Next, he plans to launch an eyewear category. The integration of resale into the business model is not on the agenda, but the brand has initiated a take-back program for its Connected watches, allowing customers to go to a participating Tag Heuer boutique to drop off an old Tag Heuer Connected watch and benefit from a trade-in. credit for a future purchase of the latest generation.
Of all the categories in LVMH’s giant portfolio, which includes Louis Vuitton and Dior, the watch sector is arguably the toughest. “After a downturn, the watch industry usually bounces back after other categories such as handbags and jewelry due to its heavy reliance on wholesale,” says Citi luxury goods analyst Thomas Chauvet. “While retailers have just started to restock in recent months, the watch industry is now facing new challenges, including the resurgence of Covid in China, sanctions against Russia and inflation – all of which are likely to increase. ‘negatively impact consumer sentiment and store traffic.’
But Chauvet notes that Tag Heuer has some advantages. “Tag Heuer could be less impacted than its main competitors. It has a higher exposure to the American market where the consumer remains strong and a lower penetration in China where it entered later than its peers”, explains the analyst.
It is also an industry dominated by independent players such as Rolex, Patek Philippe and Audemars Piguet. “The top luxury watchmakers all apply the same workbook around a limited number of iconic products, with a limited product launch, and most of them create rarity for their product. Their combined market share is growing at a very rapid rate, leaving other players with less favorable market prospects,” says Joel Hazan, CEO of BCG.
While Tag Heuer is not slowing down new product launches, it is also creating scarcity with higher prices, reflecting innovation and increased raw materials. Rarity is also growing through more limited editions, long waiting lists and improved resale prices.
As with any member of the Arnault family, it seems obligatory to ask, what is the next step? Arnault dodges the question, contenting himself with noting that LVMH is not lacking in opportunities – in the meantime, he is having fun at Tag Heuer and still has a lot to do.
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