CORDER'S COLUMN: The Watch Industry's FOMO Flip-Flop
The Fear of Missing Out (FOMO) phenomenon has been a powerful tool in the watch industry, but it's now being turned on its head.
In 2020, I wrote about FOMO and its impact on watchmakers' strategies. The fear of missing out on limited editions and exclusive watches has long been a tactic used by brands to drive sales. But here's where it gets interesting: the very same FOMO has now led to a shift in the industry's dynamics.
Initially, boutique-only limited editions created an uneven playing field, favoring monobrand stores over authorized dealers. This sparked controversy, as it disadvantaged the majority of authorized dealers. But the real twist? FOMO has now led to a new wave of boutique openings, as authorized dealers decided to compete by setting up their own stores.
Brands used a clever carrot-and-stick approach, enticing dealers with the promise of selling the entire watch portfolio in exchange for opening boutiques. This strategy fueled a boom in branded boutiques across the country, catering to luxury watch enthusiasts. However, the folly of this FOMO-driven approach is now becoming apparent.
The demand for brands like Breitling and TAG Heuer, which are major contributors to LVMH Watch & Jewellery UK's sales, has declined sharply. This decline coincides with the opening of numerous new boutiques, which retailers are now struggling to manage. The retailers, once driven by FOMO, are now facing the reality of right-sizing their networks and closing stores that are no longer viable.
As the dust settles, retailers are also realizing the importance of staff training and retaining top talent. Building exceptional in-store teams has proven to be a more valuable investment than expanding physical space for brands. This shift in focus highlights the need for retailers to adapt and prioritize customer relationships over fear-driven tactics.
The lesson here is clear: while FOMO has been a powerful sales tool, its effectiveness diminishes during times of reduced demand and plentiful supply. Retailers and brands must now shift their strategies, focusing on building genuine relationships with customers rather than relying solely on fear. Otherwise, they risk missing out on future sales opportunities.
