Audemars Piguet. Polishing the glass.
Luxury brands have lost 60 million customers in three years, and Audemars Piguet has found a way to get them back for 300 quid. Look closer and you are not being let in.
THE GIST ON AUDEMARS PIGUET: "Polishing the Glass"
What did Audemars Piguet just do?
The Royal Oak is the watch that invented expensive steel. In 1972, Audemars Piguet put a steel sports watch on sale for more than the cost of their gold one. A ballsy move, and it worked.
Every luxury steel watch since is copying it. Today it starts at around 30 grand, with a waiting list. But in May, they put that design on a plastic Swatch and sold it for 300 pounds. People slept outside shops in Tokyo to get one. It sold out in hours, and AP had one of their best months ever.
Why would a luxury brand with a waiting list sell a 300 quid watch?
Because the watch isn't worth 30 grand for what it's made from. It's worth it because everyone who sees it knows what it is, and knows they can't have one.
Luxury needs two sets of customers: the thousands that buy, and the millions that don't. When the millions go, what's the value anymore?
Where have the customers gone?
The consultancy Bain reckoned the luxury industry had about 400 million customers four years ago. Now it's down to 340 million, because they priced out an entire generation. That's you and me.
Swiss watch exports are down, and the only bracket that's growing is, you guessed it, the 300 pound mark. The Swatch is AP going after the lost 60 million.
So what did you actually buy?
If you queued for it, you may have got a watch. But what they got was worth much more. Every single one in someone's pocket made the real one more valuable, and you paid the price of the promotion.
So when a luxury brand sells you a cheap version, you're not being let in. You're just polishing the glass on the shop window.
Would you queue overnight for a 300 pound Swatch?
Your take. One tap, then see how everyone else voted.
Quick answers
What is the Royal Oak?
The watch that invented expensive steel. In 1972 Audemars Piguet priced a steel sports watch above their gold one, and every luxury steel watch since has copied it.
Why did Audemars Piguet sell a 300 pound watch?
Luxury needs the millions who never buy as well as the thousands who do. Bain reckoned the industry fell from about 400 million customers to 340 million, so AP is going after the lost 60 million.
What does the cheap Swatch do for the real one?
Every Swatch out in the world makes the real watch more valuable, because everyone knows what it is and knows they can't have one.
See you on the next one.
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