News: Imran Amed’s Weekly Briefing: ⌚Luxury Watches

Friday, August 4, 2023

Imran Amed’s Weekly Briefing: ⌚Luxury Watches

WHAT YOU NEED TO KNOW TODAY: SATURDAY, AUGUST 5, 2023

This is Imran Amed. Welcome to my new weekly briefing, where I share the must-read stories from The Business of Fashion each Saturday.

LONDON — One of the questions I am often asked about BoF is how we decide what to write about. Sometimes people say to me, "It's crazy, I was just grappling with Topic X, and then the answer popped into my inbox courtesy of your newsletter. How do you guys know what questions I am looking to have answered?"

Our process is pretty straightforward. We don't rely on inbound pitches that we receive from publicists, parroting back the stories that their clients want us to tell. We write about what interests us, often based on feedback from our community.

This week, our editorial team came across a piece of data from our weekly editorial performance data that boggled our minds. For some time now we have noticed that whenever we post a story on luxury watch prices, the engagement, readership and registrations are off the charts. Why is this, we wondered?

We know that Google Discover — which is kind of like the new Facebook feed — regularly promotes stories to our readers based on what they are searching for and what they are clicking on. But we also knew this wasn't the full answer, and so we kept brainstorming ideas about what might be happening.

Indeed, many of our story ideas come from debates we have with each other. Our 'editorial pods' who cover our core beats — Luxury, Retail, Marketing, Direct to Consumer, Sustainability, Workplace & Talent, Technology, Global Markets and Beauty — are in constant touch with each other.

Each week, senior BoF editors and correspondents meet to discuss the topics of our weekly briefings and review data from previous weeks to understand what our readers are interested in. And, we are always talking to the leading thinkers, experts and operators from within our community to get their points of view as well.

To understand who's reading the luxury watch stories and why, I went straight to Ben Clymer, founder and executive chairman of Hodinkee. Ben started writing the authoritative watch blog back in 2008 around the same time I first started writing BoF.

"Mechanical watches have always been important to a small set of influential people but until 2020, it was something that was kept effectively under hushed breath," he wrote in an email when I asked him about the surge in interest around luxury watches.

"Then, when the Covid boom hit all collectibles, and we saw what many believed to be remarkable investment potential in contemporary watches — the world at large woke up. And all of sudden, the wristwatch became a cultural signal of access. If you could simply get a rare watch from Rolex, Audemars Piguet or Patek Philippe, it gave you credibility as a person."

"We started to see them on more well known wrists than ever before – and people at large began to take Hodinkee's "Watch Spotting" rubric as their own and devote entire Instagram accounts to it," he continued. "Seeing the remarkable attention there fostered more people to pay "over retail" for watches – and the pre-owned market simply exploded."

The demand for luxury watches far outstripped supply, driving people to the pre-owned market, creating the kind of hype cycle in luxury watches that we more closely associate with fashion categories like streetwear, with a particular interest from collectors, who tend to skew very young and very male.

"There's tremendous vested financial interest in the prices of pre-owned watches. You have the general interest in the space due to cultural ebbs and flows and the hype associated with particular models — think Tiffany Nautilus selling for $3 million plus when retail is $52 thousand." he added. "You have meaningful entities around the world who have poured institutional dollars into the category hoping that prices would always climb. So, when a large publication cites an increase or decrease in watch pricing, consider it fodder for dozens of investment analysts to either prove or disprove their investment thesis."

In short, Ben says watches have hit the mainstream. "While there's simply something lovely about them as a beautiful, lasting totem of accomplishment or relationship, they are now layered on top of a no longer subtle game of cultural one-upmanship, layered on top of an even less subtle ambition for a return on investment — and putting all that together makes for a really enticing story to follow."

And that's where our regular luxury watches contributor Robin Swithinbank comes in. This week, Robin examined the growing hype cycle and cultural cred of luxury watches in his latest, From Jay-Z to the White Party: How Culture Drives the Swiss Watch Industry. It's a fascinating read for anyone interested in the space, or obsessed with watch prices!

Here are more top picks from our analysis on fashion, luxury and beauty:

1. What Birkenstock's IPO Says About the Future of the Fashion Market. News that LVMH-backed private equity firm L Catterton is planning an IPO valuing the iconic footwear brand at more than $10 billion prompted our team to wonder what this means for the wider fashion industry. With Skims, Shein and likely many other brands also mulling IPOs, is the Birkenstock news an inflection point? Cathaleen Chen did the analysis.

2. Premier League Football Team Crystal Palace Hires Creative Director. Daniel Yaw-Miller broke the news that the London-based team hired sports marketing veteran Kenny Annan-Jonathan to oversee its apparel line and partnerships with brands. This follows on Daniel's previous story asking Do Sports Leagues Need 'Creative Directors'? Seems the answer might be yes!

3. Building a Rewards Programme That Keeps Fickle Customers Coming Back. Rewards programmes have become an essential way of engaging loyal customers and gathering data about their preferences and behaviours. But brands can no longer rely on a traditional points-based offering to drive repeat purchases. As Malique Morris writes, loyalty programmes that are not rooted in discounting can help brands increase customer retention and boost sales without hurting margins.

4. Unpacking Adidas' Surprise Yeezy Coup. After severing ties with Kanye West following his antisemitic outbursts and controversial fashion show in Paris, Adidas was left to deal with $1.3 billion worth of unsold merchandise. Instead of destroying it (which would also fall afoul of European Commission rules) the company decided to sell the excess merchandise instead, beginning with a first drop in May. According to our correspondent Marc Bain, that turned out to be the right decision as demand for the sneakers has been very high. Adidas lowered its expected operating loss for the year and has another drop planned for August.

5. The Brands Taking Indian Fashion to the World. Indian designers like Gaurav Gare showing in Paris and others like Sabyasachi are opening flagship stores in New York, London and Dubai — but how many will become global luxury brands that appeal to clients beyond the diaspora? Designers must localise their product range and operational strategy to overseas markets without eroding brand equity or undermining their core values and identity, writes Praachi Raniwala in Mumbai.

The BoF Podcast

I first met Tim Brown in the early days after he co-founded Allbirds. We recorded a podcast episode for our special series on entrepreneurship called Drive and he spoke at our BoF West event in Los Angeles in 2019. I always found him to be very thoughtful and smart.

So much has happened in the world since those days before Covid. In November 2021, Allbirds went public, valuing the business at $4 billion. But the business has recently faced a number of challenges and as of this week, its market capitalisation has fallen to just north of $200 million. In May, Tim stepped aside as co-chief executive and is now chief innovation officer.

A couple of months ago I stumbled across a post that Tim shared on LinkedIn about how he has been navigating some of these challenges — and the accompanying negative media attention.

On The BoF Podcast we often focus on the highs of working in the fashion business. This week, I sit down with Tim to learn how he leads through some of the lows.

Enjoy your weekend!

Imran Amed, Founder, CEO and Editor-in-Chief, The Business of Fashion

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