Swiss smartwatches multiply as makers hunt millennial buyers

Mar 20 , 2017

Swiss watchmakers are diving into the unproven smartwatch market, with Montblanc, TAG Heuer and Tissot seeking to attract younger shoppers with a technology the industry largely snubbed until consumers began turning away from traditional timepieces

TAG Heuer on Tuesday unveiled the new generation of a US$1,650 smartwatch it makes with partners Google and Intel. Two days later, Montblanc followed with the US$890 Summit. Also on Thursday, Swatch Group Chief Executive Officer Nick Hayek announced plans for a Tissot connected watch using a proprietary operating system.

With the flurry of new gadgets, watchmakers are trying to attract millennial shoppers during the longest downturn on record for the Swiss industry. Yet sales of smartwatches so far have underwhelmed, even for giant Apple Inc., and the new tech-driven timepieces generally command lower prices than the Swiss industry’s traditional output, creating risks for brands that have jumped in.

“The smartwatch market hasn’t necessarily been as big an engagement as some thought it would be,” said John Guy, an analyst at MainFirst Bank. “Swiss watchmakers aren’t doing this to fend off the Apple Watch.”

US$15,000 Watches

Instead, they’re dabbling in smartwatches as a way to lure younger shoppers – who often don’t wear anything on their wrist, smart or otherwise. Prices of Montblanc’s traditional watches run as high as US$10,000, more than 10 times the price of its new gadget, while TAG Heuer’s most expensive models extend to about US$15,000. The original version of the Apple Watch starts at US$269.

“It’s a way to be on top of people’s minds, and hopefully getting people in their stores,” said Alessandro Migliorini, an analyst at Mirabaud Securities LLP.

So far, Swiss watch makers have insulated their high-end brands from the trend, seeking to preserve the exclusivity of more traditional timepieces. The top five brands by sales, as ranked by analyst Rene Weber at Bank Vontobel – Rolex, Omega, Cartier, Patek Philippe and Longines – have stayed out of the smartwatch market entirely.

The latest releases represents a change of heart for Richemont, which owns Montblanc, and Swatch, which produces Omega. Richemont Chairman Johann Rupert previously said his brands only planned to make “intelligent watch-straps” and that putting electronic functions into the watch case creates a danger of obsolescence for time-honored watchmaking practices. Swatch CEO Nick Hayek has said he doesn’t expect smartwatches to be a “revolution.”