Bricks and mortar still hold the key according to Deloitte report

Deloitte has published its 11th Swiss watch industry report, with the findings providing an excellent barometer for the state of the sector.

Based on surveys and interviews with hundreds of industry experts and thousands of consumers in key markets, there are a number of key takeaways from the study.

Watch industry executives are preparing for a challenging year, yet remain committed to innovation. While 43% hold a negative outlook for their main export markets (versus 23% positive), 61% plan to prioritise new product introductions in the year ahead, showing R&D remains a priority despite early supply chain cutbacks.

Key trends shaping the market:

• AI Adoption: Nearly a third (29%) of brands plan to use AI to support creative product development, up from 20% in 2023
• Retail strategy: Most executives expect brick-and-mortar to remain the dominant channel over the next five years, even as online sales account for roughly 10%. However, a disconnect exists: 41% plan to open new mono-brand stores, but 38% of consumers prefer multi-brand stores
• Pre-owned growth: The pre-owned market is gaining traction, with 40% of Millennials and Gen Z likely to purchase a used watch this year
• New buyers: Demand is now equally strong among men and women. The greatest potential for growth lies with female buyers and Gen Z
• Mexico market: Fueled by social media, Mexican consumers are twice as likely as the global average to purchase new watches via social channels, though personal relationships with retailers remain highly valued

Interpreting these findings will be a priority for a lot of watch manufacturers and retailers alike. An emphasis on a younger audience to attract Gen Z (and young millennials) is clearly a growth opportunity, but the strategy for how this is achieved is less clear.

In Mexico, it appears that a big part of the strategy should involve social media, where Mexican consumers are twice as likely as the global average to purchase a watch.

The question is whether this is the exception that proves the rule, or whether this is a trend that the rest of the world should take very seriously.

The strength of the role that physical stores play in the watch sales ecosystem is also interesting, and may appear to fly in the face of the evidence in Mexico regarding the power of social media channels.

As has always been the case, brands and retailers understanding what works best in their market is the answer. What works in Germany may be wildly different from what works in Mexico, so there would be no sense in adopting a global, one-size-fits-all approach.

You can read the Deloitte study in full HERE.