The report’s balance between sources allows the reader to reach their own conclusions about what is not one general direction but is instead an ecosystem of linked microtrends and as a whole it is a timely and useful document. It is said, perhaps apocryphally, that the late Nicolas Hayek wanted to die in Switzerland because everything happened a decade late there. The FHH Trends Report disputes that view. It makes its appearance bang on time: the two major events of the horological year, SIHH (seeming to become ever stronger) and Baselworld (reduced in size but still the big beast) have passed; the major spring auctions have been conducted; but the watch world has yet to have its summer recess before preparing for the end of year sprint to Christmas and the next SIHH and Baselworld. Indeed, from now on if the year begins with a question, then we can look forward to some sort of answer emerging by early summer if the FHH delivers on its promise to make this an annual publication.
If nothing else, it shows how the Foundation High Horology (FHH) has evolved. Once seen as a pet project of Richemont’s culture-steeped elder statesman Franco Cologni, it has since become an entity within the industry. Supported by major brands from LVMH, Kering, and Richemont; world famous names such as Chanel, Hermes and Chopard; leading independents Mille and Journe; and niche makers as diverse as Ressence and Laurent Ferrier – it can claim to reflect the diversity of a complex industry that operates on every level from slick shareholder funded multinational to single individual craftsman.
Reflecting the diversity of the industry while also delivering information and analysis in a concise and timely manner is a challenge.
Reflecting this diversity while also delivering information and analysis in a concise and timely manner is a challenge. Our time has always been a valuable commodity; but today such are the demands on it, and such is the speed at which events and trends move with round the clock real-time instant raw data spewing unfiltered into our lives, that unsurprisingly many of us feel overwhelmed. Today’s torrent of knowledge, fed by so many tributaries from varying fields of human endeavour, makes it increasingly hard to achieve a complete magisterial overview, but to quote Jane Austen the first (and I hope not the last) FHH trends in watchmaking report is ‘perfect in being much too short.’ This report – long enough to be credible, brief enough to digest in its entirety – filters out the background noise and sharpens the focus of our attention, until a picture emerges.
The perception of value for money is key
The macroeconomic context of the industry is established with a series of at-a-glance graphs and bar charts in which we see that after a two-year dip, exports are rising. But as the figures are split between mechanical and electronic it can also be seen that while mechanical sales are back at the level they were in 2012, exports of electronic watches dropped from CHF 4.9bn to 3.5bn over the same period. And although the report largely ignores the elephant in the room that is the Apple watch it addresses many other aspects of the digital world: from sales of luxury watches, only 2% are online at the moment, to the role of influencers, and digital methods of attracting the elusive millennials with whom so many CEOs are obsessed.
The apparent paradox is that brands are attempting to seduce young clients with old designs. The report ascribes what it calls the move ‘away from breakout designs in favour of tried and tested models’ to the downturn in exports. It further breaks this macrotrend into three different strands: ‘Classic Rules’, ‘Affordable icons’ and ‘Vintage mania’.
The first describes a return to conservatism consigning the bloated ‘anything goes aesthetic’ to the past: the hamburger watch that piled complications on top of each other has been replaced by styles that offer a low profile on the wrist and a dial that values clarity rather than clutter. Representative models used to illustrate this point include Laurent Ferrier’s Galet Minute Repeater and Panerai’s Luminor Due 3 days 38mm – not watches that one conventionally puts side by side but which make perfect sense together in this context.
When it comes to Affordable Icons (which strangely includes the AP Offshore – never a budget buy in my experience), the re-emergence of the perception of value for money is noted. In boom times entry level is not exactly the sexiest place to be, but the recent downturn and the success of Tudor has refocussed attention on lower price levels. ‘Perceived value for money has become an important construct, meaning brands have every interest in occupying this end of the market. These same brands also need to maintain volume sales in order to keep production lines busy, hence the attention paid to these iconic styles – and why each anniversary is celebrated as though it were a piece of world history’
The importance of the second-hand market
The need for brands to address lower price levels with integrity is a shared trope among the influencers interviewed, however as Francois-Xavier Overstake cautions “It’s a big mistake to adapt the offer to a lower price segment as this is often perceived as a sign of weakness.” Although whether, as one interviewee states, “These days you can start an entire collection with €10,000” is open to question. I suppose you can, but the question is whether it would be a collection worth assembling, or for that matter whether it would be worth €10,000 once assembled.
Wisely the report’s authors do not over-analyse the different varieties of vintage mania restricting themselves to general observations ‘Brands can choose to reinterpret older styles with a complete design overhaul, or instead make subtle changes to a flagship model, thus retaining its essence, while introducing a modern movement. A further option is the launch of a new collection inspired by a model from the back catalogue, or a distinguishing feature from the past.’
And then of course there is actual old vintage vintage. Globally the second-hand watch market is worth an estimated $5bn and is growing at a healthy 5% a year. Headline auction results such as that of the Paul Newman ‘Paul Newman’ have raised awareness among the civilian population and not merely collectors, speculators and geeks. While the rise of such platforms as Chrono24 has brought the vintage watch market to the smartphone generation.
Cruelly dangling the carrot of the millennial in front of the industry the report describes the second-hand market as a millennials’ playground, citing ‘Changing mentalities – buying pre-owned luxury goods is no longer taboo – and new consumption habits that favour experience over ownership.’ Industry mentalities are changing too, albeit more slowly: the report addresses the importance of the secondary market as an increasingly significant part of the industry, noting how Audemars Piguet has decided to offer pre-owned, authenticated pieces alongside new models.
Values that withstand the test of time
At the moment few brands offer their own second hand pieces, but all tackle, with varying degrees of success, after-sales. Here the report shows the value of the killer statistic that says more than a thousand spreadsheets: ‘the number of watches returned for servicing is equivalent to 10% of total watches in circulation’ and the FHH reckons six million are added to this pool every year – now you know why a ‘simple’ service can take months to complete and the overhaul of a complicated piece a generation. A shortage of qualified aftersales staff is cited as a problem which might explain why a clock I sent to a major brand for an estimate was away for months and was returned to me in worse condition. However, get it right, and ‘some experts believe that, in the long term, customer service could become brands’ biggest profit centre, ahead of new product sales.’
But this report is not all about ‘profit centres’: one of my standard moans is to complain that the industry’s soul is being sucked dry by management buzzwords and business school jargon. A watch is a vessel for emotions, as much as it is a machine which tells the time, and few can make this point as convincingly as the genial Philippe Dufour who is filmed for the report visiting the SIHH (alas sans pipe).
Amidst these transformations, one element remains unchanged: Fine Watchmaking continues to appeal to our hearts and minds.
Although by no means a young man he bustles with energy and there is an uncynical enthusiasm about the way he examines each new piece he is shown, taking uncomplicated delight in the humanity of watchmaking. In this vein it is wonderful to see another filmed contributor Eric Giroud telling Davide Cerrato of Montblanc that he has made the leap from wizard to Magician. The FHH seems to share that joy and brings the report to a close with the words: ‘amidst these transformations, one element remains unchanged: Fine Watchmaking continues to appeal to our hearts and minds with products that, year after year, are a culmination of expertise, creativity and innovation. Values that withstand the test of time.’
Nick Foulkes, Historian, author and Contributor to the Financial Times