Watch Industry

Introduction

In the early 1970s, the emergence of quartz technology sparked a revolution that almost ended the Swiss watch industry. The 1969 quartz watch revolution began when Seiko launched the Quartz Astron, the world’s first quartz watch. Despite having first invented the quartz movement in 1967, Swiss watchmakers were unable to give up their traditional production methods to produce cheap quartz watches on a mass scale. This gave the Japanese companies, who were able to exploit production improvements and economies of scale, the perfect chance for market penetration. Within a decade, Switzerland had lost most of its market share to Seiko and Citizen. Employment in the Swiss watch industry dipped from 90,000 to 28,000 (Thompson 2009). Smaller brands eventually closed down, and many brands were lost.

In 1983, the introduction of Swatch marked a turnaround of the Swiss watch industry. Instead of just a timepiece, the Swatch watch was now positioned as a fashion accessory. Swatch was the dominant brand during the late 1980s and 1990s and many credit this watch saving the entire Swiss watch industry. Swatch was launched to counter Japanese dominance of traditional Swiss markets. In time, Swatch began acquiring many old brands such as Breguet, Blancpain, Longines, Omega and Hamilton, and breathed new life into them, reviving the industry. This eventually leads to multiple brand emergences, and therefore industry fragmentation.

This report aims to explore the issues and factors that cause fragmentation in the luxury watch industry, and attempts to address them with suggestions where possible to either overcome, or cope with fragmentation. Some of the observations contained within this report are from internal perspectives.

The Luxury Watch Industry

The luxury watch industry can be divided into traditional watchmaking, jewelry setting, and sports oriented brands. The preference of the brand for consumers depends on a wide range of demographics and psychographic...