Singapore Tatler Jewels & Time
MILLENNIAL DOLLAR BABY
The watch and jewellery industry fights for its slice of the Generation Z pie
“Millennials and Generation Z accounted for 85 per cent of the growth in luxury spending last year.”
The behavioral habits and preferences of millennials seem vastly different from previous generations. The Financial Times noted that millennials (defined by the Pew Research Centre as those born between 1980 and 1996) are now the biggest demographic group in the world at 1.8 billion in population, dwarfing even the baby boomer generation, which numbers 1.1 billion. Millennials grew up in a time of technological change, which greatly affected the availability of both information and social networks—wikipedia, the iphone, and of course, Facebook and Instagram were all invented during their lifetimes. A Goldman Sachs report suggested that millennials also have less disposable income and more debt than previous generations. Coupled with the greater access to information about product quality and cost, millennials are likely to search for brands that give them the most perceived value at a given price. The luxury must-haves for previous generations are of lesser importance to millennials. However, that does not mean that the luxury industry as a whole is doomed. According to the Business of Fashion, millennials and Generation Z accounted for 85 per cent of the growth in luxury spending last year. Since millennials are entering the stage of their lives where they have the greatest spending power, what has the watch and jewellery industry done to court them?
The answer: social media. According to Goldman Sachs’ analysis of data (from the Association of National Advertisers, Barkley, Service Management Group, and Boston Consulting Group), 34 per cent of millennials agreed that they liked a brand better if it used social media. Just about every watch and jewellery brand has cottoned on to this powerful tool to communicate with their prospective consumers directly. A search across various social media platforms indicates that Instagram is the de facto choice for most watch and jewellery brands with more followers and a higher level of engagement than on any other platform. Case in point: Patek Philippe—it joined Instagram only this March (coinciding with the Baselworld fair) and has 151,000 followers on Instagram, compared to 22,500 on Youtube (where it started regularly posting videos only two years ago), and 5,600 on Facebook (with no content but redirects you to its Instagram page).
The power of Instagram is no surprise—it is snappy and allows for the communication of both images and facts about the brand’s history or new releases in innovative ways. Tiffany & Co., for instance, has regularly created Instagram-unique campaign images that are quirky, visually exciting, and conveniently tagged with a shopping link. With 8.7 million followers, that’s a lot of shopping to be done. The champion of the Instagram game, however, is Omega. This past July, it launched its second “Speedy Tuesday” campaign, and took orders for an exclusive version of its famous Speedmaster entirely on Instagram. A teaser was sent to its followers mere hours before the official launch. And it worked—all 2,012 pieces of the Speedmaster Limited Edition 42mm “Ultraman” were sold out within two hours. No intermediaries were involved, as collectors merely reserved their piece via a link in Omega’s Instagram account. “This is very millennial,” says Omega CEO Raynald Aeschlimann
“We don’t do an Instagram watch. We don’t do a watch that is a millennial watch. We are creating the buzz around [the watches] by interesting [the millennials]” —
RAYNALD AESCHLIMANN
about the first “Speedy Tuesday” campaign in an interview with the South China Morning Post. “This is a very new way— there was no Instagram five years ago. But we are respecting [the millennials]. We don’t do an Instagram watch. We don’t do a watch that is a millennial watch. We are creating the buzz around [the watches] by interesting [the millennials]”
To speak about social media in a more market-specific context, one must consider Wechat and Weibo— China’s most influential social media networking platforms. A report by Digital Luxury Group measured word-of-mouth performance across Wechat, Weibo, and Baidu (China’s most prominent search engine) at the beginning of this year’s Baselworld fair. Surprisingly, luxury marque Chopard came out tops, taking nearly 60 per cent of all brand mentions on Weibo, while Rolex and Omega topped Wechat and Baidu respectively. While these platforms might not be as prolific as Instagram globally, the isolated nature of China’s market (which does not use Instagram nearly as much) requires special attention from brands. And rightly so, as China’s 350 million millennials—a staggering number compared to 70 million in the Us—is ripe for the picking.
While essential, social media is not the only strategy that brands have employed to woo millennials. Many have also engaged celebrity ambassadors to court a targeted demographic. In Omega’s case, it is the young Kaia Gerber, who will turn 17 in September. She is not strictly a millennial herself, but her appeal lends itself to a young audience. (Her 3.6m followers on Instagram don’t hurt either.) Tudor has worked with the likes of American singer Lady Gaga, former footballer David Beckham, and most recently, Taiwanese singer Jay Chou, all of whom appeal to the millennial demographic in different ways. In the same vein, Piaget has Ryan Reynolds, Cartier has Jake Gyllenhaal, and IWC has Bradley Cooper, and Tiffany & Co. has Elle Fanning. Chopard’s aforementioned success with the Chinese market also had much to do with its partnership with singer Roy Wang— announced at the beginning of the Baselworld fair, coinciding with the brand’s dominance on Chinese social media accounts. What celebrity faces can do is draw attention to brands that have a dearth of younger consumers who might one day become true connoisseurs—after all, everyone starts somewhere.
And that start for many watch brands is churning out entry-level timepieces to appeal to millennials. This strategy could also have been put into place to combat the soft market that the watch industry has been facing in the last few years, but the approach is likely two-pronged. In the last two years, high-end brands such as Piaget and Girard-perregaux have both introduced entry-level collections—piaget with
the Polo S, and Girard-perregaux with the Laureato. This year, Jaeger-lecoultre launched its revamped Polaris collection at an entry-level, while Vacheron Constantin created the new Fiftysix collection at a lower price bracket than its other offerings. As Goldman Sachs reported, millennials are more price-conscious than previous generations, so they are more likely to balance a watch’s perceived value against its price tag.
One cannot speak of price tags without mentioning e-commerce. According to the V12 data, 67 per cent of millennials prefer to shop online as opposed to a physical store. But the watch and jewellery industry has been slow on the uptake with e-commerce. The consensus is that most consumers would not want to pay for a watch or piece of jewellery without first seeing it in person. However, some brands have taken the plunge, with luxury e-tailer Net-a-porter playing host to watches and jewellery from the likes of IWC, Jaeger-lecoultre, Piaget and Tiffany & Co., while brother site Mr Porter carries a wider range, including Bell & Ross, Breitling, Montblanc, Ressence and Zenith. Another online retailer, Farfetch, which has major Chinese e-commerce player Jd.com as an investor, has also launched its watch and jewellery department, with brands such as Bell & Ross, De Beers, Zenith, Girard-perregaux and Ulysse Nardin. While the jury is still out on who would pay those prices for a watch online, it is nonetheless true that the watches and jewellery pieces are all moving quite briskly. Jean- Claude Biver, the legendary head of LVMH’S watch business, said at this year’s Baselworld fair that “[the watch industry] didn’t realise the speed at which millennials would take to buying cars or watches online.” The truth is that there is no one winning strategy guaranteed to win the millennial dollar. The best approach is likely one that both fits the identity of the brand and communicates successfully to the millennial consumer. It’s a trial and error game for now, but in a decade or so, the results of various strategies should be evident—when millennials reach middle age.