The luxury watch industry is undergoing a significant transformation, driven by changing consumer trends and the increasing global wealth. LVMH, a leading luxury conglomerate, is capitalizing on this opportunity by expanding its watch division and introducing new, higher-priced models. With sales of luxury watches expected to reach $37 billion by 2032, LVMH aims to gain a significant share of this growing market.
LVMH’s jewelry and watch division reported sales of $11.8 billion in 2023, experiencing a 7% increase in organic growth. The conglomerate currently owns 10 watch brands, including renowned names like TAG Heuer, Hublot, and Zenith. These brands are known for their innovation, cutting-edge materials, and creative designs. Frederic Arnault, the CEO of LVMH Watches and son of LVMH’s Chairman and CEO, is spearheading the company’s watch division and is expected to bring his fresh perspective and expertise to further propel its success.
The luxury watch market is projected to continue its growth trajectory due to the rising wealth globally and the increasing interest of Generation Z and millennials in high-end mechanical watches. Analysts estimate that sales of luxury watches will surpass $37 billion by 2032. LVMH recognizes this potential and is actively targeting the “super-spenders” and VIP collectors who are less affected by economic uncertainties.
Despite the challenges posed by rising interest rates and fears of a recession, the American luxury consumer has shown resilience, creating a positive outlook for the luxury watch market. LVMH executives believe that the United States’ short economic cycles contribute to its ability to bounce back quickly. The company’s chief executives are encouraged by the traction within the U.S. market and are confident that 2024 will be a stronger year than 2023.
Women’s watches, though accounting for only a third of total watch sales, are gaining significance in the luxury watch market. The increasing exposure of women’s watches on social media and the growing number of models designed specifically for women have led to a surge in interest. Moreover, the rising population of wealthy self-made and inherited women is fueling sales growth in this segment. LVMH recognizes this trend and aims to tap into the fastest-growing segment of luxury watches.
To gain a larger market share and captivate collectors, luxury watch brands must constantly innovate with materials, complications, and designs. LVMH’s advantage lies in its relentless focus on reinvention and desirability. CEO of TAG Heuer, Julien Tornare, believes that the Swiss watchmaking industry has been conservative to some extent, while LVMH pushes boundaries and embraces new ideas. This approach is crucial to appeal to the new generation of luxury watch buyers.
Many LVMH brands are leveraging their rich histories to create new designs and models. Zenith, for example, draws inspiration from its rare prototype El Primero watch from 1970 and introduces the Chronomaster Triple Calendar. Additionally, while Zenith produces highly complicated watches, it strives to deliver value to customers by pricing its watches competitively. This strategy enables them to offer a compelling proposition to younger watch buyers and collectors.
LVMH is not only focusing on delivering value but also introducing more expensive limited editions to cater to the upper luxury segment. Hublot, known for its bold and large watches, recently released the limited-edition MP-10 Tourbillon Weight Energy System priced at $250,000. This fusion of tradition and innovation creates a sense of exclusivity and allure for collectors.
As the luxury watch market continues to grow, LVMH is strategically positioning itself to capitalize on this expansion. Through its newly formed watch division and an array of new, higher-priced models, LVMH aims to gain a significant share of the luxury watch business. By tapping into the growing interest of women in luxury watches, emphasizing innovation and desirability, and preserving heritage while offering value, LVMH is well-positioned to thrive in the evolving luxury watch industry.
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