer. “We always look for ambassadors who believe in the brand.”
Ryan Gosling, he added, researched Tag in-depth before signing on, while Patrick Dempsey was eager to visit Tag’s headquarters in La Chaux-de-Fonds, Switzerland, and spend time with the watchmakers. “He’s interested, he comes up with ideas,” said Ciz.
Naomi Osaka helped to design the limited-edition Aquaracer model for Tag that bears her name.
All three Tag ambassadors have strong ties to North America — and that’s no accident. The U.S. market is flourishing thanks to a new generation of wealthy, young consumers, and investment by the brands in omnichannel and physical stores.
Schmid of A. Langhe & Söhne said the U.S. market has always been an important one for the brand, but what’s new for him is the very young and savvy customer.
“We are seeing people who are 21, 22, 25 years old who are very knowledgeable. You can’t just make up a marketing story because they will spot it and you will lose all credibility — forever. It’s a collector’s market, and a very successful one for us,” he said.
Ulysse Nardin’s Pruniaux said that the U.S. is proving to be more dynamic than Europe, with customers who are engaged, knowledgeable — and eager to spend.
“They learn very rapidly, move more rapidly than the Europeans. And they don’t need to be convinced 10 times before making a purchase. They are educated, but they also want to discover, and they’ll leap over to a brand more rapidly than the European customer,” he said.
Pruniaux added that a clear “step-up” in the customer experience at retailers across the U.S. has been a great driver of demand. He compared the sales trends in watches to what was happening in the luxury automobile industry in the U.S. in the 1980s and 1990s.
“Americans moved from local luxury car brands to international brands, very often German ones. And the move was quite fast. Americans have been buying luxury watches for a while, but now they’re doing it on a completely new scale. And this is great for everyone because they are influencing the rest of the world.”
He believes that the brands’ and retailers’ significant investments have been paying off: Money has gone into high-profile locations, training and investment in staff. “Business in America is very, very dynamic, and that is great news for the industry,” Pruniaux said.
Chopard’s de Meckenheim agreed.
“Americans can get immediately into a brand if they understand its DNA, and legitimacy,” he said, adding that Chopard is preparing to burnish its presence further in the U.S., with a flagship boutique on Fifth Avenue that’s due to open in mid-September. He said it will offer clients “an extraordinary new experience.”
Ciz at Tag Heuer said during the pandemic, growth in the U.S. was more than 800 percent thanks to the company’s omnichannel strategy. He said there were a lot more “long-distance sales” and e-commerce was thriving, but he believes that there will be a return to physical retail.
“People still love to go shopping, on the weekends especially. They love to hang out, go to the stores, have a nice meal. And they love to go as a tribe, particularly when they are buying their first watch. They love learning about the brands, it is part of the fun. Stores will still be extremely important, and I think you want to have amazing flagships that inspire and take people on the journey and make them think,” said Ciz.
Brand leaders also discussed the opportunities presented by the metaverse. Ciz said Tag Heuer doesn’t want to rush into things, and wants to do something “really well, and credibly” in the space.
“The metaverse community is very strong, very opinionated and full of early adopters. We are at the very tip of the iceberg, and we need to earn their trust. We will try to come up with a really interesting solution, and we have some interesting products in our portfolio that could be really well suited for it. And there is also investment potential: it’s an engagement story, a commercial story, and a product story. There are a couple of angles there,” he said.
Regarding the potential for NFTs in the space, de Meckenheim of Chopard said they will never replace real product. Instead, “they have to bring an added value, not just words, to what we are already creating,” and their development requires the same level of attention as any other Chopard product.
Chopard, he said, will be paying ever-closer attention to the metaverse and NFTs.
“It is the future and it brings a totally new kind of client to the maison,” including cryptocurrency investors. “And when you have new clients coming to you, discovering your maison, you need to find the right way to speak a language that they understand. At the moment, that is the challenge for all of us. We have new clients coming in, and we need to find the right way to adapt our creations to their demands and desires, while ensuring that we stay true to ourselves.”