Can Gucci Sell High-End Watches To China?

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Key Takeaways:

To celebrate its 100th anniversary, Gucci has launched its new Haute Horlogerie collection, unveiling 33 high-end models designed in Switzerland by Alessandro Michele.

The global luxury watch market was valued at $23.623 billion in 2020, registering a compound annual growth rate of 3.25 percent during the forecast period, 2021-2026.

Luxury watch exports to China in 2020 until September increased by 11 percent compared to the corresponding period in the previous year, outpacing Hong Kong.

Many believe the luxury timepiece on your wrist speaks for you — a status symbol, investment piece, and family heirloom that will never go out of fashion.

Growing consumer preferences for high-end watches have made the sector much more resilient to crises, and high-net-worth individuals have continued to buy statement pieces despite pandemic uncertainties. Chinese shoppers led all countries during the pandemic and the country is now the world’s largest market for Swiss watches.

From January to November of 2020, Swiss watches imported to the Mainland totaled $2.39 billion, which was an increase of 17 percent over the same period in 2019.

Because of that demand, Gucci is now venturing into this lucrative market. But it faces fierce competition from already major players like Rolex, The Swatch Group, Richemont, Patek Philippe, Audemars Piguet, and Richard Mille, which together account for more than 50 percent of the total watch market.

This year, on the occasion of its 100th anniversary, Gucci has launched its Haute Horlogerie collection, featuring high-end movements designed by its creative director, Alessandro Michele.

Here, Jing Daily analyzes the strategies behind the brand’s calculated expansion and whether local consumers will buy into it or not.

Why is Gucci launching in the watch market?

This year’s centenary, the brand’s runway collaboration with Balenciaga, and its upcoming release of “House of Gucci” with Lady Gaga and Adam Driver have all created much online buzz. Gucci knows how to stay on consumer minds, surprising even digitally native fans.

However, after years of robust growth, its 2020 annual performance was disappointing. The brand reported a 10.3-percent decline year-on-year, despite strong demand from local millennial buyers.

Product expansion is an obvious way for it to beat its sales expectations. And while luxury brands such as Celine are turning their eyes to Haute Couture, Kering’s star chose unexpectedly to collaborate with Balenciaga. This latest move into watches has, once again, surprised the industry.

Now, the unveiling of its 33 statement timepieces has become an additional way to celebrate the company’s 100th anniversary. The watches, from their tourbillons and jumping-hour movements to their fully gem-set pieces and sapphire-crystal constructions, most reflect Alessandro Michele’s eclectic romanticism, and several of them incorporate bees, stars, and other charming icons.

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In fact, Oliver R. Müller, the founder of a luxury consulting agency for the watch industry called LuxeConsult, observes that “their aim is to develop a niche positioning. They want to complement what they are doing. It pushes their brand image.”

Gucci did not collaborate with any high-end watchmakers but still took the daring initiative to expand directly into the sector. Although the Gen Z favourite is assembling the movements at Kering’s prestigious Horlogerie manufacturer in Switzerland, the lack of heritage in the watch industry undermines its legitimacy to sell a $300,000 watch. As such, the high price positioning may discourage local buyers from purchasing.

Will Gucci find its buyers?

Despite the challenges of the market, according to watch analyst and industry expert Reginald Brack, Gucci will find its buyers, especially if they are young, local fans. “The designs are very young and will appeal to the brand’s existing Millennial and Gen-Z buyers,” Brack says. Indeed, Michele’s unique, extravagant, and retro-inspired aesthetic has cultivated a loyal fan base of consumers.

However, are traditional timepieces still relevant to young, local spenders? According to Deloitte Millennials and Gen Zers are, in fact, showing stronger preferences toward smartwatches. In 2019, the Apple Watch outsold the entire watch industry in terms of volume at an estimated 30.7 million units shipped worldwide, while the Swiss watch industry in total shipped 20.6 million units.

Recommended Reading By Julienna Law Tmall to the Rescue for Luxury Timepieces By Julienna Law

In contrast, it will be very challenging for the brand to acquire new customers or take market shares from its Swiss competitors (Rolex, Patek Philippe, and Richard Mille). People see high-end watches as investment pieces, just like Chanel and Hermès handbags. Collectors expect it to increase the price on the resale market over time.

Brack explains: “There is a higher risk purchasing Gucci’s expensive timepieces since it lacks a secondary market.” And unlike fashion seasons, high-end timepieces are expected to last decades: their timeless aesthetic is key. While it will be hard for watch collectors to opt for the brand’s movements, Gucci’s hopes may rely on its deep-pocketed, cultured buyers.

Will more luxury brands tap into the sector?

Many fashion luxury houses have already tapped into the high-end watch sector, from Louis Vuitton to Hermès and Chanel. But few have positioned themselves in Gucci’s risky price range ($10,000-$306,000).

“Even if you are Chanel and Hermès you need to be consistent with your brand image,” notes Müller. For example, Chanel’s J12 model had huge success by maintaining the brand’s chic and clean aesthetic, priced between $5,000 and 8,000.

To sell its high-end timepieces, Gucci will need to make significant efforts to build credibility by earning the respect of the watch industry’s influential people and limiting its production quantity. For instance, Richard Mille makes among the most expensive and investment-worthy watches — not just because of its craftsmanship, but also because of its limited supply (it only produces five thousand pieces per year).

“Gucci’s high-priced watches are lacking legitimacy. Real watch collectors will not buy,” Müller concludes. In fact, the expansion into high-end watches may not help Gucci attract new clientele but will undoubtedly enhance the Italian maison’s prestige. As the luxury entry barrier lowers, the brand is required to expand in the high-end sphere to retain its exclusivity and appeal to local high net worth buyers.

New Music Friday: The Top 6 Albums Out On May 28 : All Songs Considered

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New Music Friday: The Top 6 Albums Out On May 28

Enlarge this image toggle caption Breyona Holt/Courtesy of the artist Breyona Holt/Courtesy of the artist

We open this week’s show with the super-duo Bachelor, which is built around the friendship of Jay Som (a.k.a. Melina Duterte) and Palehound’s Ellen Kempner. On Doomin' Sun, they combine their powers in pop-rock music that’s gnarly but lovely and introspective at the same time. The rapper DMX, who died in April, has a posthumous album called Exodus, which hearkens back to his early hit records with the aid of guests like Jay-Z, Snoop Dogg, Alicia Keys and Bono. And the singer Mustafa, a.k.a Mustafa The Poet, returns with a gorgeous collection of “inner city folk music” called When Smoke Rises.

The compilation Fire in Little Africa commemorates the 100th anniversary of the Tulsa Race Massacre while also showcasing the wide range of talented artists who make up Oklahoma’s hip-hop world. Singer Mereba, a Tiny Desk veteran who’s also part of the hip-hop collective Spillage Village, has a breezy and beautiful new EP called Azeb. And the Mexican superstar Natalia Lafourcade rounds out the mix — along with a lightning round encompassing everything from Moby to GWAR — with a new celebration of her country’s music, titled Un Canto por México, Vol. 2. Joined by writers Gavin Godfrey and Christina Lee, NPR Music contributors Jewly Hight and Alex Ramos, and Alt.Latino’s Anamaria Sayre, guest host Stephen Thompson shares the gang’s picks for the best new albums out May 28.

Featured Albums:

Bachelor — Doomin' Sun

Featured Song: “Spin Out”

DMX — Exodus

Featured Song: “Hold Me Down”

Mustafa — When Smoke Rises

Featured Song: “Ali”

Various Artists — Fire in Little Africa

Featured Song: “City of Dreams”

Mereba — Azeb

Featured Song: “Rider”

Natalia Lafourcade — Un Canto por México, Vol. 2

Featured Song: “La Llorona”

Notable releases for May 28: Black Midi — Cavalcade; GWAR — The Disc With No Name; k.d. lang — Makeover; Moby — Reprise; Porter Robinson — Nurture; Quivers — Golden Doubt; Lou Barlow — Reason to Live; Juanes — Origen; Scotch Rolex — Tewari

Anniversaries galore! – FHH Journal

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Blink and you may have missed, early this year, the release of an anniversary edition of the Cartier Tank Cintrée: by the time it reached public attention, the entire edition had been pre-sold. Collectors were justifiably keen to own one of these 150 watches, created for the 100th anniversary of the first variation on the famed Cartier Tank, imagined a few years earlier and commercially introduced in 1919. At a time when the wristwatch was still very much a novelty and the influence of the Bauhaus school was creeping into design, the watch imagined by Louis Cartier would stand out as the archetype of the modern wristwatch. One whose success has never waned in a century of existence.

The Tank Cintrée was designed to follow the natural curve of the wrist; an idea Cartier had already experimented with when it introduced the Tonneau in 1906. A blend of oval and rectangular shapes, this new silhouette was a radical departure from the then dominant pocket watch with its round form. The idea of gently curving or arching the case (cintrée means curved) left no doubt that the Tank Cintrée was meant to be worn on the wrist.

This celebration of a defining piece of horological history is just the first in a series of anniversaries taking place throughout 2021. Designed by Gérald Genta, the Nautilus by Patek Philippe also has a milestone 45th birthday. While certainly younger than the Tank, it too turned a page in watch design. “Launched in 1976, the Nautilus was surprising in several respects,” says Patek Philippe. “The choice of stainless steel was totally unusual for a luxury watch. The octagonal bezel with rounded corners departed from conventional designs. Its case was inspired by a ship’s porthole. The exceptional robustness and water resistance to 120 metres was an extreme challenge then for a regularly produced watch. And the interplay of polished and satin-brushed finissage emphasized the uniqueness of the form elements. With its horizontal relief embossing on the dial and the integrated steel bracelet with external links that tapered in the direction of the clasp, the Nautilus immediately proved to be the perfect incarnation of casual elegance.” Patek Philippe is paying tribute to the Nautilus with three new iterations: one in steel with a green dial (with or without diamonds), a Travel Time Chronograph in pink gold and a High Jewellery piece.

Before the sport-luxe watch burst onto the scene in the 1970s (the Nautilus being a salient example, as is Audemars Piguet’s Royal Oak and the Riviera that Baume & Mercier has revived this year), tool watches were all the rage. Linked to tales of adventure and derring-do, they too have something to celebrate, starting with the Jaeger-LeCoultre Reverso which is marking its 90th anniversary on a grand scale… grand as in the extraordinary grande complication Hybris Mechanica Calibre 185 with its 11 complications. These include unprecedented astronomical indications. Let us not forget, however, that the Reverso was originally developed for polo players wishing to protect their timepiece from a fatal encounter with a mallet or ball, thanks to its swivel case. From purely functional, this ingenious solution would pave the way for fabulously creative variations. The purpose of the “basic” Reverso, however, was clearly to survive extreme conditions of use; the type of watch that would leave its mark for years, if not decades, to come.

IWC responded to the need for accurate, robust and reliable timepieces that were capable of braving the toughest situations with a first Special Watch for Pilots in 1936. “The history of pilot’s watches at IWC stretches back to the early years of aviation,” notes the brand. “At the time, precise wristwatches were an essential cockpit instrument and vital to a pilot’s survival. Used primarily to monitor flight times or engine operating hours, they were also useful tools for navigation during visual flights. Combined with a sextant, a highly accurate wristwatch helped the wearer to determine their current location using astronomical navigation. IWC was an early pioneer in the production of technical instruments designed to meet aviators’ requirements.” Already, the 1936 model was equipped with an anti-magnetic movement that resisted temperature fluctuations between -40° and +40°C, as well as a shatterproof crystal. These qualities laid the groundwork for a vast Pilot’s collection which IWC is extending in this 85th anniversary year with a 43mm diameter that harks back to the exploits of the pioneers of flight.

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