Luxury conglomerate LVMH is making a strategic move to gain a larger share of the global luxury watch business. With the formation of a new watch division and the introduction of a range of higher-priced models, LVMH is capitalizing on the estimated $30 billion sales of luxury watches worldwide in 2024. This figure is expected to grow to over $37 billion by 2032 as global wealth increases and younger demographics, such as Generation Z and millennials, develop a growing interest in high-end mechanical timepieces.
LVMH’s jewelry and watch division experienced significant growth in 2023, reporting sales of $11.8 billion and a 7% increase in organic growth. The luxury giant currently owns 10 watch brands, including well-known names such as TAG Heuer, Hublot, and Zenith, alongside its fashion and jewelry brands like Louis Vuitton, Bulgari, and Dior, which also produce watches. The recent appointment of Frederic Arnault, the 29-year-old son of LVMH’s Chairman and CEO Bernard Arnault, as the CEO of LVMH Watches further indicates the company’s dedication to expanding its presence in the luxury watch market.
Frederic Arnault, known for his innovative approach and successful launch of popular new models at TAG Heuer, brings a fresh perspective to the larger brand group. His focus on innovation, cutting-edge materials, and creative designs is expected to drive further growth for LVMH’s watch brands. Analysts speculate that LVMH may extend its expansion strategy through the acquisition of attractive brands, should opportunities arise.
During LVMH’s Watch Week in Miami, the chief executives of the brands expressed optimism for 2024, citing stronger performance compared to the previous year. Despite concerns about rising interest rates and potential economic downturn, luxury executives are reassured by the resilience of the American luxury consumer. The “super-spenders” and VIP collectors within this market segment continually invest in high-quality craftsmanship, regardless of economic uncertainties.
As the luxury watch market follows a pattern similar to the broader luxury industry, LVMH is strategically targeting the wealthiest consumers. This select target group remains less affected by economic fluctuations and interest rate changes. Consequently, luxury brands are increasingly catering to the desires of these consumers, specifically the “super-spenders” and VIP collectors who value quality, authenticity, and timeless brands.
LVMH recognizes the growth potential within the women’s luxury watch segment. While women’s watches currently account for about a third of total sales, the rising interest among women in luxury mechanical watches has made it a focal point for the industry. Increased exposure on social media and the introduction of more models designed for women have contributed to this trend. Furthermore, the growing population of wealthy women, both self-made and inherited, is driving sales growth. LVMH aims to tap into this market by offering more feminine and unisex watches, acknowledging the increasing power, autonomy, and purchasing capabilities of women.
Staying competitive in the luxury watch industry requires constant innovation in materials, complications, and designs. LVMH, specifically TAG Heuer, has successfully embraced this principle with their Carrera Plasma watch, featuring lab-grown diamonds, and the teal-green Carrera Glassbox Chronograph, inspired by vintage auto racing. The constant pursuit of reinvention and desirability is seen as a distinct advantage of the LVMH brand and sets it apart from other watch brands and groups.
Many of the LVMH brands are drawing inspiration from their rich histories to create new designs and models. Zenith, for example, launched the Chronomaster Triple Calendar, a tribute to its rare prototype El Primero watch from 1970. Additionally, LVMH brands are investing in limited editions and moving up the price ladder to appeal to collectors. Hublot, known for its bold and large watches, recently introduced a $250,000 limited-edition watch called the MP-10 Tourbillon Weight Energy System, with only 50 pieces produced. This approach of connecting tradition with innovation exemplifies what Hublot CEO Ricardo Guadalupe calls “the art of fusion in watchmaking.”
LVMH’s aggressive push into the luxury watch market demonstrates its commitment to capitalizing on the growing global appetite for high-end timepieces. With a focus on innovation, creativity, and the discerning tastes of wealthy consumers, LVMH’s watch brands are poised for continued success in the ever-competitive luxury watch industry.
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