An Industry in Danger
Deep Thoughts, Uncategorized

An Industry in Danger

Next week in Geneva, SIHH marks the real beginning of a new year for the watch industry.  This will be my first year for a while not attending the shows.  As someone who is now on the outside looking in, I have a new perspective – and can also be more candid.  During my time in the industry, I gained a ton of respect for a few people, including my former team at MB&F.  Mostly, however, I was left disillusioned by the vast majority of the industry.
I believe the watch industry is in a condition of serious danger.  Ten years of incredible sales brought on by what we now know to be a completely artificial boom here in the US and now economic growth in Asia have made it too easy to think for the short term at the detriment of the long without realizing the effects.  Brands have not paid the proper amount of attention and respect to their collectors, their products or their business models.  Here is a short list of what I would like to see change for the health of the industry as a hole.

  1. Pricing is out of control.  We ALL know this to be true.  Walk into a retail store and try to buy a nice watch for less than $9000 retail.  It is incredibly difficult.  Watches that were in production 10 years ago now routinely cost double for the same piece.  10 years ago, a Patek perpetual chrono cost about $35,000.  Now $135,000.  Most of the interesting stuff starts at around $100,000.  This is insanity.  Brands need to control their costs better and maybe stop lining their pockets so thickly.  This can only continue for so long before a critical mass of collectors realize things have gotten out of control.
  2. Explore new sales channels.  The internet is the most power sales tool in history.  Sorry for my retailer friends, but why are retailers getting the same margins they were before that marketing and sales channel existed?  In many cases, why are they even necessary?  Want to cut costs to bring pricing back to earth?  Here’s a great place to start.  The sales pipeline is stuck in the past.  The answer is not just to open up fancy brand boutiques and keep the margin, the answer is to streamline and cut prices.
  3. Create products with soul.  Aside from a few independents and the occasional big brand release, most new watches have no soul.  A mechanical watch either has to be art or extremely practical.  If it’s over about $10,000 you can toss practical aside.  So what we have is an industry trying to make art, but 95% of the artists are untalented dilettantes who in most cases don’t even understand what art is and that it is their job to make it.  To make a watch for $200,000 where things flip around and at precisely 8am it shoots water in the wearers eye and says “I love you” is not art.  To make something just “because it’s cool” is not art except for a very very small number of true tastemakers who have such a solid grasp of the product that it works.   I’m sorry, but most of this stuff is shit.  The product people in the industry need to take a hard look at why mechanical watches exist and what they can truly offer of value – not repetition or novelty.

Will we see this at SIHH next week?  Of course not.  And so I wish my friends – the good guys – good luck at the show, and I will enjoy reading about it from Los Angeles.

  • Ariel Adams

    Steve,
    My agreement is with you almost wholeheartedly. I have not been fortunate to have the insider experience you had in terms of being inside of a brand. I believe that there are good brands with good people (such that the one you were part of), but for the most part I tend to just ignore the whole side of pricing as it is silly to say the least. For me the rubric is “would I buy this watch at the retail price if I had the money given what I know.” Very few watches can claim I would say “yes” to that. The model is one based on short turn profits and I agree totally that for long term success the luxury market needs realize that at some point over-funded under-educated buyers are going to be harder to come by.

    • Thanks, Ariel. I know you and I have some agreement in these areas. Enjoy your trip to Geneva!
      Best,
      Steve

  • Anthony

    Maybe you didn’t have specific watches in mind when you discussed the “I love you” model but it definately made me laugh out loud (and at work, no less). I thought of more than one recent entry that fit the bill.
    Another insightful article. I hope your move away from MB&F won’t diminish your output.

  • I also feel that with the new generations (that I am a part of, being 15), have really lost respect and care for the art of watches, turning to brands like Nixon or Gshock as apposed to handmade watches.

  • Joe

    Dude you need to post more!  I came across your blog recently and was a little sad that the updates are intermittent. 

  • Rorvician

     It’s a boring life without your periodic periodicals. I hope that the reason for your hiatus is you’ve become so successful in your most recent entrepreneurial pursuit that this takes a back seat.