Consulting firms and investment banks alike have had plenty to say about the luxury industry these past few years. That they should be training their sights on one aspect of this business in particular, i.e. personal luxury goods, which includes watches, should come as no surprise considering how strongly this market is progressing. According to Bain & Company, sales of personal luxury goods will be worth €300 billion (US$ 360 billion) by 2020. Recent reports have given extra column space to two of the main factors now shaping this environment. They are the growing weight of digital, whether as a distribution channel or for brand communication, and the millennial state of mind: the Generation Y age group of 20 to 35 year-olds who are increasingly dictating how businesses do business.
Helped by the fact that baby boomers are reaching retirement, this changing of the guard couldn't have come at a better time.
It would have been strange, then, for the luxury giants to remain on the sidelines of a trend whose consequences will no doubt be comparable to those that came in the wake of the industrial revolution. Digital has become the bread-and-butter of the development, manufacturing and selling of consumer goods, and the arrival at the head of numerous watch brands of a new generation of savvy professionals – equipped to take digital to a new level – makes perfect sense. Helped, it has to be said, by the fact that baby boomers are reaching retirement age, this changing of the guard couldn’t have come at a more apposite time.
It’s a hard fact within the major watch groups. During 2017, Richemont initiated a major restructuring at senior management level. As well as group-owned Maisons IWC, Jaeger-LeCoultre, Montblanc, Piaget, Vacheron Constantin and soon Panerai, the shakeup also extended to Richemont’s own senior executive committee with the appointment of specialists on China, information technology, finance, telecommunications and consumer behaviour. LVMH, whose watch division is under Jean-Claude Biver’s stewardship, recently welcomed Julien Tornare as the new CEO of Zenith. At Kering, Patrick Pruniaux took the reins of Ulysse Nardin. As for Swatch Group, it named Raynald Aeschlimann as President of Omega halfway through 2016.
The economic situation of the past twenty-four months also contributed to recent changes at De Bethune, RJ-Romain Jerome, Speake-Marin and Vulcain as well as Corum and Eterna, both owned by the Chinese Citychamp group. Not forgetting Breitling which, for want of a successor, was taken over by CVC Capital with Georges Kern leaving Richemont to take the hot seat. Though not exhaustive, these examples show how the branch is adapting to new market conditions, and while Fine Watchmaking may not be in the frontline of the digital shakeup, to downplay its importance would be a strategic error. A younger generation of execs is part of this necessary adaptation, and likely to continue in the near future.