For Tag Heuer, smartwatch is ‘additional business’ beyond core

AS MAJOR events were getting canceled across the US, and New York was banning gatherings of 500 or more on March 12, the Swiss luxury watchmaker Tag Heuer hosted a final shindig in honor of its new Connected Watch.

At the Caldwell Factory in New York’s trendy West Chelsea district, guests played with the new smart timepiece, which comes in four variations to retail from $1,800 to a steep $2,350 — making it one of the most expensive, serially produced, connected watches on the market.

“The new Connected Watch combines high-performance digital experiences with our new TAG Heuer Sports App and fine watchmaking,” says Frédéric Arnault, the company’s chief strategy officer and digital officer. “With the steel bracelet and interchangeable straps, the dynamic dial designs that are inspired by our mechanical watches, and the case design, especially with the ceramic bezel, it looks like you are wearing a mechanical watch.”

The Connected Watch — crafted in stainless steel or titanium — features a ceramic bezel that improves the communication for the sensors underneath to align with the app. In previous generations, a steel bezel interfered with the sensors, so the watch construction was a bit bulkier. (The molecules of the ceramic allow for better transmission.) The new watches are thinner and lighter in weight, as well as more ergonomically designed to fit the wrist. They are also highly intuitive for the user because instead of being a total touch-screen device, functional crown and chronograph pushers are installed on the case side. They can be used to start and stop programs, return to original menu screens, and more.

Tag Heuer, still a traditional watchmaking company focused on mechanical watches, views the connected business as a new revenue stream, not a replacement for existing categories. “We continue to invest heavily in the mechanical watch space; it is what we stand for, and our core values are in the mechanical watch world,” says the Mr. Arnault, 24, whose father Bernard is chairman of Tag’s parent company, LVMH. “The smart watch is additional business, and it increases our consumer base.” In fact, the connected watch business nourishes the mechanical business, according to Mr. Arnault: Some people who start with a smart watch go on to buy mechanical TAG Heuer watches.

How much additional business can the brand expect from the new Connected Watch? The smartwatch market “is really booming, with very high double-digit growth year over year, and it’s just the beginning. It is only four or five years old, and there is more coming, especially since the true use is health and fitness, where we have positioned ourselves,” says Mr. Arnault. “So we have strong ambitions and believe the volume can reach several hundreds of thousands of watches. We think this could reach 20 to 30%of the business in the years to come.”

While the COVID-19 coronavirus pandemic could slow initial sales as people delay big-ticket purchases, the Tag Heuer Connected Watch is a multipurpose purchase, especially with the Sports App that tracks not just walking, but jogging, running, and even golf. (A separate digital team was created in Paris to work on this app, created over the course of 18 months.)

According to Mr. Arnault, the next sport to be tracked, with updates coming in the next few months, will most likely be swimming. Currently, the watch has interchangeable rubber straps and metal bracelets and is water resistant to 5 ATM, which means it’s ready for the pool.

“The tactile sense of the watch, the functional pushers, and crowns make it very easy to use,” says Mr. Arnault. “We wanted the user interface to be intuitive and fluid; that was a high priority. The [previous model’s] heavy reliance on touchscreens bothered us. If you have wet fingers and can’t move the screen, for instance, it is a problem. With this watch, even a mechanical watch user feels very comfortable.” —

“The smart watch is additional business, and it increases our consumer base.” — Frédéric Arnault, Tag Heuer’s chief strategy officer and digital officer