The luxury watch industry is facing a significant challenge as it struggles to attract new customers, particularly from Gen-Z, who have different buying trends and preferences. According to industry executives at the annual watch world gathering in Geneva, the traditional strategy of increasing revenue through more expensive offerings is no longer effective.
A record 71 brands participated in the event, but despite the strong attendance, watchmakers are worried about the future. The Swiss watch industry, which is the global leader in luxury watches, exported only 14.6 million timepieces last year, compared to 25.4 million in 2016, according to the Federation of the Swiss Watch Industry.
Jean-Christophe Babin, president of Geneva Watch Days and chairman of Bulgari, stated that the main challenge facing the industry is adapting to the changing preferences of younger consumers. “Today, that’s the main challenge of the industry,” he said in an interview.
Rolex and Patek Philippe have maintained their position, but mid-market watch brands are being heavily impacted. The ultra-high segment continues to attract collector interest, but it’s a tougher market for those in the middle, according to Rodolfo Festa-Bianchet, CEO and co-founder of Bianchet.
Gen Z Buying Trends
Gen Z and young millennials are driven by excitement, emotion, and discovery, rather than status and brand loyalty. They are also fueling the secondary market, buying secondhand and vintage watches online to avoid waiting lists and access discontinued models. This shift in behavior is affecting the industry.
Babin emphasized that the industry has been too cautious and conservative in responding to changing tastes, focusing on technical improvements rather than delivering bold new ideas. He cited the Royal Pop collaboration between Audemars Piguet and Swatch as an example of the kind of innovation that can attract new buyers without alienating existing ones.
The collection, which recast Royal Oak design codes in an accessible, colorful pocket-watch format, is aimed at younger consumers. However, such radical departures have been few and far between, and Babin believes that the industry needs more innovation to recover volumes.
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Competition is also intensifying, with Chinese-made movement quality now comparable to ETA SA or Sellita for standard complications. Chinese luxury jeweler Laopu is an example of a brand that has rapidly gained popularity, and Western incumbents risk losing market share.
Global Competition Intensifies
Chinese watchmakers are increasingly selling mechanical watches globally through online channels, bypassing traditional retail networks and adding pressure on Swiss products, particularly mid-priced ones. Japanese brands, such as Seiko, Citizen, and Casio, are also doing well in the mid-price segment, according to Oliver Müller, founder of LuxeConsult. He notes that these brands are taking volume away from Swiss-made brands.
“Gen Z probably gives less weight to the Swiss-made hallmark,” Müller said. “Each of these brands is marginal on its own, but aggregated they are taking volume away from the institutional Swiss-made brands in the mid-price segment.”
Breitling CEO Georges Kern warned that the current market trends might be the new normal for the sector, and Swiss watchmakers need to adapt to persuade a new generation to buy more watches. The challenge is no longer just how to keep raising prices, but how to attract new customers and increase sales volumes.
Rethinking Industry Strategy
In the middle of this crisis, it’s clear that the luxury watch industry needs to rethink its strategy and find new ways to appeal to younger consumers. By understanding the changing preferences and behaviors of Gen Z, watchmakers can develop innovative products and marketing approaches that resonate with this demographic.
As the industry continues to evolve, the Swiss watchmakers will respond to the challenges and opportunities presented by the changing market trends. One thing is certain, however, the traditional approach of relying on brand loyalty and status is no longer enough, and a new era of innovation and creativity is needed to drive growth and success in the luxury watch industry.
The Federation of the Swiss Watch Industry reports that the industry is facing significant challenges. The export numbers are declining, and the industry is struggling to attract new customers and increase sales volumes.
