The future of watch-making according to McKinsey
From McKinsey’s latest report entitled The State of Jewelry and Watches, in the next 5 years, the watch industry’s premium segment for high range will see a reshuffle of value in terms of geographical areas, distribution channels and consumers as it recovers from the pandemic shock and explores new ways of doing business.
Revenues will shift from the retail channel to watch-makers due to a business model that is becoming more and more focused on direct-to-consumer, while the second-hand watch market is destined to grow even more rapidly and players in the medium segment will find themselves under pressure.
As for premium and ultra-luxury watches, McKinsey expects a relatively slower growth rate of between 1 and 3% a year between 2019 and 2025.
In this case too, there a three main changes: the retail sale revolution (2.4 billion dollars of annual revenues should be transferred from multi-brand retailers by 2025); the second-hand watch market is bound to become the sector’s most rapidly growing segment, reaching sales of between 29 and 32 billion dollars by 2025; a reduced middle-market due to: intense competition between native digital players, a rapid growth in fashion brands and the smartwatch category, the market for medium-range traditional watches being under growing pressure.
In the absence of a recovery, McKinsey foresees that the revenues of traditional medium-range brands will fall by 2.5 billion dollars by 2025.
Federica Frosini, Editor in Chief VO+
Photo: Ulysse Nardin, Diver X Skeleton