The French luxury company continued to gain coveted market share for the third year in a row, achieving a 610 basis point increase in sales compared to the broader Swiss watch industry.
For a luxury brand more associated with leather goods and silk scarves, Hermes’ Entering the top 20 Swiss watch brands in 2021 may have come as a surprise to some. Since then, the house has achieved impressive results Watch sales growth of +72.5%, +43.1% and +13.8% in 2021, 2022 and 2023 respectively, consistently outperforming the broader luxury goods market.
In particular, Hermès’ 2023 annual financial report showed that the watch division was one of the company’s fastest-growing sectors, but at CHF 593 million it still remains one of the smallest revenue generators in the larger context of the wide and varied product offering.
In fact, Hermès is still the only brand in the top 20 ranking where you could also purchase a Haute Complication made of DLC-coated titanium Arc Lift Tourbillon Minute Repeater, an extravagant Himalayan crocodile diamond-encrusted Birkin bag and a fabulously tailored two-piece suit. While you’re there, you can install a custom saddle for your thoroughbred pony or custom upholstery on your private yacht (the brand doesn’t advertise this service, but it is offered to private customers through them). Tailor-made workshop).
This is a level of brand immersion that is not common in any industry. Here we see five reasons for the seemingly unstoppable rise of the house in the Swiss watch industry:
#1 Premiumization of Hermès watches
While Hermès watches have long been a hit with its relatively accessible quartz Cape Cod line, the house has steadily moved upscale with a broader offering of mechanical watches across its families. In 2006, Hermès acquired a 25% stake in the Swiss watchmaker Vaucher Manufacture Fleurier, which also supplied movements to major watchmakers Parmigiani Fleurier and Richard Mille.
Since then, automatic movements have been steadily introduced into most watch families and entry-level quartz watches have been phased out as part of the strategy.
However, while other Hermès categories are firmly at the top of their price range – the famous Birkin bag starts at $11,300 – their watch offerings offer far more pleasant value for money. The H08 line of sports watches start at $5,650. In return, you get a beautifully crafted, satin-finished titanium case housing a Vaucher manufacture caliber H1837.
The ultra-sporty graphene composite version costs just $3,000 more – a surprisingly authentic price that would command a significantly higher premium from watchmakers of a similar caliber, undoubtedly making the H08 an attractive proposition for cross-shopping customers.
As with everything related to Hermès, the Maison has repeatedly demonstrated its talent for resisting short-term trends and continually evolving its product. One could take a similar view of their watch offering and expect these prices to become more in line with their offering over time.
#2 Successful start of H08
The introduction of the H08 in 2021 marked the brand’s proverbial hat toss in the sports watch ring. At once elegant, edgy and sporty, the new family offered a compelling offering in style and movement.
While the beautifully decorated in-house caliber that powers the movement – first used in the Dressage line in 2012 – may not be the most novel thing, the sheer aesthetic versatility of the H08 was a winning formula for the brand to carry forward. It is no coincidence that the launch of this family coincided with the rise of Hermès into the top 20 Swiss watch brands.
At last year’s Watches & Wonders, the H08 debuted complications in the form of a monopusher chronograph, perhaps the most natural fit for a sports watch. Watch Revolution’s Wei Koh introduce the piece Herebut suffice it to say that this novelty was a unanimous highlight for the brand.
Available in a comfortable 39mm case, material options include brushed titanium on a rubber strap or bracelet, matte black DLC-coated titanium, an ultralight graphene composite, and two-tone rose gold. As discussed above, value for money doesn’t usually equate to haute luxury, but Hermès certainly makes a case with the H08.
#3 High quality halo products of watchmaking
Don’t confuse the pinnacle of French luxury with stoicism – the heart of Hermès lies in whimsy, playfulness and fun. Take a look at the most collectible bags that the house has recently released, and you’ll see that you have the opportunity to poke fun at even the most popular products that others might dare to buy.
This playfulness is also reflected in their watch department, with forays into haute horlogerie. Unveiled at Watches & Wonders 2022, the Arceau Le Temps Voyageur showcased the technical prowess of La Montre Hermès with a world time complication that brought a fantastic sense of literalism to the term “travel time.”
The whimsical mechanism of this GPHG-winning piece is worth exploring Here But as Laurent Dordet, CEO of La Montre Hermès, explains best: “Our goal is to create reliable and technical watches, but our watches must evoke imagination, humor and intimacy.”
While the Arceau line has been the main beneficiary of these efforts so far with the Arceau L’heure de la lune and the Temps Suspendu, the Slim D’Hermès has gained a perpetual calendar option, and it’s not hard to imagine the same approach being taken other families. This foundation of fine watchmaking is reduced to even the simplest three-hands, creating the famous “halo effect,” which creates the feeling of desirability essential to commercial success.
Where desire creates the spark, merchandising lights the fire. The Cape Cod has long been a hit with the style of its signature double-tour bracelet, the H08 is steadily carving out its place in the sports watch arena, its Métiers d’Art offerings are on par with the best watchmaking houses, and its high complications standards the GPHG jury level of watch nerds.
Call it what you will, but the establishment truly has something to offer every customer who pushes the boundaries of its boutique.
The cohesion and enduring desirability of the Hermès universe provides rare opportunities for merchandising – a ready-to-wear parent might buy a 25mm Heure H for their daughter; A savvy customer might add an Oran sandal and a bejeweled Arceau to count toward a Birkin allotment. The possibilities under the orange blanket are seemingly endless.
#5 Revised sales strategy
Since 2019, Hermès has been reaping the rewards of its updated distribution strategy, shifting from a wholesale model to 90% directly operated retail stores. The brand’s New York flagship store on Madison Avenue, a 20,250-square-foot boutique that opened in 2022, features expansive rooms dedicated to watches and jewelry, while the top floor houses a studio with resident artisans who Watches work on leather, jewelry, etc.
These focused spaces allow Hermès to gain deeper understanding and build relationships that might otherwise be lost to authorized retailers. As salespeople create their own customer profiles, direct feedback on watch products leads to invaluable data that will undoubtedly find its way back to the product teams in the factory; The higher margins, controlled customer experience and first-hand data create a win-win-win scenario.
