Changing Competitive Landscape of Wristwatches
Executive Summary
The luxury watch industry dates back to the early 1900s and caters to customers who desire a premium timepiece. Consumer’s willingness to pay has traditionally been derived from a watch's quality, style, and brand status. However, technological innovation and the entrance of the smartwatch into the market have changed the competitive landscape of wristwatches. The top players in the watch industry were previously dominated by time-tested brands like Rolex and Cartier and have now expanded to include innovative technology companies like Apple and Google. This has generated new demand by customers who were not previously interested in traditional watches but would purchase a smartwatch for the additional features offered beyond simple timekeeping. The following analysis reviews key implications for luxury watchmakers, given these market changes. The goal of the research is to determine how a luxury watch brand can adapt to customers’ changing demands while maintaining elements of its traditional strategy that have made it successful to date.
The scope includes the global luxury watch industry. The initial observations are about the industry as a whole but further narrow down the scope to review TAG Heuer as a focal firm. (TAG Heuer has been a longstanding top competitor in the industry and has also recently diversified their product offerings to include smartwatches) The article also includes the sustainability of this strategy and addresses the critical threats and opportunities for TAG to consider as they grow in this space. However, with competition from both traditional watchmakers and technology companies, TAG will need to differentiate itself to sustain its market position.
Based on these conclusions, there are two strategic recommendations for TAG. First, to pursue a sustaining innovation strategy by partnering with technology companies like Google and Intel to develop unique apps that will cater to a premium customer and increase willingness to pay. A second option is to seek out opportunities to disrupt the industry by pursuing a Blue Ocean Strategy to create value in an entirely new way.