Richemont shakeup: impact on watch brands?

In terms of generation gaps I also feel there might be a reduced appreciation in general of mechanical things in the digital age... I used to be and still am a big fan of model railways...I was invesigating the german / austrian market and was shocked to find that fleischmann, marklin, rocco have all gone bankrupt...they simply did not engage sufficiently with the next generation.

Yes, F1 is actually an excellent example, which is a shame. I think racing on actual city streets, with sharp turns and even some up and downhill is far more interesting than 500 laps on a banked oval track. I think price matters, but it isn't the main factor. The Porsche Cayenne and BMW X1 still cost real money. Even the Swatch Sistem51, at around $150, costs real money for what is essentially a disposable piece of plastic.

Ariel Adams has a new article on the general state of the watch industry, which I believe has some relevant points to this thread.

His main argument is that the move to in-house movements has generated distortions in the luxury watch market which are now being exposed as market demand collapses.

More below:
http://www.ablogtowatch.com/push-in-house-movements-ruined-modern-luxury-watch-industry/

I do agree with Ariel that from a pure logistics / manufacturing perspective, going back to having base movements being mass-produced by centralized suppliers similar to ETA would make sense. Product management technology such as PLM (Product Lifecycle Management) is now at a maturity level where it can allow watch brands to interact at new levels with the base movement suppliers as part of the supply chain manufacturing process. In this scenario, I would propose individual watch brands investing just in additional mechanism decoration, and maintaining final assembly and regulation in-house.

One of the problems I see is that industry has gone too far down the road of in-house movements as justification for high level price points, and positioned brands at a level where moving the pricing down would destroy the brand's value proposition.

Perhaps the large groups (Swatch, Richemont, LVMH etc.) should at least consider consolidating their in-house manufacturing across brands as much as possible. I for one would not care if Omega had their co-axial anti-magnetic calibres manufactured by a division of ETA, part of the same Swatch group, offering additional QA guarantees for the overall integrated product manufactured by the group.

Indeed, increasingly I see " in-house" for mass produced brands as being hard to define. No large scale mass production watch company has just one manufacturing physical site where everything is produced, not even the most vertically integrated ones such as Seiko and Rolex. So what is the essential difference if Omega, for example, were to continue manufacturing calibres at a "Omega" manufacturing site versus manufacturing the same calibre at a "ETA anti-magnetic co-axial" site? Surely mass-produced movement manufacturing processes can be standardized across ETA 2824, 2892, VJ7750, Co-axial 8500, leading to additional efficiency of scale, developing core expertise / talent and allowing for continuous improvement/innovation for the whole group?

With Kern assuming an executive watchmaking overview role across all the Richemont brands, one wonders if Richemont are going to initiate this sort of in-house calibre manufacturing consolidation for the mass produced products from Montblanc, JLC, Panerai etc.

We may see these large watch groups gaining efficiency of scale with in-house manufacturing consolidation, with the individual brands focusing on design and perhaps final decoration of the movement, which effectively creates the product differentiation for the consumer.

I would argue that the market AND appreciation for mechanical fine watches will always exist. The 20 somethings use their phones to tell time, yes, but there will be moment when they start considering nice watches.

As they get better jobs, going in interviews, company meetings, they will realise the need for a watch strapped on wrist vs. phones that you need to pull out of your pocket. During certain professional situations, such as job interviews or client meetings, it would be considered rude to pull out a cellphone out of pocket to tell time. So yes, those young people will eventually consider wrist watch. And when they do, coupled with higher income when they get real job, they will definitely consider strapping something nice on their wrist. Just look at all those office types during downtown lunch hours. Many of them young fellows have on Omegas, Rolexes etc.

And if they are wearing an actual business suit, maybe they will eventually realize that they need a dress watch that slips discreetly beneath the cuff. Though I suspect the business suit is gone for good, with a few exceptions.