Exclusive extracts from this 120-page-long report:
- What is the business?
Most luxury watchmakers operate through a vertically integrated model, which enables them to control all stages of the production process and achieve higher margins. Smaller groups have lower financial resources and/or capabilities, which forces them to purchase certain watch components from third parties. […] As regards to jewellery companies, the extent to which they are involved in the manufacturing process varies significantly, depending on product categories and quality ranges. At the same time, marketing and distribution are key for both watchmakers and jewellery companies in order to reinforce and build brand value
- What are the main markets?
The Swiss watch industry has historically dominated the industry. In recent years, it has reinforced its high-end positioning, exporting mainly to Europe and Asia. A strong Swiss franc, which has made Swiss exports more expensive, has impacted watchmakers, forcing leading companies to either raise prices or cut costs. Fierce competition between groups has accelerated industry consolidation, with Swiss groups, Richemont and Swatch, the world's leading companies.
- How intense is competition?
Watchmakers compete with each other to attract luxury buyers, and focus on creating a strong brand identity that will differentiate their products from competitors. All key players in the industry spend heavily on marketing to maintain their exclusivity and make their brand value grow. Storytelling, advertising and partnerships with other luxury brands are the main strategies they employ. However, as the industry is highly concentrated and still enjoys fairly generous margins, of more than 15% on average for the key players, rivalry is not as intense as other businesses.[…] Even if online sales of watches and jewellery only account for 5% of the industry's total sales, their share will increase in the next few years. This shift towards online luxury sales reflects both increasing demand from customers, who are increasingly accustomed to making purchases via digital (including mobile) channels, and reduced caution from luxury companies, which are slowly but surely embracing online platforms as a complementary and high-potential distribution channel.