Let’s step into the time machine and see how technology has influenced the way people sell and purchase Swiss watches.

The industry is experiencing a low-level downturn, but the value of fine watches is not diminishing. Several factors are behind this: a decline in sales, the rise of smartwatches, and market volatility.

1. The Internet

The Internet is a worldwide network of interlinked computer networks that use the standard Internet protocol suite (TCP/IP) to link devices and services. Its underlying architecture has revolutionized the way we live, work and play by enabling new forms of communication, research, business and entertainment.

Today, more than 4.5 billion people around the world are estimated to have access to the Internet. This includes more than 2.5 billion smartphone users and over 1 billion tablet owners. The popularity of mobile devices and the widespread availability of broadband connectivity are driving the growth of the Internet. In addition, the rapid rise of digital natives is challenging traditional brands’ ability to attract millennial consumers and compete for their attention.

While the Internet’s impact on society is largely positive, there are concerns that it can increase isolation and alienation by decreasing civic engagement, sociability and the intensity of relationships. There are also concerns that the Internet promotes a fear of missing out, commonly known as FOMO.

Watchmakers are not typically big fans of online shopping, but the success of platforms for pre-owned watches such as WatchBox and Richemont’s (CFR.S) Watchfinder is encouraging some of them to offer digital sales channels. The global digital trend is having a significant impact on the luxury sector, and some of Switzerland’s finest manufacturers are beginning to adapt their business models to meet these changes.

During this week’s Salon International de la Haute Horlogerie (SIHH), the annual trade fair that showcases the Swiss watch industry, some of its best-known manufacturers are showing off their latest creations. They’re hoping that this year’s event will revive the sector, which suffered a blow from the coronavirus crisis and a decline in demand for high-end mechanical watches. The show’s emphasis on innovation and art – plus a dose of celebrity stardust from brand ambassadors from the world of sport and film – may help. However, the industry’s future remains unclear as worries about global trade and the rise of smartwatches persist.

2. Social Media

The traditional watch industry faces several challenges. The upcoming wave of connected watches is causing a lot of uncertainty about how the traditional business model will evolve. Issues such as production volumes, lack of authenticity and decreased expertise are also causing concern among the industry leaders. But the biggest challenge is how to cope with changing consumer attitudes. The industry needs to find ways to preserve the skills of traditional Swiss watchmakers and stand up to international competition, while maintaining a high level of quality.

The good news is that the industry leaders are aware of these changes and they are taking steps to adapt. However, some of these changes are still in their early stages and it will take time before the effects can be felt on the bottom line. The most important aspect of the change is the way consumers interact with watch brands. This interaction is becoming increasingly influenced by social media platforms, such as Instagram and Tumblr. These platforms have turned from simple promotional vehicles into bona fide sales channels.

Moreover, the use of these platforms has created a new generation of watch fans who are able to connect with watchmakers on a more personal level. This is particularly true for the millennials and Gen Z buyers who are now entering the market. These young buyers are demanding a more personalized experience and they are looking for companies that are willing to invest in building long-term relationships with them.

It is also important to note that the use of social media has made it possible for independent watch brands to compete with the large luxury retailers in the United States. The legacy model of selling watches from a brand to a retailer is quickly being replaced by the sale of watches directly from the watch manufacturer to the consumer online. This is a move that is being supported by the majority of Swiss watchmakers.

It is important to remember that the large American retailers are heavily subsidized by the watch brands and they have an incentive to keep as much of the profit from each sale as possible. This is one of the main reasons why the sales model of selling watches from a brand to third-party retailers has been so dominant. Despite these obstacles, the representatives of the Swiss watch industry are in agreement that digitization has the potential to make services after the purchase more efficient and transparent.

3. Mobile Apps

If there’s one nation that the world thinks of when it comes to luxury watches, Switzerland is the first one that pops up. This is because there’s just something about a Swiss watch that signals quality and elegance. It’s not just about the watches themselves, but also the tradition of Swiss watchmaking, which has survived a lot of shake-ups and changes over the years.

Despite the pandemic, most Swiss watchmakers remain optimistic that bricks and mortar stores will still be the primary sales channels for high-end Swiss timepieces. Over 70% of those surveyed by EY believe that offline channels will continue to dominate digital ones across all price brackets. That’s why they are focusing on developing and strengthening their omnichannel strategy. To do so, they are leveraging technologies like experiential brand experiences and mobile apps.

Many Swiss watchmakers are also working on ways to integrate technology into their watches themselves. Some brands have started using 3D printers to create unique watch models, while others have been experimenting with smartwatches that are designed to be discreet and blend in with the rest of their watches. This year’s SIHH even has a dedicated area called “The Lab” that features different innovations in the field of horology, including robots, 3D printers and artificial intelligence.

Although the industry has not yet recovered from the drop in sales caused by the coronavirus crisis, it is slowly starting to see new opportunities. One example is the growing popularity of online platforms for second-hand Swiss watches such as WatchBox or Richemont’s (CFR.S) Watchfinder. These platforms are providing a valuable alternative to physical stores and are helping Swiss watches reach new audiences.

Another opportunity is the growth of online watch auctions, which are allowing consumers to purchase vintage and modern timepieces directly from dealers. These platforms are leveraging technology to increase transparency and security while making the transaction process easier for consumers. For instance, online watch auctions are enabling customers to view the watch details and images, and also share their opinions with other users on the site. This will help potential buyers make more informed decisions about which watch to buy.

4. Apps for Watches

For over 200 years, Swiss watchmakers dominated the global mechanical timepiece industry, and their products were widely considered emblems of technological supremacy and innovation. However, this dominance came to an abrupt end with the onset of the quartz revolution in 1970. Quartz watches were expected to displace mechanical ones because of their superior accuracy and ease of use, as well as the growing popularity of battery-powered digital devices (Donze, 2011). The arrival of quartz was accompanied by a decline in the demand for Swiss watches. Consequently, many watchmakers closed their factories and went bankrupt. However, a small group of companies reclaimed the market and revitalized their business model by embracing the new trend.

This group of firms repositioned the mechanical watch as an image symbol and a luxury good, while also promoting its craftsmanship. They also redeveloped their production methods and reorganized their distribution networks to capitalize on the new demand. Moreover, they adopted and influenced cultural trends that emphasized slow manufacturing and craft. These efforts helped them reconceptualize community and consumer boundaries associated with their legacy technology and reactivate latent demand for their products.

These strategies were largely successful. Between 2002 and 2008, export values for mechanical watches eclipsed those of quartz watches. As a result, some Swiss watchmakers started reinvesting in their legacy technologies and reconceptualizing the meanings and values attached to them. The reemergence of the mechanical watch was supported by a rise in discretionary household incomes, especially in the markets that had been most affected by the quartz crisis.

Despite the success of the reemergence of the mechanical watch, some analysts believe that it is not sustainable in the long run. Apple’s smartwatch, for example, has been credited with bringing back the wristwatch as a fashion item and attracting younger generations. In fact, a Piaget executive I interviewed credited the Apple Watch with bringing “wrist awareness” to consumers.

Nonetheless, other experts point out that the Apple Watch might have an ulterior motive and is actually designed to replace traditional Swiss watches. They point out that the Apple Watch is capable of much more than just telling time, and it could become a replacement for expensive traditional watch brands.