The Rampant Anti-Competition in the Watch Industry

Horology is more than just a hobby, and more than just a trivial obsession of a fleeting few. Watches are often portrayed as a fine craft, and many watches are, however a false persona of an experienced watchmaker toiling away at a fine movement in a small workshop overlooking the grand vistas of alpine glacier; or perhaps an image of a fine watch passed from father to son. ( Yes, Patek Philippe! What a cliche that is!)

Watches are a multi-billion dollar industry, and competition between brands can be fierce at times, however since the rapid consolidation of brands into portfolios reminiscent of private equity funds, competition is sparse, and only between a few prominent brands like Rolex versus Omega, or three-way competition between the maisons of Patek Philippe, Vacheron Constantin, and Audemars Piguet. Although well-intentioned, the brand consolidation has proved an ineffective way of generating exciting competition in the industry.

Baselworld [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Baselworld [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Every watch brand in a portfolio serves a purpose, and in the case of the Swatch Group, filling various price tiers. The disadvantage comes when there can be no friendly competition between brands. Historically speaking, the friendly competition between the King Seiko (Daini Seikosha) factory and the Grand Seiko factory (Suwa Seikosha) pushed the envelope of what a precision Japanese watch could be.

If you want a classic dive watch from a major brand between $5000 and $8000 dollars, there are only a few options despite the category featuring major demand. You are likely to be choosing either a Rolex Submariner, Omega Seamaster (with some variety), or perhaps a Ulysse Nardin if you go pre-owned and want a watch with an out-of-the-box design.

Public Domain

Public Domain

These conglomerates are like a puppeteer pulling the strings of the individual brands to serve a purpose in the corporation. Not all puppets can become a main character, and thus cannot reach their full potential. An example of this is Baume & Mercier, which has outstanding potential but cannot capitalize on their capabilities, especially in creating more sports watches and watches with higher price-points.

Additionally, companies fail to respect their client base by producing watches in vast quantity; too much for the market to absorb while at the same time raising prices. Watch companies love to gripe and complain about the “evil” grey market when they willingly fuel it to meet quarterly growth expectations from the all to short-term-thinking stock market!

Colin Carpenter1 Comment