The watch industry's FOMO phenomenon has taken an unexpected turn. A tale of power dynamics and shifting strategies unfolds.
In 2020, I delved into the world of FOMO, exploring why watchmakers crafted limited editions and hoarded them for their exclusive boutiques. This strategy, creating scarcity, aimed to entice potential buyers with the fear of missing out, driving them to the few stores carrying these coveted pieces. However, this practice left authorized dealers, loyal to the brand, with the less desirable core collection watches, produced in larger quantities and often unchanged for years.
The issue became more complex post-pandemic. Not only were there boutique-only limited editions, but there was also a bias in allocating highly sought-after, non-limited watches to monobrand stores. This created an uneven playing field, with brand-owned boutiques at the top, followed by franchise boutiques, and multibrand stores, the majority of sales points, left with the remainder.
The Rise of Boutique FOMO: Over the next three years, a new form of FOMO emerged. Authorized dealers, tired of being sidelined by brands favoring their own boutiques, realized they needed to join the boutique game. Brands enticed and threatened, offering the full portfolio to those who opened boutiques and warning of potential brand loss for those who refused. In an era of high demand, retailers like Watches of Switzerland Group expanded, building branded boutiques for TAG Heuer, Breitling, Omega, and Tudor.
The Folly Unveiled: The consequences of this FOMO-driven strategy are now evident. Demand for Breitling and TAG Heuer has dropped sharply, coinciding with the opening of numerous branded boutiques at great expense. Retailers, while enthusiastic about securing supply, are now faced with the task of downsizing their networks, closing unviable stores, and recognizing the importance of staff training and retention.
The Power Shift: FOMO has largely dissipated in the luxury watch market. Everything is readily available, with secondary market options and competitive prices giving customers choices. Retailers and brands still employ fear tactics, but their impact is diminished in times of reduced demand and ample supply. Instead of customers building relationships with retailers, it's the retailers and brands who must cultivate connections with their customers.
A Thought-Provoking Question: Should retailers and brands continue to rely on fear tactics, or is it time for a paradigm shift towards building genuine customer relationships? What are your thoughts on this evolving dynamic in the watch industry?
