The watch industry is currently experiencing a dramatic shift, where the very concept of 'Fear Of Missing Out' (FOMO) has been turned on its head. Back in 2020, the initial focus was on how watchmakers leveraged FOMO by creating limited editions and hoarding them in their own boutiques. This strategy, designed to create artificial scarcity, pushed customers to buy quickly. But here's where it gets controversial... This strategy often left long-standing, authorized dealers at a disadvantage, struggling to sell core collection watches. These watches, produced in larger quantities and often unchanged for years, didn't create the same sense of urgency.
I've always questioned the fairness of boutique-only limited editions. They create an uneven playing field, giving monobrand stores an unfair advantage over authorized dealers, who handle the majority of sales.
During the post-pandemic boom, the problem expanded. Not only were boutique-only watches prevalent, but there was also a bias in allocating highly sought-after, non-limited watches to monobrand stores. The hierarchy was clear: brand-run boutiques got the best allocations, followed by franchise boutiques, and finally, multi-brand stores, which represent most brands' points of sale, received whatever was left.
If you can’t beat them, join them
Over the next three years, up to the end of 2023, a new form of FOMO emerged. Authorized dealers, tired of being sidelined, realized the only way to compete was to open their own boutiques. Brands used a 'carrot and stick' approach: open a boutique and have access to the entire watch portfolio, or refuse, and risk losing the brand altogether.
FOMO fueled an unprecedented demand for luxury watches. Retailers like Watches of Switzerland Group, Beaverbrooks, and others, invested heavily in branded boutiques for brands like TAG Heuer, Breitling, Omega, and Tudor.
The folly of acting on this FOMO is now becoming apparent. Demand for brands like Breitling and TAG Heuer has declined sharply, coinciding with the opening of these expensive new retail spaces. Retailers, initially caught up in the rush for supply, are now pragmatically adjusting their networks, closing underperforming stores. Simultaneously, they are recognizing the importance of staff training and retaining their best employees. Exceptional in-store teams are proving to be a better investment than another new store.
Retailers, especially those working with Rolex and Patek Philippe, need to take responsibility for not working hard enough to maintain demand for other brands. They often treated casual customers without a history of significant spending with arrogance, expecting them to buy less desirable watches and jewelry. This created a false impression of the demand for many brands.
FOMO has all but evaporated across the luxury watch landscape. Everything is available all the time. While waiting lists still exist for certain collections from Rolex, AP, or Patek Philippe, secondary market availability and competitive prices give customers more choices. Retailers and brands will always use fear as a sales tactic, but its power is diminished during times of reduced demand and ample supply.
Instead of customers having to build relationships with retailers and brands, the retailers and brands now need to build relationships with customers. If they don't, they should be very fearful of missing out on future sales.
What do you think about the shift in the watch industry? Do you think the emphasis on FOMO was a sustainable strategy? Share your thoughts in the comments!
