In a traditionally cautious industry, selling luxury watches online is a rapidly growing trend that looks set to stay.
In a fast-changing world, consumers are no longer shopping like their predecessors. In the last 15 years, we have witnessed the enormous rise of e-commerce, thanks to the growth of a younger, ultra-connected generation that increasingly does everything via their mobile devices, whether they are buying groceries, apparel, electrical goods and furniture, or booking holidays. The luxury market, with its pricier offerings, has taken longer to enter online retail as it has had to maintain the sense of exclusivity reflected in the value of its products, but enter it has.
Management consultancy Bain & Company reports that the market for online luxury goods grew 13 per cent in 2016 alone. E-commerce doubled its share of the luxury market between 2012 and 2015, up to 7 per cent, and consultancy McKinsey & Company expects this to rise to 18 per cent by 2025, reaching 70 billion euros (S$113 billion). More specifically, online luxury watch sales in 2016 were estimated at just over 3 per cent of the watch market, approximately 1.1 billion euros – double its share from three years ago.
The watch industry has been slow to the game, as extensive investment in own-brand boutiques worldwide and longstanding relationships with major retailers mean that it is cautious about disrupting traditional sales models. Then, there is the disconnect between the gradual evolution of highend horology and the fast-paced cycles of consumer technology. However, savvy CEOs such as Tag Heuer’s Jean-Claude Biver are clearly aware that they may lose access to an entire generation of consumers without an e-commerce presence in an increasingly omnichannel retail environment.
Tag Heuer began selling online through key retailers in 2009, before subsequently opening its e-shop, today available in the US, the UK and Australia. These channels generate slightly less than 10 per cent of the brand’s global revenue. Biver states: “We have a very strong focus on online. It is by far the fastest-growing channel, and already represents very solid numbers. Consumers shop online more and more, and it will only accelerate, as millennials and digital natives are entering the Swiss luxury watch market only now. By 2020, our goal is to do 10 per cent of our total business on Tagheuer.com, and another 10 per cent on retailers’ websites.”
Other established brands that have taken the plunge rather than waiting on the sidelines include Bell & Ross, Cartier, Chopard, Jaeger-LeCoultre, Montblanc, Nomos Glashutte, Piaget and Rebellion, which sell through their own e-shops. Around three dozen Swiss companies now have their own online retail outlets, while only three years ago, that number was much smaller.
Mature and geographically large, the US market has been the obvious e-commerce testing ground for several brands. Breitling began selling online by offering 48-hour delivery across the US. Two other brands with US-only online sales are Bulgari and Panerai, which retail a core selection and keeps some models for its boutiques only. Jaeger-LeCoultre started selling its watches online in the US in 2012, subsequently expanding to
Europe, China and Japan, thanks to excellent response. Online clients, apparently, came from areas where the brand both did and did not have an existing retail network.
Cartier debuted its e-shop in 2009 in Japan, followed by the US a year later, selling all watches except exceptional creations and limited editions. For the Singapore market, it started online retail in October 2016, and response has been positive. Gregoire Blanche, who was until recently Cartier’s managing director for South-east Asia and Oceania, had said: “We will be increasing investment in this area. Not only do we expect a large conversion to digital, but we believe that it will bring new segments of clients and greater conversion throughout all our networks.”
NOT GOING IT ALONE
Just as in physical retail, however, some brands choose to sell online solely through multi-brand watch retailers rather than directly through their own e-shop – at least for now. Girard-Perregaux, for instance, favours a long-term and exclusive relationship with its retailers, and is therefore available through websites like The Watch Gallery. Hublot is sold on the Web via retailers such as Jomashop and Time of Switzerland, and has no plans to sell directly online, to avoid cannibalising its retailers.
Interestingly, fashion e-commerce sites have been notably visible in making serious watches available to a larger audience, many of whom might not have considered owning them before. Owned by Richemont and Italian fashion e-tailer Yoox, luxury fashion e-commerce giants Net-a-Porter and Mr Porter have been popular multi-label destinations for watch brands, big and small. And it’s not just Richemont-owned brands that have added their pieces to these e-tailers’ catalogues; Mr Porter, for instance, currently stocks Richemont brands like Montblanc and IWC, as well as non-Richemont names like Bremont, Ressence, Zenith, and Bell & Ross.
In November 2016, IWC announced Net-a-Porter and Mr Porter as its first online-only outlets, becoming the first luxury watch brand with a permanent presence in the two e-stores, selling a curated selection from each of its product families. During the SIHH watch fair in January 2017, customers could buy selected references of the new Da Vinci collection on the IWC website and collect their purchases from an IWC boutique, or via Net-a-Porter delivery – before regular sales began in April.
For Montblanc, Mr Porter, and not its own boutiques, was the launch pad for its Summit smartwatch collection in May 2017. The partnership was so successful that the brand has expanded its offerings on the menswear site to include timepieces from its Timewalker, Heritage Spirit, Heritage Chronometrie and 1858 collections. With a current annual production of 300 timepieces, small independent brand Ressence has sold more than 30 pieces on Mr Porter since 2015. DIFFERENT APPROACHES Just as the Internet has changed the face of retail, it has also opened up a multiplicity of sales channels online. Top influencers and social media have been a powerful part of the equation. Founded in 2008 by Benjamin Clymer, US-based online watch magazine Hodinkee has launched five limited-edition, co-branded timepieces that sold like hotcakes, totalling US$3.04 million (S$4.13 million) in revenue. For each, Hodinkee had a hand in its design. Its first such foray in 2015 saw all 10 pieces of the MB&F LM101 (US$52,000) sell out within five hours. Most recently,
20 Ressence Type 1H Limited Editions (US$22,500) were purchased in 21 minutes.
Other top online influencers have helped to drive sales in different ways. In 2012, Robert-Jan Broer, founder of the Fratello Watches blog, created the hashtag #SpeedyTuesday – a reference to Omega’s iconic Speedmaster model. This hashtag had been used over 41,000 times on Instagram, when Omega announced a new limitededition timepiece commemorating the fifth anniversary of #SpeedyTuesday. In January 2017, Omega had its first-ever taste of direct online sales with the Speedmaster “Speedy Tuesday” Limited Edition, inspired by a 1978 model created for Nasa. It harnessed social media to boost sales and direct customers to the Omega website, where orders could be placed for the watch. All 2,012 pieces were bought in just over four hours.
Omega president and CEO Raynald Aeschlimann explains the company’s digital retail strategy: “It will definitely be a part of our future, but we are not rushing into it because we want to get it right. It will be introduced on a market-by-market basis. I’m not sure about a large conversion of sales to digital, at least in the short term, because buying a watch is still a very handson process. People like to come into our boutiques and experience how the watch looks and feels on the wrist.”
High-end timepiece buyers, it seems, are coming around to the notion of purchasing watches online – but slowly. Long-time Singapore-based collector Dr Melvyn Teillol-Foo prefers buying timepieces at physical stores as he believes that no photos or videos can truly capture how a watch looks and feels in real life. However, he recently bought three watches online for the first time: the Zenith Cronometro Tipo CP-2 special edition custom-made for PuristSPro for its 15th anniversary, as he has been a member of this online watch community for years; and two timepieces by Montfort, a brand that he helped to finance via the crowdfunding platform Kickstarter. He describes his experience: “I liked the ease and potential savings. It requires a lot of trust in the designer and watchmaker that the product will be as good as they say. For very well-known, mid-priced or inexpensive Kickstarter watches, the online route may be adequate, with minimal risk. Above that, I need to be in a real store with real people, for real watches.”
Some players believe it is just a matter of time before people come around. Hodinkee’s director of watch sales, Louis Westphalen, concludes: “I truly believe that online watch retail is the future, and that its importance will grow exponentially in the short term. The Internet is where my generation has grown used to shopping. We value the convenience of the experience, regardless of price point. That said, to be successful, online retail requires new capabilities, and a different type of relationship with clients, enthusiasts and collectors who live and breathe on Instagram, dedicated forums and Whatsapp. This is what the brands are slowly gearing up to, and it is such a drastic cultural shift that it explains their prudence towards e-commerce. The question is not whether some brands will ever sell online, but rather when and how.”
“E-commerce will definitely be a part of our future, but we are not rushing into it because we want to get it right.”
OMEGA CEO RAYNALD AESCHLIMANN
05 Fifty pieces of this special-edition Cronometro Tipo CP-2 were created by Zenith to mark the 15th anniversary of online watch community PuristSPro. Available only via the watch’s website, all 50 pieces sold out within six hours. 05
06, 07 Cartier was among the first watch brands to make its wares available on designer fashion website Net-aPorter, which carried pieces from its Drive de Cartier collection and women’s Panthere de Cartier series.