Start with what you know
A few random thoughts on watch brands' decisions and the future of watch sales
This started as an older post being refreshed, but I ended up rewriting a lot of it, and hope it makes some sense. Consider this a stream of consciousness as I debated this in my head, with myself!
Many innovators and strategists are obsessed with predicting how the world will change in the future, and then they then try and develop new products and business models to fit this "new hypothetical world". As Jeff Bezos describes in the video below, it can be even more valuable to figure out what will not change in the future - here's what he says in the video (from about 04:30):
I very frequently get the question: “What’s going to change in the next 10 years?” That’s a very interesting question. I almost never get the question: “What’s not going to change in the next 10 years?” And I submit to you that that second question is actually the more important of the two. You can build a business strategy around the things that are stable in time.
In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection.
It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon, I just wish the prices were a little higher.” Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible.
So, we know the effort we put into these things today will still be paying dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.
Jeff Bezos
Now, when we apply this to the world of watches, what can we conclude? It's an interesting question, and one which I wish we could hear more about from brand CEOs.
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There are obviously intrinsic and extrinsic factors when it comes to a watch purchase; The price and function of a luxury item like a watch, are correlated with perception and emotion. If you’re buying a watch/device solely to tell the time, you need not spend thousands, let alone hundreds of thousands. Specifically, I'd imagine people would like to have increasingly longer service intervals, longer warranty periods, increased durability, longer power reserves and so on - these are the watch analogues to Bezos’ examples of product prices and delivery times.
Less tangible, are of course the extrinsic factors such as resale value and reputation (or 'hype') level for each brand or watch. What appears to be true, is that the brands seem to have taken a reactionary approach to their product strategy in the last few years. That is, focusing more on extrinsic characteristics, and less on intrinsic ones. This seems absurd because it is absurd. Brands have 100% control over intrinsic factors, and almost no control over extrinsic ones. A brand can, with 100% certainty, choose to increase the power reserve of a watch, but they cannot do the same for determining whether their watch will be hyped or stay hyped for the foreseeable future.
By way of example - Vacheron Constantin (VC) once found themselves aboard a 'hype train' with the Overseas line, and as a reaction, they closed deposits on these watches until further notice. The waitlist, at least in London, extended beyond 5 years - based on the typical delivery schedule derived from their production timelines. If you asked anyone at VC, they would say production could not keep up with demand.
If this were true - what should they have been doing about it? They could potentially have increased capacity to be able to meet demand - but this could be short-sighted, and would probably upset existing collectors who see the market being flooded and likely devaluing their watches; a worse outcome for the brand. Should VC have cared? Being owned by Richemont, this was still a possibility, to meet shareholders' desires - but that didn't happen.
What would probably have been a better long-term play, would have been to simply take the current watch, and make it better in every way. Make another watch which will be a worthy replacement for this one - because that's exactly what customers want! It could be thinner, it could have a less fragile movement, it could have a longer power reserve and maybe even be offered without a date window! Instead, they waited until the hype completely died, and introduced an ‘upgraded’ version (4520v) which has what seems to be an inferior/cheaper rotor and made no other useful changes that I am aware of, aside from being a fraction thinner. They didn’t even bother making a ‘launch’ of it.
Being the astute reader that you are, you are likely scratching your head, wondering how my thoughts seem contradictory: i.e., improving the watch doesn't necessarily solve the increased demand. The point I am making is this: not improving the watch AND changing policies or raising prices is an objectively worse approach overall!
Swatch added a sixth Blancpain to their lineup of cheap disposable watches yesterday. Who the f*ck asked for this?
Could they have perhaps worked on making the movement serviceable? They could have potentially offered the same watch for a slightly higher price if they had done this, and who knows, this may still happen in the future - but yet again, they are ignoring what they ought to already know.
A positive example in this regard is the Moser Streamliner Small Seconds. I shared a video of this from my time at Dubai Watch Week. The brand heard feedback from collectors that the earlier models were too large for some - so they made the same watch, simplified it, and offered it in a smaller 39mm case. No prizes for guessing how well it is doing… these watches are waitlisted, and delivery times are supposedly long. That is not ideal for a prospective buyer, but from a brand perspective, they are listening to collectors and trying to deliver (what they seem to value) to them.
Granted, sometimes consumers have no idea what they want. Steve Jobs knew this better than most - the iPhone and iPad represent what has now become entire product lines from multiple companies… products which nobody knew they needed, but which have become indispensable. The principle, however, is still the same: start with what you know. Jobs knew that people liked music, and disliked the admin of managing entire physical libraries… he also knew that a more intuitive and streamlined user interface would be welcomed, and celebrated… because who doesn’t like convenience and ease? Jobs knew purchasing music was a chore, and that having everything available at one’s fingertips would streamline purchasing and increase volume… this is what he knew, so he came up with a product and ecosystem which could translate what he knew, into something which people would be likely to buy and enjoy.
Many watch brands appear to be living in echo chambers with people who are rooted in the past. Decisions are made to be true to historical constructs or design rules, which are tone deaf when it comes to the customers they serve. Profit is being guarded as the key performance indicator at the expense of brands’ long-term prospects. Specifically, this is translated into shorter launch cycles. Collectors are seeing new launches with a much higher frequency and given the rise of so many new independent brands and micro brands, the sheer volume of available options is pretty overwhelming. The fact we’re in a negative cycle for the industry just makes it worse for every company - but mostly for the newcomers.
This harms the industry over time - because particularly with high end watches… what is supposed to be an ‘heirloom purchase’, is now trending towards cyclical ownership: buy it, enjoy for a while, sell it within a year or two and buy the next hot thing. Is this really what luxury brands aspire to become? If so, perhaps they should introduce a subscription or lease model for every new watch instead.
Imagine paying for an annual membership to a luxury watch brand ‘leasing scheme’ - offered in tiers. Brands could continue to sell watches in a boutique, but priority would be given to members, in order of their tier-status. Brands could potentially offer a selection of watches to be used for the duration of the membership, after which they can buy the watch at retail price after a full service, or return it to the brand and either terminate the membership or renew their membership and pick the latest model and use it for the duration of the new renewed membership. This allows people to lease watches just like cars, and also not be trapped with an asset they may not want to own forever. Granted, this is the opposite of what luxury watches are supposed to stand for, but as I stated above… if brands are moving away from behaving like ‘heirloom purchases’ then why does this sound so preposterous?!
Anyway, I am curious to hear what you think about all of this... If you were in charge of a watch company, what would it look like to ‘start with what you know’ -and what sort of value would you aim to bring to customers for quick wins? What would you focus on for future growth? How would you tackle what seems to be a shorter ownership cycle?
I concede there are more questions than answers here, so I sincerely hope you weigh in below, and turn this into a useful discussion in the comments section!
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Vertical integration.Many brands do this with a good/better/best or beginning/intermediate/pro model. But at that point, you would start seeing the groups tearing their offerings in a much different way. So it would be hard to determine what would be good/better/best, since most brands have that within their own line, and with multiple brands in each group that would change everything. Tiering, or some sort of brand/group stratification would need to occur before determining which level you enter a group at, and how you move up. I’d it only the lease price, or does one need to move up steps as one becomes worthy, and how much does it cost?
Always relevant thank you again.
To me « future growth » should always be linked to improvement. Rolex master this science.
Always give what the market « seems » to want could expose you to hype. And by meaning, the hype never stand long.