Gaining insights on future trends that impact luxury customer behaviour and expectations

After missing a few editions of the FHH Forum, I was delighted to attend last week's annual not-to-be-missed gathering organized by the FHH - Fondation Haute Horlogerie in Geneva. The 2023 edition was once again an enlightening session where visionaries and industry leaders converged to explore the dynamic landscape of the luxury watch industry. The event theme of The FHH Forum 2023 was 'Horology Futurology’, exploring macro trends and perspectives at the intersection of horology and futurology.

In this article, I decided to take up the challenge of summarizing what we can qualify as an eclectic mix of reflections, forward-looking speeches and panels.

Here is a concise breakdown of some insights and key takeaways coming from those noteworthy discussions that unfolded during this thought-provoking gathering. First, the keynote speakers outline macro forces set to shape the coming years such as the evolution of societies and civilizations, the global warming, the human relations to nature, and how to manage short and long-term business horizons. Then, the topic has been narrowed down to the trends shaping the future of the watchmaking sector, with 德勤 presenting the key findings of their Swiss Watch Industry Study 2023, followed by industry experts talking about watch customer behaviors and aspirations, sharing their understanding of how brands build customer engagement, and their perspectives on the luxury watch market. A wide range of topics...!

My goal here, with this 5-minute read, is to provide a concise yet comprehensive summary of the event that captures the essence of this 5-hour conference and to relate the contributions of each speaker.

In his keynote speech and during his conversation with Stephen Dunbar-Johnson from The New York Times, Ian Goldin, professor of Globalization and Development at the 英国牛津大学 emphasised the following points:

• The tension between collectivity and individuality reinforces the importance of collaborative approaches, especially in this world where the pace of change is accelerating amid the increased political and societal polarization around the globe and the risk of isolation.
• Having said that, he shared his optimistic vision of the future based on the rise, fall, and renewal of civilizations, where creativity, the exchange of ideas, and humility play a crucial role.
• He also believes in economic growth and opportunity in our highly connected world, and this will benefit the watch industry since discretionary spending continue rising over time despite inequality gap increasing.

As for Virginie Raisson-Victor , a French analyst in geopolitics and researcher on international relations, she focused on the climate crisis, stressing the need for a political revolution and advocating for a change of governance at the global level if we want to reach the Sustainable Development Goals and achieve a better and more sustainable future for all.

Inès Leonarduzzi , founder and CEO of the NGO 'Digital for the Planet,' highlighted the importance of balancing short-term reactions and long-term thinking in order to improve business efficiency and to avoid destroying company value, even if short-term thinking can be positive in the sense that we must react quickly in this world of immediacy. This is particularly true in the high-watchmaking industry aiming at mastering the time. To her, the future of the luxury industry lies in embracing “longtermism”, which is the view that we need to safeguard humanity's future by taking actions to benefit not just the present generation but all generations to come. She illustrated this with the 'empty-chair' technique used in some ancestral councils, representing the “not-born-yet” generations’ interests, when making strategic decisions. This can and should be used more often in executive meetings. Finally, she concluded by reminding the audience how important it is to be purpose-led and not to forget that 'People don't buy what you do, they buy why you do it', and what you do serves as proof of what you believe in.

Karine Szegedi , Managing Partner Consumer Industry and Fashion & Luxury at Deloitte, shared a summary of the key findings of The Deloitte Swiss Watch Industry Study 2023. This industry assessment is based on an online survey of 75 senior executives in the Swiss Watch industry and over 6,000 consumers in the top ten markets for Swiss watches. The Deloitte report reflects the sentiments of senior executives of the industry and the consumer view:

• All generations of consumers indicate that they will not be influenced by geopolitical factors when purchasing a watch.
• Brand experience over convenience: overall, 54% of consumers will still purchase a new watch in-store (73% for watches > CHF 15,000).
• Acquiring a watch remains an emotional experience: The main motivations to go to a store, for 52% of respondents, are the touch and feel, test, try and for 43%, this is the in-person relationship.
• All generations agree that in-store experience remains key, including Millennials and Gen-Z who prioritize the physical channel as well.
• The reasons for buying in-store differ by country: Japan: test & try; US/France: convenience; HK/China/India: social in-store experience; and it’s also a way to reduce counterfeit in China.
• For those purchasing online, the motivations are: price (48%), convenience 24/7 (47%), a better selection (34%), the control of delivery (28%), no barrier to enter a store (20%)
• Social media/social commerce remains low in terms of sales channels (2%), but growing in Singapore and Hong-Kong, driven by online marketplaces.
• Developing or strengthening omnichannel strategies are the #2 priority of the industry (for 45% of respondents) after introducing new products (55%)
• The third priority is to develop digital solutions (41%) by investing in CRM tools (53%), chat tools (53%), DTC capabilities (51%), new channels (51%)
• Brands and retailers are investing more in sustainability: It ranks #6 out of 25 strategies, with 38% of industry leaders mentioning it as a strong priority
• The industry is quick to embrace digital innovations with 52% of executives planning to use Generative A.I. (for content), but not so much Web 3.0: blockchains/NFTs (15%)
• India is now on the industry’s radar and perceived as a growth engine with sales of Swiss watches predicted to reach CHF 400M by 2028.

Further findings and the full Deloitte Swiss Industry Study 2003 report can be found under the following link https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/consumer-business/ch-deloitte-swiss-watch-industry-study-2023_EN.pdf

The purpose of the first panel discussion was to understand what the expectations and aspirations of watch customers are. Prof. Diana Derval ?? , Austen Chu , Founder & CEO of Wristcheck, Scott Wempe , Co-Head of business development at Wempe, and Guido Terreni , CEO of Parmigiani Fleurier highlighted shifting consumer behaviors and made the following observations:

• Customers are now investing in goods that are meaningful to them. There is more and more this culture of relevance. As mentioned by Scott, 'beauty creates meaning.'
• Guido Terreni stressed the importance of looking for customers who share your brand values, style, love for craftsmanship and go beyond the simple criteria of the monetary wealth. When you intersect those different elements, you attract customers.
• Following Covid, Chinese luxury shoppers are behaving differently. They are now taking into account and valuing the customer experience. They are much less price-sensitive when buying watches.
• Local customers are becoming more and more important wherever you go in the world and are replacing tourists. However, the new profile of post-pandemic watch customers does not really affect local customer relationships in store as brands are striving for excellence in customer service experience focusing more on? brand signature and human values than on cultural values.
• Transmitting the culture of a brand is as important as product knowledge because emotional engagement and brand-match become key factors since customers seek a sense of true connection and want to have values that align.
• Understatement is a growing trend in the luxury watch sector and becoming more fashionable.
• Online platforms and Marketplaces seduce digital natives who need to see the breadth of assortment. However, having a physical retail space allows building trust and inspiring shoppers.
• An omnichannel strategy is key as online and brick-and-mortar are very complementary. Furthermore, visiting a physical store delivers a sensory experience.
• Multi-brand watch stores offer the advantage of being 'neutral' by being brand-agnostic and customer-centric, playing a role of curator and advisor, as well as taking on the role of educator.
• Sustainability is considered a must, and that’s given for luxury customers who expect this as an intrinsic part of the brand they purchase, especially on the sourcing aspect.

The second and last panel discussion addressed the question of customer engagement with the watch industry moving from a product-centric to a customer-centric model amidst the sector’s ongoing integration of distribution. Clara Arnoulx de Pirey from Nelly Body, Anne-Sophie Scharff, strategic planner at DLG (Digital Luxury Group) , @Matthias Fuchs from EHL, and Prof. Stéphane J.G. Girod at IMD, discussed the ongoing cultivation and elevation of the relationships between the luxury brands and customers, going far beyond the transactional aspect, and presented their views and opinions: ? ?

• Three main trends are shaping the customer engagement in the watch and luxury industry: 1. the continuing rise of personalization. 2. its rapid digitalization, and last but not least 3. the storytelling which plays a pivotal role.
• Luxury customers want to go beyond the product, seeking experiences or to join a community. Hence, luxury brands must find effective ways to take customer relationships to the next level and build their reputation round the next generation of luxury customers. Some brands integrate the hospitality dimension into their territory to propose immersive experiences and bring their brand to life with a dream dimension.
• Nowadays, retail and hospitality boundaries are blurring with the concept of retail-tainment, such as the Dior’s 30 Avenue Montaigne flagship with a museum, a restaurant and a luxury suite for overnight stays.
• Recent brands' successes are based on creativity with new value propositions, the creation of original, entertaining and authentic brand content and also on community building.
• Pop culture’s influence and digital transformation (with the use of A.I. helping to identify and solve customer pain points) are driving the future of customer engagement in luxury.
• The next challenge for luxury brands will be to maintain some forms of exclusivity, uniqueness and high reputation in a large (and growing) addressable market. At the same time, the industry must strike a delicate balance between expanding its global reach through a broader audience, and adopting sustainable practices quickly.

The FHH Forum, once again, provided valuable insights into navigating the complexities of a fast-changing world and the ever-evolving expectations of Millennials and Gen-Z while maintaining the timeless essence of horology.

I'd like to take this opportunity to thank the speakers and everyone involved in making the 2003 FHH Forum a valuable and inspiring resource for the professional of the luxury watch industry, especially the FHH Team and its vice-president Pascal O. Ravessoud .

https://www.hautehorlogerie.org/en/experience/museums/horology-futurology