Under the patronage of the powerful retailer group Seddiqi Holding and the local government, Dubai Watch Week 2019 once again proved a welcome respite from the current uncertainties, oppressive travel volume, and uncooperative business norms which have typified the experience of many of today’s luxury watch industry professionals. There is hope however, but all present agree that hard work needs to be done.
Dubai Watch Week specializes in creating round table discussions and open conversations about issues currently facing the business, ethical, and creative sides of the watches industry.
This would not be possible without careful curation of both guests and topics by the industry-savvy organizers of the now world-renown event. Here are the major topic areas were many of guests at the 2019 event came to a strong consensus on:
The Watch Industry Is Not Healthy & Corporate Mentalities Are Doing Great Harm
Jean-Claude Biver himself put it best when lambasting the short-term thinking and accountant-run practices at many of the large groups which own the majority of large luxury watch brands. The industry legend who is considered a managerial and marketing genius dug into “technocrats” which focus on unrealistic ROI goals as opposed to allowing for creativity and risk to blossom where needed at brands today.
It marks a larger “risk-free profit-focused” mentality at major groups were financial people and not watch industry experts make sweeping decisions about how brands are run. Guests at Dubai Watch Week 2019 agreed that in challenging times such as now where many believe the luxury watch industry in large parts face an existential crisis, the correct path forward is investment and experimentation. While the smaller independent brands are specialists in creativity, they operating margins will never match those of major high-volume brands. A strange-hold on autonomy at many of today’s well-known luxury brands is not only stifling innovation, but people are also saying that a lack of meaningful investment in human resources, marketing, and other initiatives across the board will force any progress for the industry to be at a nail’s pace.
Evidence of industry unhealth come from various sectors including low export numbers to typically popular Asian markets such as China and Hong Kong, as well as dwindling human resources at brands and service providers which are having a massive negative effect on core productivity. On top of that, managers at European brand headquarters are being asked to spend so much time away from their offices to travel – productivity in many areas has crawled to a halt. This intense and constant level of travel seems to be due to a lack of available staff to perform such tasks as well as the misguided believe that by simply traveling to a country for a few days, European managers will determine what strategies they need to employ to bolster performance in various markets.
While only few people outright said it, there seems to be a consensus that the watch industry might need to get smaller before it gets bigger. The implication being that too many brands, with too many overlapping products are not currently needed by the market. There is hope, such as brands being able to tap into previously undeveloped price areas (mostly lower-price points), but the overall accord seems to be at fewer, not more watches will need to be produced in the coming years. This is despite record popularity for particular high-demand products from esteemed “safe bet” brands that consumers currently trust.
Perhaps the greatest sign of poor watch industry health realized at Dubai Watch Week 2019 was the fact that the public and private conversations between industry professionals mostly focused on addressing industry problems as opposed to preferred topics such as doing business as normal (product sales, creative development, partnership creation, initiative execution).
The Industry Is Sorely Lacking Educational Initiatives To Explain Luxury Watchmaking To Mainstream Consumers
Several years of anemic watch industry marketing spending is starting to take it tolls. The above-mentioned large corporate groups who manage a number of global watch brands have also routinely eroded away as marketing budgets. Such practices are normal during rough economic times were lower profits can be somewhat offset by decreases in marketing spending. The reality however is that the watch industry is almost entirely marketing-driven and the collective failure for enough marketing dollars to be spend is now resulting in a number of problems.
One of the most important problems is a simple lack of many watch brands being able to form ongoing relationships with consumers. There seems to be a large misunderstanding by many managers in regard to what forces actually drive consumer interest for luxury timepieces. The last few years have seen a withdrawal of marketing from enthusiast media to social media where mainstream audiences are intended to be reached. In addition to no one presenting any evidence that social media advertising alone creates demand for high-end luxury watches, evidence does exist that a failure to reach traditional watch enthusiast consumers has taking a toll of sales for all but the most resilient of brands.
In this area there does seem to be hope, although little in the form of specific direction or strategy. Watch industry managers seems to be waking up to the fact that without strong support from consumers with product category expertise (sophisticated luxury watch buyers who make up most of the important repeat customers), mainstream consumers are not being “authentically” and “authoritatively” educated on how to select a luxury timepiece to meet their own needs. Such sentiments are shared not only by Jean-Claude Biver, but also members of the Seddiqi team (the major local UAW and Dubai retail of luxury timepieces), the management of WatchBox (a now global retail for pre-owned watches), and managers from a cross-section of high and low-volume production watch brands present at the 2019 show.
While there is no one marketing approach that will work for all brands, what managers at Dubai Watch Week also seem to increasingly understand is that marketing in the future for them will take both money, time, and risk. One-size-fits all solutions to brand communication and distribution are a thing of the past. To reach the right audiences watch brands and retailers seem to now agree that long-term thinking and investment is the only route forward. Though it remains to be seen what players are first to prove that they are willing to take the spending risks that so many decision makers these days apparently fear. Returns on investment in marketing and consumer outreach could take five or more years to prove effective in many instances. Short-term shareholder friendly performance results for most brands are a thing of the past.
Major Luxury Watch Brand Marketing In Large Part Is Failing To Reach People Who Actually Buy Watches
The thirst for new blood when it comes to luxury watch consumers will need to be modified if watch brands are to reach today’s most likely customers. What seems to have happened over the last few years is that major luxury watch brands shifted marketing focus away from known wrist watch consumers, to relatively ambiguous audiences of mainstream consumers who are seen as potential new clients.
Done in parallel this strategy actually works quite well – meaning that if a watch brand reaches both existing and new clients (with different messages) at the same time, then it can enjoy steady growth. Attendees at Dubai Watch Week lament how marketing spending has been channeled in many instances entirely to be audiences leaving existing watch customers feeling alienated. Many brand managers seemed to believe that years of market penetration would lead to lasting marketing momentum whereby established goodwill and word-of-mouth popularity would function as de facto marketing in the absence of paid campaigns. Most now agree this is not happening.
Instead, industry professionals now seem to realize that even relatively short pauses in marketing to watch enthusiast consumer audiences result in lower sales performance and interest. This is probably because of the massive amount of current competition in the luxury watch space which provides that if one brand stops speaking to a client, another five brands are waiting to step in and take over that conversations.
Dubai Watch Week 2019 did not reach a consensus on exactly where to invest first, but the consensus was clear; watch brands stand to immediately gain by re-establishing marketing relationships with its legacy clientele. In other words, selling product to existing consumers is a more effective (and cheaper) strategy that first attempting to find new ones and then persuading them.
The Experience Of Being A Watch Enthusiast Consumer Today Is Fraught With Pitfalls
The fractured nature of global watch sales distribution and marketing has created a “last-mile problem” for brands who need to turn demand into sales. One of the biggest issues with being a watch consumer today is both knowing when to buy a watch or where to buy a watch. Overly redundant global distribution with far too many purchase options (mostly online) has created a “third world bazaar” of luxury watch retail on the internet.
While some ultra-sophisticated consumers thrive in a market full of choice, the consensus seems to be that buying a wrist watch is simply too daunting a task for most mainstream consumers. This problem is really an aggregate of issues which includes the still wide availability of discounted prices (that often leads to choice paralysis), the lack of enough official authorized dealers with serious online presences (allowing too much consumer interest to flow to the gray market), and the fact that many consumers are highly-turned off by waiting lists and over-retail prices for some of today’s popular models.
No industry can grow or thrive it they do not have an effective strategy for product distribution or sales. Despite the enviously long heritage of many luxury watch brands, most of them seem to be floundering in a world where they should theoretically being doing much better. An excellent example is the fact there are any watches which are priced above retail in a market that is saturated with unsold goods. That consumers who can’t purchase certain watches do not shift their attention to other watch products which are much more available is a sign that consumers face a poor experience and that the industry is failing to funnel current unfulfilled consumer interest to products which will give them immediate satisfaction. Instead, the predominant consensus among watch collectors and enthusiasts is that good (translated here as popular) watches are too hard to get, and that doing so involves playing entirely unfun games.
Enthusiast Watch Media Is In Serious Danger Of Altogether Disappearing
Without sufficient marketing dollar support from watch brand advertisers (due to the above-mentioned persistent budget cuts), watch enthusiast media is also facing an existential crisis. A popular topic of conversation (and heated debate) at Dubai Watch Week 2019 is how watch enthusiast media should fund itself – with most people seeming to have forgotten historic wisdom. Traditionally, luxury watch brand managers fully understood the powerful persuasive and informative value of watch enthusiast media when it came to educating the public and creating demand. A functional relationship existed with specialized media titles whose business model focused on reaching known watch collectors and buyers. It was understood that third-party publications could more often than not do a better job explaining the virtues of luxury timepieces to consumers better than the brands could – this remains true but increasingly unutilized.
In an ironic twist (promulgated by unwise budget reductions) watch enthusiast media titles are “out for themselves” as dwindling budgets (the money is there, it just isn’t being allocated for this purpose), the larger watch brands have often abandoned watch enthusiast media under the misguided belief that “they can do it better themselves.” Facing life without sufficient advertising revenues, a large number of the remaining watch enthusiast media titles (many have already folded) have started to turn to alternative revenue sources. One of those is to sell watches – now making some previously watch enthusiast media into a retailer. This often puts that former media title in direct competition with other brand partners (such as their existing dealer network), as well as in some instances in competition with the brand itself.
A healthy debate at Dubai Watch Week focused on the interesting fallout from this state of affairs, as well as the morality and wisdom of watch media also being watch retail. Various well-meaning justifications for supporting watch media to become retailers were advanced – but most of those arguments missed the point. What guests at Dubai Watch Week 2019 seems to appreciate is that the move from watch media to retail is not the evolution of watch media, but rather one evolutionary direction of watch retail. In an era where a lot of watch retailers do not engage in consumer outreach or education, people trained in watch media are coming in to do retail better since they have superior product knowledge as well as superior relationships with consumers. In this regard, some watch media professionals are indeed the most likely incumbents to take on “watch retail 2.0.” With that said, at the same time, doing so results in those professionals surrendering their position as actual watch media.
Watch enthusiast media, like all other media is premised on authority, trust, authenticity, and transparency (according to Danny Govberg of Watchbox and most other industry professionals). Watch media’s role is to have a consultative relationship with consumers which is at odd of the profit-minded relationship retailers have with consumers. If the watch media of today become watch retail, all it does it create a vacuum for watch media that now has a lot of vacant positions.
Watch brand managers are still trying to wrap their mind around what the future of watch retail is, as well as what relationships they need to have with watch media. The problem is that before enough of them figure that out, the majority of watch media might have already gone extinct. This is in large part because watch media titles are relatively small, independently-run companies without financial buffers to wait out periods of industry dysfunction that prevents them from earning revenue. That is compared to watch brands who for the most part are budges sufficient to pay their staff for years of losses – or at the least most access to abilities to borrow or secure additional cash.
The danger of watch enthusiast media dwindling into obscurity is that there are no other authoritative means to expose and educate consumers (sophisticated or otherwise) about watches. Consumers throughout history have repeatedly rejected the notion that a retailer is in the best position to guide them into purchases when a robust “product review community” is available. Retailers want to make money, not necessary make consumers happy or give them the best deal. On top of that, it has already been established that making an informed decision about purchasing a wrist watch does require education. Without the industry effectively educating consumers about how to understand or appreciate why a luxury timepiece is worth the asking price, it is primarily up to watch enthusiast media to do so. What guests of Dubai Watch Week wholeheartedly agreed on was that watch enthusiast media was not being paid its due – especially for the consumer education it engages in and the direct sales to brand and retailers it is responsible for facilitating.
Watch enthusiast media frustrated with a challenging business environment may very well turn to retail as an exist strategy. That will however continue to create large vacuums in the authoritative consumer education space – potentially entirely breaking the already fragile demand engine for fine timepieces.
The Long-Term Future Of The Watch Industry Remains Bright But Immediate Challenges For Most Industry Players Are The Norm
Visitors to Dubai Watch Week 2019 found it challenging not to remain optimistic amidst the relaxed atmosphere, good weather, and typically excellent service in Dubai. The future of luxury watches seems promising, even in a world where smartwatches threaten wrist real estate and where global economic uncertainly will allow for far less new wealth to be created and thus less watch consumers overall. The most optimistic about the long-term health of the watch industry was both Seddiqi as a collective entity as well as Jean-Claude Biver.
For Seddiqi’s part, the retailer group is not only going to be taking the Horology Forum element of Dubai Watch Week on a global traveling tour, but recognizes that it as a regional retailer can have a major role in the global health of the watch industry. If the powers that be in Switzerland are not facilitating the right conversations about the future of the watch industry – then they will do it. Such determination and investment would only be possible if they felt that over the long-term the appeal of luxury watches for many consumers will remain strong.
Then there is Jean-Claude Biver, who now twilighting out of his official capacity as a manager in the watch industry reminds everyone of the multi-faceted appeal of the wrist watch. He reminds us that these are not just means for telling the time and suggesting the size of one’s bank account, but that watches offer so much more to the consumer. A traditional wrist watch includes history, mechanical technique, skilled human effort, authentic craftsmanship, beautiful art, sentimentality, and the enjoyment of collecting rare and exclusive items. Mr. Biver reminds us (and I’ve said it myself many times) that the emotional appeal of a wrist watch for those who know what they are wearing on their wrist is truly timeless. Mr. Biver does not however side-step the “hard work” and “dedication” that will be required by the watch industry to successful move to its next healthy phase. For his part, he will educate “the youth” to help his “passion” (the traditional watch industry) to get there.
Dubai Watch Week will hold its next event in Dubai in 2021, with traveling Dubai Watch Week Horology Forums due to be announced prior to that.