Luxury Watches - Demographics
Millenials and Baby Boomers are the biggest demographic segments currently buying luxury watches. Growth is mostly seen in China, Russia, and the UAE where spending increased up to 70%. Luxury consumers spend 53% of their money on luxury goods in their home country, 26% abroad, and 15% at the airport. Luxury watches are the fourth most popular luxury segment with consumers, after fragrances, spirits, and vacations. The key purchasing period for luxury watches is December when watch sales are at 24.9% of the total annual units sold. By income cohort , watches that resonate the most with those with the highest income are produced by Patek. Rolex and Tag are most popular with those who make $150,000 and above.
LUXURY SEGMENT DEMOGRAPHICS
While this first source we use is from 2015, it provides one-of-kind information regarding the luxury segment disruption that has been going on since 2014 and is still in progress. We later provide information that supports that the claims made in this source still hold now with more recent sources. However, we felt quantitative data quoted in this report was too valuable to omit. Demographic disruption is the biggest challenge the luxury market is facing since 2014, and this trend is expected to continue for a full decade until 2024. The largest market for this disruption is the US, as this market is currently the largest luxury market in the world, with sales of €64.9 billion. It is even bigger than the four next largest markets combined—Japan (€18.1), Italy (€16.1), France (€15.3) and China (€15). The shift is boosted by the fact that a generational shift in the demographics of the target market is currently going on, from maturing Baby Boomers (born 1946-1964) to Millennials (born 1980-2000). Currently, both generations are equal in size, but their spending power is different. Affluent Boomers have a larger amount of wealth to spend and are accustomed to the luxury lifestyles. However, Boomers don't care that much about luxury goods and are more focused on experiences. Millennials are yet to accumulate the majority of their wealth. As people tend to reach their highest income levels between 35 and 54 years of age, this means that Millenials are about to be stepping into this era of their life between years 2010 and 2029, when the Millennials will reach critical mass in the affluence window. According to Deloitte's 2017 Global Luxury Report, over last five years, consumer spending on luxury spending remained the same as the previous five years. Growth is mostly seen in China, Russia, and the UAE, where spending increased up to 70%. Overall, luxury customers spend 53% of their money on luxury goods in their home country, 26% abroad, and 15% at the airport. The first big trend when it comes to luxury consumers is the fact consumers are shifting their spending habits to online shopping, and are more attentive when it comes to the digital experience. Currently, 37% of consumers buy their luxury products online. The second trend is an increasing demand for personalization of products, such as monogramming or customizing. 88% of luxury consumers buy products because they are premium quality products 82% of luxury consumers buy products because they make them happy 75% of luxury consumers buy products because they are hand-made 68% think it is a luxury to buy the latest trend 63% like to buy luxury products others haven't heard of yet 57% wear only luxury products 56% buy luxury products because they like to show off their luxury goods
Countries that have the highest share of luxury consumption:
Thirty-nine percent of Ultra High Net Worth Individuals (UHNWIs) worldwide recently said that online privacy and security when it comes to shopping for luxury goods is an issue of concern for them.
LUXURY WATCHES DEMOGRAPHICS SPECIFICS
Luxury watches are the fourth most popular luxury segment with consumers, after fragrances, spirits, and vacations. They rank higher than apparel, home furnishing, and cars. Watches are the most popular luxury segment overall with Boomers, and fourth most popular with the GenX and Millenial generations. All three generations use the following words to describe their desired watch purchases: quality, expensive, name-brand, and high-end. The Millennials' top luxury watches descriptions include the words best, classy, and money. The Gen Xers' like the most the words cozy, premium, style, unique, and valuable. Boomers rank the words desirable and overpriced as most sought-after words when it comes to luxury watches. The key purchasing period for luxury watches is December when watch sales are at 24.9% of the total annual units sold. April and July are also months of high activity when 10% of the total annual value is sold. The remaining sales are divided equally throughout the year. The five key features when it comes to the demographics of the luxury watches that the companies should be aware of are:
1. The quintessential self — consumers achieve fast and smarter self-actualization, and expect their products to be more exclusive than anyone else's.
2. V.I.D. or Very Important Data — consumers expect their watches to show off just how important they are according to the specifications of the product.
3. Premium redeemed — luxury watches should not be made in factories that exploit workers or be responsible for killing the environment. Social responsibility is crucial.
4. Extravagant economy — luxury is expected to be on demand.
5. Post-demographic luxury — the demographics have been disrupted and the lines of whom, where and when of luxury have been erased. Therefore, personalization is key.
When it comes to brands, the top preferred luxury watches brands are: Rolex (13%), Hermes (8%), and Cartier (6%). If observed from a geographical standpoint, Rolex is overall the most popular brand, followed in the aggregate vote by Patek Philippe and Tag Heuer. By region, Rolex is less strong in Europe where Breitling is considered the second-most popular brand. By income cohort , watches that resonate the most with those with the highest income are produced by Patek. Rolex and Tag are most popular with those who make $150,000 and above. According to a market research conducted in the UK that targeted only Rolex consumers, a typical Rolex owner is 68 years old and is a white male. 66% of people who own a Rolex are over the age of 65, and only 1.5% are under 35. Male owners outnumbered women by 2:1. The largest consumers of Rolex watches are company directors (7.2%), with managing directors close behind. More than 20% of Rolex owners have either manager or director in their job title. Tag Heuer is turning towards lower-income Millenials as their primary demographics. They are set to be the definitive affordable-luxury watch brand, opting to rather produce smaller watches which are less complicated to produce, and make a 1,000 of the same kind of those watches, than go for one-of-a-kind watch that hardly sells. The biggest problem luxury watch companies have when it comes to identifying customers and customer demographics is the lack of direct contact with the customer. Luxury watch companies work through distributors and retailers, "which makes it hard to connect with their customers and react to trends."
WOMEN'S LUXURY WATCHES
Fashion houses, such as Chanel and Hermes, are more popular choices when it comes to women's luxury watches as they are "better equipped to target powerful women, who are more and more acting like men in their search for watches." Today, women are buying luxury watches because of the precious material, diamonds, aesthetics, but also because of the craftsmanship and technical expertise. More and more women are buying mechanical watches. Women tend to go for big, high-quality brands. The most popular watch brands when it comes to women consumers are Rolex, Cartier, Bulgari, Chanel, Dior, Faberge, Tom Ford, Hermes, Ralph Lauren, and Louis Vuitton. The female watch market consists of two segments: "feminized, reduced-size men’s watches and designs original to women, some with mechanical movements and some with quartz movements. In general, women are interested in the overall design of a watch. They want something nicely made that looks good." In China and other Asian markets, there has recently been a big shift from women’s sports watches to mechanical watches because of the perceived prestige value.
MEN'S LUXURY WATCHES
The sale of men’s luxury watches represented 48% of units sold and 59% in terms of value. The four most-quoted reasons why men buy watches are as follows:
"1. A replacement for a lost watch
2. A gift to a loved one
3. A keepsake intended for the next generation
4. It marks an achievement, a victory, a milestone,"
1. Ages between 25 and 45. The man who is on his way up and has an active lifestyle. They buy TAG Heuer for the brand name, with Omega as a general most popular choice. Ball Watch is bought for the night-life, Nomos because of the minimalist styling, and Grand Seiko because of the finish. 2. Middle-aged consumers who are successful and comfortable with their achievements, however, they still have more to accomplish. They opt for Rolex and Panerai for the brand. Popular choices also include Alexander Shorokhoff, Jaeger-LeCoultre, Bucherer, Chopard, Ulysse Nardin, IWC, Cartier, Audemars Piguet, and Vacheron Constantin. 3. Customers over 65 who are at the apex of their career, and care only about relaxing and enjoying their life. The go-to brands for this demographic are Patek Philippe, Breguet, Laurent Ferrier, and Speake-Marin. The most popular size for men is the mid-size model, that ranges from 40 to 43 mm.
Today, women are buying luxury watches because of the precious material, diamonds, aesthetics, but also because of the craftsmanship and technical expertise. The four most-quoted reasons why men buy watches are because they are buying a replacement for their previous watch, they are buying a gift for their loved one, they want a keepsake for the next generation, and they are marking an achievement.