We all know how generations Y and Z love their avocado toast or leaving old traditions behind, making them appear less interested in luxury goods.
It may come as a surprise to you, but gens Y and Z (according to Bain&Company) are, in fact, 47% of the global personal luxury goods consumers in 2018. The latest generations (digitally connected) impress with their preferences and buying habits, which differ so much from their grandparents and parents. They play an important role in luxury goods sales these days, pushing the most traditionalist luxury brands to become attentive and start selling online too.
This behavior counts so much for the luxury watches industry, which is still trying to recover after the 2016 slump.
More and more luxury watches are sold online
Passionate luxury consumers still like buying in-store and not online, but the tendency is on the move. Online shopping grew by 22% in 2018, and 10% of those numbers are luxury sales. It’s expected for this number to keep on growing, with online sales reaching 25% of the market by 2025. Even if accessories are a common category of items sold online, exclusive luxury items (watches included) present a constant growth in online sales.
E-tailers still represent the most significant part of online luxury sales, and it’s the flexibility that stands behind that success. Online platforms provide a wide range of watch brands and price-points, eliminating geographical barriers. You may now find Rolexes for $150,000 on the most significant platforms, and $40 watches in the same place.
Besides, buying luxury watches is more comfortable and safer than before, as the platforms are trying their best to provide secure online transactions and even user-friendly apps.
Can luxury watch brands handle e-commerce?
The luxury watch brands didn’t need much time until noticing the online trends (and they don’t make changes easy). At the moment, online sales represent a slim 2% luxury watch revenue. There’s no denying though that the trends don’t lie, forcing the luxury brands to take notice.
Some brands are trying to attract with the pre-owned watch sales, but customers still prefer the open e-boutiques, which only reduces the number of physical stores. The online presence becomes stronger, primarily through the help from the e-commerce platforms.
It’s fair to mention that millennials don’t just buy online luxury watches. One thing that luxury goods brands need to understand is that they need to become “friends” with the new generation. They have to become part of their lives and learn how to speak their language.
The moment that Patek Philippe and Rolex launched their Instagram is the moment when the luxury watch industry finally received the message from the new generations.
What do the numbers say?
Back in 2015, products and services online reached a total of 8.4billion euros, which was 13% more than in 2014. 40% of the e-commerce market included online sales, with the rest of 60% representing the services.
For the Swiss watch industry, online shops are gaining their fans amongst people aged from 18 to 30. Social media plays a big part in the marketing channel, helping with sales.
Let’s take a look at the Swatch group, which launched many new products back in 2017. The 60th anniversary of the Omega Speedmaster is attracting new buyers. Thanks to e-commerce and Speedy Tuesday on Instagram, the sales were impressive (scroll down for the details).
It’s almost universal for watchmakers to allow e-commerce, and even high-dollar brands are now including shopping carts to their websites. Cartier has been online since 2008, Montblanc started back in 2011, whereas Jaeger-LeCoultre became online-available in 2012. Many of them added e-commerce without making a big fuss about it.
You may notice that several watchmakers (Panerai is one to name) prefer selling through their e-boutiques. There’s also the category of brands (Bremont, for example) that trade with the help of retail partner’s sites.
One thing is sure: luxury watch brands are preoccupied for improving their customer service abilities through social media. 33% of brands are continually replying to their clients on Facebook Messenger in less than a minute, whereas 59% feature menus with guided questions into Facebook Messenger for faster solutions.
It’s important to mention that Google searches for luxury watches takes one to resale sites. For example, 64% of search results for Rolex on Google connect to resale sites.
The example of Omega
Omega is one of the few Swiss companies that allow e-commerce straight through its site. People working at Omega noticed that more and more customers are interested in buying online. Omega didn’t even have a website when it went online. It started with Instagram back in 2017, when offered preorders for the “Speedy Tuesday” Speedmaster model. It only took 4 hours, 15 minutes, and 13 seconds for all 2,012 watches within the limited edition to be sold.
You need to understand that for a luxury watch brand going online isn’t as easy as you may think. Omega had to create new boxes for the online transaction. In the case of a luxury watch brand, the challenges for investing in e-commerce are all worth it.
Is there a risk for counterfeiting in the online luxury industry?
In March 2017, we found out that there are more than 30 million fake Swiss watches sold everywhere in the world. Twenty-five million genuine pieces are sold worldwide, nevertheless.
Online counterfeiting hurts any brand, altering its reputation and revenue. It also lowers the customer’s confidence. It’s good to know that luxury watch brands use protection strategies since they work with experts in the field so that every possible problem has an efficient solution.
What are we expecting to see coming up?
Young consumers are more and more attracted to luxury brands as they’re one way to express self-realization. Only in the United States, 80 million people spend more online, which represents 30% of retails sales in 2020.
Web sales will become a quarter of all global luxury goods sales by 2025, which is a lot more than 9% from last year. Some luxury brands still hold on to their principles (Chanel is one) and don’t show any interest in going online. It’s the same for Rolex, which has little to no interest in building an online shop any time soon.
Many of luxury watch brands got the message right. Unless they start selling online, new buyers are going to look elsewhere: the counterfeit products. And no luxury brand, watches or not, is going to have the luxury to allow that on the long run.