A plastic quartz watch can tell the time more accurately than a Swiss luxury timepiece costing as much as a car or even a house, but value and functionality have never been selling points. That’s starting to change as a new breed of customers demand more for their money.
Brands like Richemont’s Vacheron Constantin and Officine Panerai are introducing new models that undercut their traditional pricing. Some, like Baume & Mercier, are upgrading features or manufacturing techniques. Others, such as Audemars Piguet, have begun reselling their own products, so that fans can buy a used version at a fraction of the $15,000-and-up new cost.
It’s a seismic shift for Switzerland’s watchmakers, holed up for centuries in the mountains near Geneva, who used to rely on an aura of exclusivity to fuel demand. Then came a four-year sales slump deepened by an anticorruption crackdown in China and the rise of the smartwatch. After Apple Inc. dethroned Rolex as the world’s biggest watchmaker last year, the $50 billion industry faced up to the new reality.
“People won’t just buy a watch because it’s Swiss,” said Ulysse Nardin Chief Executive Officer Patrick Pruniaux. “We shouldn’t bet on that.”
The new thinking was on display this month at a trade show in Geneva. Brands moved away from their competition in past years to add ever-more-intricate and expensive mechanisms like perpetual calendars and tourbillons, which counter the effects of gravity but whose usefulness is debated. Instead, watchmakers looked up from their loupes to talk about listening to customers.
Clifton Baumatic
Take Baume & Mercier, which unveiled the Clifton Baumatic — its first timepiece with a self-made automatic motor, rather than one supplied by component makers such as Swatch Group AG’s ETA. Making in-house movements is a big draw for watch aficionados because it helps burnish a brand’s manufacturing credentials.
The watch brings down the price for timepieces with proprietary movements as it retails for 2,300 francs ($2,400), a level at which bought-in motors are the norm. It was built to respond to client demands, the Richemont brand says: precision that can rival a Rolex; a more readable date; the ability to run seven years or more without maintenance. The watch also has a five-day power reserve. While the brand usually guarantees its watches for two years, this one is covered for three.
Accessibility often means a lower price. Vacheron Constantin’s new Fiftysix collection, introduced at the Geneva salon, starts at 12,700 francs in steel, a far cry from the gold and platinum offerings by the brand, whose prices can run into six figures.
“Richemont brands are trying to engage with a younger generation by offering prices that are lower than those typically associated with its brands,” said Jon Cox, an analyst at Kepler Cheuvreux.
Officine Panerai, known for big, chunky timepieces that garnered Sylvester Stallone as a fan and can fetch more than 20,000 francs, introduced some of its smallest and least expensive products yet, include the Luminor Due 3 Days Automatic, which measures a more svelte 3.8 centimeters (1.5 inches) across and sells for 6,000 francs, which may draw more female clients.
For Richemont’s biggest brand, Cartier, value is about convenience. Its $6,000-plus 2018 Santos model comes with a bracelet in leather and one in steel, which the customer can change and alter at home without the hassle of going to a boutique. This allows people to change the look and feel more often for their selfies on Instagram.
“It’s as true for a watch in steel as a watch in gold,” said Cartier CEO Cyrille Vigneron in a presentation at the fair. “Even for high-end jewelry watches, you need to establish a clear sense of the tangible value of the watch.”
Audemars Piguet
Richemont has been opening more of its own boutiques to reduce its reliance on third-party retailers. That brings it closer to customers, giving the company more feedback on what they want in a watch.
Audemars Piguet, the family-owned company that has been making watches for 143 years, is going a step further. It disclosed plans for a new line of stores that will trade the brand’s vintage timepieces.
CEO Francois-Henry Bennahmias said the move will keep the brand in contact with customers throughout a watch’s life cycle, rather than just at the initial purchase. He compared the strategy to automakers adding used-vehicle sales, which often open the doors to eventual purchases of new cars, and said the move was emblematic of the industry’s new thinking.
“We could be shot from one day to another because someone came up with something smart and totally unexpected,” Bennahmias said.
This article was provided by Bloomberg News.
