Veltracon Lifestyle Management

A Stroke of Marketing Genius

We have once again witnessed a stroke of marketing genius by Swatch, much like the staggering and daring moves of Nicolas Hajek in the 1980s when Swatch was all about shaking up the watch market.

It was about time for something new, so we applaud the release of the eleven Swatch x Omega MoonSwatch Bioceramic watches just a few days ahead of the 2022 Watches & Wonders fair in Geneva!

Looking in from the outside

Over the past decades, Swatch Group “grew up” and became a conglomerate, rather than being the noisy kid on the playground. Of course Swatch itself remained true to its identity of fun designs and colourful, affordable watches but they didn’t make any more noise in the market.

Those who look in from the outside might be compelled to think that Omega was making a mistake by lending its name, design and unique Moon theme to the affordable, or dare I say, low end watch brand of Swatch. It’s easy to think that Omega is damaging its brand image by making such a move, but in this instance it is very relevant to look a little closer and dig a little deeper to truly see the genius of the collaboration and to understand that there really never was any risk by doing this venture. 

First of all it is important to note that the idea isn’t far fetched at all because Omega is owned by Swatch. In that sense it is much more logical than for example the collaboration between Louis Vuitton and Supreme which was a streetwear sensation but could have easily gone wrong. Another example for great and successful collaborations are the H&M collections by famous designers like Karl Lagerfeld or Roberto Cavalli. These collections did very well, which is no wonder because they combined Haute Couture and affordable prices. Yet in no way did they have a negative impact on the legacy of these immortal fashion designers.  In that sense, recent history was already showing Swatch Group the way.

The only way is up

The ownership structure is a piece of the puzzle that is very relevant in this assessment because the the worst case scenario would have been that the financial upside of one is the downside of the other, making it a zero sum game. What I mean is that Swatch creates a buzz and sells a lot more watches whilst Omega would be regarded as less valuable, causing the dissuasion of potential new buyers who could then favour another brand of a similar standing. What has been much more likely is that this release is regarded as a singular event, an anomaly and not a dilution of any kind because Swatch isn’t pretending to be Omega and a real Omega will never be regarded as a Swatch either. 

To tie this in with the theme of the collection, we might call this event a shooting star or even a comet, causing a lot of ooohs and aaahs for a second, for those who witness it, but which then disappears with no impact on the universe. In other words, no stars or planets were destroyed in the process.

An event with singular consequence

My unconfirmed research has revealed that the launch production was 100’000 units, selling for $260 each, which translates into sales of $26 million within a few hours on its release day in stores. Given the this success and massive interest that these 11 models have now encountered, it is safe to assume that the sales of just this special Edition Swatch collection will rival the annual revenue of the entire Omega brand and will benefit the Swatch Group immensely. For comparison, Omega is said to produce 500’000 watches per year with around $2 billion in total sales. Since this new line is not limited in any way, we will likely see production and sales continue until the interest in the pieces dies down, which could be a long time, generating hundreds of millions of sales over the coming months and billions over the lifetime of the product(s). That is a tremendous outlook, isn’t it?  

I like playing around with these numbers to add some more perspective to the analysis. Considering the sales in the secondary market that are now heavily ongoing, with the watches being sold for 10 times or even 20 times the retail price, it is safe to assume that this watch release was the single most financially significant release of all times

Speculation and Motivation

I would speculate that more than 50% of the people who queued at the stores did so for immediate financial gain to resell the watches and considering the multiples being paid by those who have been firmly gripped by FOMO, this market event is possibly creating billions of Dollars in sales, sending ripples through the watch market and confirming the theory above.

It is both entertaining and tragic to see what resellers are attempting to achieve with their offerings on auction platforms like eBay. Some people are trying to sell the blue “Earth” edition together with the yellow “Sun” edition and hoping for a better auction result because those colours make up the Ukrainian flag, which I find rather tragic. Others are taking the light blue “Uranus” edition and renaming it “Tiffany Blue” in the hopes that it will create a hype like all current watch products that have a light blue dial, trying to benefit from the monumental hype that stems from the collaboration between Patek Philippe and Tiffany & Co, with its commemorative watch release of the 5711 to honour the 170 year anniversary of Tiffany & Co. A watch that is now selling behind closed doors, among avid collectors, for 100 times the official price.   

Although Swatch calls this watch a pale blue tribute to the god of the sky, it isn’t hard to understand why people would want to make the connection with the iconic turquoise Tiffany blue.

The Hunt for Dopamine

Surprise collaborations pay off because in our fast paced world of consumerism, millions of people are constantly on the prowl for their next fix of dopamine and what is more exciting than buying a novelty? Who doesn’t want to get their hands on the latest release of something new?! We want instant gratification from social media and that is easily achieved by owning something that everybody wants.

I’ve seen photos and videos from Swatch stores around the world, from Singapore to Frankfurt to London and the frenzy was the same. Thousands and thousands of people standing in line for hours, some even camping outside the store the night before. Those scenes seemed very familiar from Apple releases this past decade.

I believe that it is actually Apple who is at the root of “hype marketing” in this century as the invention of the iPhone plays a central part as the first delivery system for a constant flow of information and stimulation. If you combine the hype with the artificial shortage of products, you can keep the flame burning for a very long time and that is the ultimate goal for any brand.

The watch market as a whole is in a massive hype right now and that in itself has many reasons, going back to the shopping craze during the COVID-19 pandemic and the “you only live once” mentality which is on the forefront of peoples minds since 2020. 

We’ve seen demand exceed supply for several years now, which has constantly driven prices higher in the secondary market for most of the established watch brands that were already not easy to get prior to the pandemic, such as Rolex, Audemars Piguet or Patek Philippe. Other brands have started to see their demand exceed supply such as F.P. Journe or Vacheron Constantin and others. Watches have become widely accepted as alternative investments and are also becoming a refuge from growing inflation as traditional investments have been stalling for a while or have simply become too risky.

Brand Loyalty all around…

Swatch has built a very loyal following and a large number of collectors over the past four decades. It has always set itself apart with its creative designs. There have been countless collections that were highly desirable at the time of release and which have become collectibles over the years. 

Omega also has a very loyal following, particularly because it has chosen its design and marketing strategy and stuck to it for a very long time. Such continuity creates confidence in the world of luxury because it creates a sense of timelessness. Omega’s DNA hinges mainly on being the first watch on the moon and also, in no small part, being the watch of choice of her Majesty’s favourite secret agent, James Bond or 007.  

New Generation Appeal

“If you want to get something you never had, you need to do something you’ve never done before.”

That is the basic train of thought for change and innovation. We know that Swatch is good at innovating since the brand has proven it time and time again over the last 39 years, since the company was created.

Research shows that the new generation is much more interested in experience than possessions and if you want to draw in this generation as future, loyal buyers of your brand then you need to reel them in with something fun yet replaceable. A watch that is regarded as cool and holds some status, yet costs merely $260 to buy, is precisely that. Let me put it another way: How many youngster will now remember all their lives that the first cool watch they owned was either a Swatch or an Omega? That kind of a move is priceless marketing and ensures the success or at the very least the survival of a brand for years to come.

The appeal in this instance is not a classical one, where we look for mechanical complications, precious metals or diamonds. In this instance the appeal lies within the fun of the novelty and that idea has been carried out to perfection.

So to all of those out there who say that Omega made a big mistake, I say think again! If my analysis of the situation as a outsider can only come to one conclusion, I’m sure that the clever team(s) at Swatch Group looked at all the possible scenarios long and hard and came to the obvious conclusion that the group could only win with this move.

If we look at all the factors that come together in this very moment, between the hot watch market, an appetite for hyped new products, the loyalty of the customers of both brands and the statistics of what the new generation is looking for, then this release is an inevitable consequence of market conditions and had virtually zero risk of failing or damaging the reputation of Omega.

I’ll be buying the set of 11 watches for myself and keep them, simply to commemorate this fun and cool initiative to change things up once again. I think they are a testament to the times we live in and I predict that this is the first of many collaborations that we’ll be seeing between high end watchmakers and entry level brands as the fight for the next generation watch buyers is already in full swing…

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