Jewellery & Watches: ‘K-shaped’ recovery
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Luxury’s post-Covid recovery is likely to be K-shaped – those brands doing well before the pandemic will bounce back sharply, while those brands that were struggling, will continue to do so. That’s the analysts’ view and it’s one that supports a polarised marketplace. But how will this play out as the travel retail world starts to return to normal? 

In 2019, the global luxury jewelry market amounted to about €21bn, according to Statista. China comprises the majority of the market revenue, followed by the US, Japan and India. In value terms the market is expected to increase from approx. $279bn in 2018 to $480.5bn by 2025.

While the personal luxury market has contracted this year by its biggest share since 2009, according to Bain & Co’s latest Luxury Study for 2020, the outlook for watches & jewellery looks promising with online sales proving to be somewhat of a saviour. 

“Online shopping for luxury goods has soared, doubling its share of the market to 23% in 2020 from 12% in 2019,” says the report.

“The turmoil of Covid-19 has been the catalyst for change for the luxury industry, which is on a path to recovery by 2022-2023.” 

Bain’s latest data show that jewellery saw sustained demand in Asia and benefited from online sales. The category remains polarised with high jewellery and iconic entry-level priced items leading the recovery, it says.

Watches [and apparel] both declined by -30%, compared to 2019. For watches, the pandemic amplified the already critical secular consumption pattern shifts from the category, as per Bain. As the march to digital and e-commerce has been slow for luxury, in an interim and post-Covid era, it has speeded up, even for watches and accelerated in China.

Watches of Switzerland

The FT says [sub req.] a K-shaped recovery will benefit watch brands and retailers that have staying power – such as Breitling and Watches of Switzerland (both operating in the travel retail marketplace) – as global passengers start to return to travel and their appetite for watch shopping remains undiminished,  now with fresh attitudes to digital shopping. 

The Covid-induced downturn of 2020 is different to previous years, HSBC luxury analyst Erwan Rambourg tells the FT: “Following 9/11, there was a guilt factor and buying luxury was seen as vulgar. Now it’s not. You have people buying a lot of luxury, spending on logo-heavy products.” Revenge-spending has been an enduring consumer trend associated with this year, first coined in March to describe the pent-up demand for Chinese shoppers and now being applied globally as luxury spending increases via e-commerce.  

In the UK, sales of luxury watches have been rising since the summer and following the first ‘essential retail’ lockdown. In particular, sales of watches running into four figures have increased by 10.3% YoY, according to retail market research firm, GFK.

Furthermore, it’s a sign of the strength of the online watch market, that Hodinkee, a digital trading platform that specialises in high-end watches, has just raised $40m investment funding with Forbes calling it ‘a huge stir’ in the market.

In November, the Watches of Switzerland Group reported stronger than expected revenues of £202.7m for the first 10 weeks of its second quarter from the end of July, an increase over 2019 of 20.2%. The group said sales were up 12.6% in the UK, and 43.4% in the US over the same period.

Brian Duffy, CEO of the group says there is still great demand for the watches the retailer sells. In the UK sales have been growing despite the lack of international business, with the slack having been taken up by the domestic business. E-commerce has been a stand-out for the retailer, it reported UK online sales were up by 49.9% YoY.

Luxury brands have also been focused on increased online sales in place of their closed physical stores. Breitling UK reports its e-commerce business has grown by more than 300% in the last quarter compared to 2019 and it has been investing 60% of its media budget in online channels that have become much more important during ‘Covid times’. The company’s chief executive, Georges Kern says this is also based on the shift for consumers to make more purchase decisions while they are online: “70% of your [watch-buying] decision process is made online,” he says.

Polarised brands drive innovation

The next decade of luxury jewellery sales will be driven by Asian consumers investing in branded fashion-led jewellery according to Jing Daily. However, while luxury consumers have adopted digitalised shopping during the pandemic, Millennial and Gen Z friendly jewellery brands such as Pandora, Swarovski and Tiffany & Co have pivoted to attract new customers. This cohort of brands have engaged in heighted online marketing activity such as influencer campaigns and limited-edition merchandise.

Pandora’s 2020 ad campaign

Danish jeweller Pandora reported an encouraging sales recovery in Q2 2020, which led to a 39% sell-out growth and is amid the company’s rebrand efforts. The new strategy involves “forceful initiatives to manage through the crisis in a socially responsible way”. A new collaboration with Star Wars has helped sales recover and the brand reach new audiences. 

In May, Tiffany & Co launched a new hero product line, the T1 Collection and the storied jeweller that will soon become the latest luxury brand to join the LVMH stable, has a big focus on influencers to drive sales across digital platforms. The latest campaign features supermodel Adut Akech as the face of the brand and the T1 collection has been featured by top influencers on Instagram, Snapchat and Kakao in Korea. 

There is an expectation that Swarovski will become more fashion led further to the appointment of super-stylist and global fashion influencer Giovanna Battaglia Englebert, who was named the first ever company-wide creative director in May. Watch this space for trend-led fashion collections and tiered price points. 

Panthère de Cartier at Harrods

At the other end of the market, Cartier and Bulgari have increased their phygital retail activity: Cartier partnered with Harrods in November for an interactive Panthère de Cartier installation while Bulgari launched an invitation-only app to enable clients to try out virtual necklaces and earrings from its new Barocko collections and purchase the real ones online or collect in-store. 

Travel retail luxury flagships 

LVMH-owned Bulgari has been on a store renovation spree as it introduced a new VIP shopping concept at some of its most prestigious airport and downtown retail locations. 

Last October the luxury jeweller introduced a new travel retail store concept at Istanbul Airport in association with ATU and Gebr. Heinemann. 

“This is a blueprint for Bulgari’s expanded retail footprint in travel retail. We think it mirrors the experience in our downtown flagship stores. This [Istanbul] is the most attractive luxury travel retail location in the world right now and our store experience here elevates the brand. We will be launching this new VIP airport shopping experience at our newest travel retail concept spaces,” Roberto Marino, Sales and Marketing Director, Bulgari Travel Retail in Europe told DFNI.

Bulgari’s latest travel retail renovation is in Macau, China at the T Galleria by DFS, Macau, Shoppes at Four Seasons shopping mall and features the new VIP salon interior décor and a shift in high-end merchandise, more geared towards the city’s HNWI clientele. 

Luxury Time Pieces at Istanbul Airport

Luxury Time Pieces is a multi-brand luxury store concept newly created by Gebr. Heinemann to bring watch brands to life in airport retail spaces, according to Olaf Benjamin, Director Purchasing Watches & Jewellery at Heinemann,talking to DFNI.

“We wanted to bring the storytelling our customers are used to seeing at traditional city centre stores into airports,” explains Benjamin. “The manner in which the premium components of a wide selection, exclusive customer service and unique atmosphere all come together allows customers to experience the dream of luxury even at an airport, where everything is normally driven by efficiency.”

The Luxury Time Pieces concept store has so far opened at Istanbul Airport and Sheremetyevo, Moscow and is shaped like a watch mechanism or a ring, so that the space provides a flowing transition between the custom rear walls for the individual brands, according to Heinemann’s press release. The new specialist category concept has encouraged international luxury brands and watch manufacturers to make the leap to the travel retail market including exclusive airport-only products. “We have created a shop with a big impact that offers brands a high-quality stage on which to present themselves,” says Benjamin, who adds it is a benchmark for the next step in this category in travel retail. 

Haute horologie in Hainan

Luxury jewellery brands are looking to Sanya, Hainan to reach affluent Chinese consumers as the shopping destination leads the way for Asia’s luxury market resurgence. 

In September and October, Net-A-Porter and Mr Porter partnered with the Fondation de la Haute Horlogerie (FHH), organisers of the Watches & Wonders luxury watchmakers showcase, that usually takes place during Baselworld in Geneva, and took its industry-only event on tour to China for the first time. 

The exhibition launched in both physical and digital form in partnership with the state-owned duty-free operator CDFG and took place at the Sanya International Duty-Free Shopping Complex in Hainan, China. The interactive exhibition was open to consumers via Net-a-Porter and Mr Porter online platforms as well as live workshop sessions from 14 participating Richemont-owned watch brands at the major Chinese shopping destination. 

Meanwhile also in Sanya, Cartier has unveiled a new flagship concept store that has a focus on brand codes such as the Panthère de Cartier collection and other historic iconography. The new Sanya boutique design features an activation pad, a brand showcase area which plays a central role in the concept, bringing the retail space to life for new launches and gatherings.

Meanwhile also in Sanya, Cartier has unveiled a new flagship concept store that has a focus on brand codes such as the Panthère de Cartier collection and other historic iconography. The new Sanya boutique design features an activation pad, a brand showcase area which plays a central role in the concept, bringing the retail space to life for new launches and gatherings.

Echolution takeout: 

Whether its physical sales in luxury flagships at airport and downtown locations or increased e-commerce sales via digital channels, there is pent-up demand for the watches & jewellery sector.

As travel picks up and global passengers research before they buy, brands that have the ability to get to know their customers with the right product at the right time in the right place, will win the conversion race. The luxury watches & jewellery market is more diverse than ever and it’s now more open than ever before to new digital audiences.