Tuesday 22 August 2017

Swiss watchmakers try to get smart as consumers shun traditional timepieces

Watchmakers TAG Heuer, Montblanc and Tissot are embracing technology in an effort to attract millennial buyers, write Thomas Mulier and Corinne Gretler

Actor Leonardo DiCaprio is the face of TAG Heuer, one of the watchmakers looking to the future.
Actor Leonardo DiCaprio is the face of TAG Heuer, one of the watchmakers looking to the future.

Thomas Mulier and Corinne Gretler

Swiss watchmakers are diving further into the unproven smartwatch market, with Montblanc, TAG Heuer and Tissot seeking to attract younger shoppers with a technology the industry largely snubbed until consumers began turning away from traditional timepieces.

TAG Heuer has unveiled the new generation of a $1,650 (€1,536) smartwatch it makes with partners Google and Intel. Two days later, Montblanc followed with the $890 (€828) Summit and on Thursday, Swatch Group Chief Executive Officer Nick Hayek announced plans for a Tissot connected watch using a proprietary operating system.

With the flurry of new gadgets, watchmakers are trying to attract millennial shoppers during the longest downturn on record for the Swiss industry.

Yet sales of smartwatches so far have underwhelmed, even for giant Apple, and the new tech-driven timepieces generally command lower prices than the Swiss industry's traditional output, creating risks for brands that have jumped in.

"The smartwatch market hasn't necessarily been as big an engagement as some thought it would be," said John Guy, an analyst at MainFirst Bank. "Swiss watchmakers aren't doing this to fend off the Apple Watch."

Instead, they're dabbling in smartwatches as a way to lure younger shoppers -- who often don't wear anything on their wrist, smart or otherwise. Prices of Montblanc's traditional watches run as high as $10,000 (€9,314), more than 10 times the price of its new gadget, while TAG Heuer's most expensive models extend to about $15,000 (€13,969). The original version of the Apple Watch starts at $269 (€250). "It's a way to be on top of people's minds, and hopefully getting people in their stores," said Alessandro Migliorini, an analyst at Mirabaud Securities LLP.

So far, Swiss watch makers have insulated their high-end brands from the trend, seeking to preserve the exclusivity of more traditional timepieces. The top five brands by sales, as ranked by analyst Rene Weber at Bank Vontobel - Rolex, Omega, Cartier, Patek Philippe and Longines - have stayed out of the smartwatch market entirely.

The latest releases represents a change of heart for Richemont, which owns Montblanc, and Swatch, which produces Omega. Richemont Chairman Johann Rupert previously said his brands only planned to make "intelligent watch-straps" and that putting electronic functions into the watch case creates a danger of obsolescence for time-honored watchmaking practices. Swatch ceo Nick Hayek has said he doesn't expect smartwatches to be a "revolution."

TAG Heuer wants smartwatch buyers to upgrade. With its first device, customers could pay extra to replace it with a traditional timepiece if they ever decided it was obsolete. For the new version introduced this week, TAG Heuer is offering a module for an extra $1,650 (€1,536) that can swap the smartwatch with a mechanical time face.

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