Recently, a commentator for Financial Times wrote that “luxury is scarcity.” The reporter referred to issues concerning the German wine industry and the German car industry. Apparently, German wines no longer have a cachet. One of the reasons is the expansion of its varietals. Quantity over quality. As for the German automotive manufacturers, Mercedes is excising its entry-level brands to focus on its more expensive, more luxurious models, in other words, fewer luxury vehicles. On the other hand, Porsche took the opposite approach: Porsche went for quantity and variety over scarcity and seems to have been successful. It is supposedly headed for an IPO.
Whatever, the situation, saying that scarcity is luxury and vice versa is a marketing miscalculation. Luxury is more than scarcity. And, some brands are winning by embracing a different luxury model for today’s changing world; a model that turns scarcity on its head.
The French branding expert, Jean-Noël Kapferer, writes extensively about luxury. He has examined the traditional concept of luxury as something exclusive and rare. A luxury brand in its classic sense is “an inessential, desirable item that is expensive or difficult to obtain.” In his writings, he describes a new concept of luxury that brand owners might consider: luxury can be both widely available and exclusive: he calls it “abundant rarity.” His concept is based on the discussion of how a luxury brand can remain a luxury brand even if it is so available that it is no longer rare.
This is a paradoxical conundrum. If a brand remains highly exclusive with limited production units and waiting lists, it is a smaller, coveted brand than if it has wide distribution: think the Hermes Birkin bag. But, to satisfy the desires of people around the globe, some luxury brands are no longer difficult to obtain. One no longer has to travel to Paris to find Louis Vuitton or Chanel. Once a luxury brand is widely available it may become less exclusive, even if it maintains its price premium. It may run the risk of losing its hard-won cachet. Many luxury brands are no available on upscale resale sites as well.
Mr. Kapferer says that some luxury brands will have to figure out how to maintain a high-class, exclusive aura while being available to many.
This brings us to Swatch. Not exactly your brand defining luxury. Please be surprised. Abundant rarity not only is a way for luxury brands to exist in today’s changing world, it is also a way to create a sense of scarcity for more mass market brands.
Swiss-based Swatch Group is the owner of some of the world’s most coveted luxury brands. Swatch Group owns Blancpain, Breuguet, Harry Winston, Omega, Longines, Tissot and Rado, to name a few. It is also the owner of Swatch, the inexpensive, battery-powered, quartz-regulated watches that became cult offerings in the 1980’s and 1990’s.
Swatch was your “second watch,” hence the name. Swatch wanted you to change your watch every day according to how you felt and what you were wearing and doing. Over time, Swatch generated a wide variety of “collectible” watches even though the brand was widely available. Swatch offered the caché of Swiss precision in a whimsical, unique, “affordable accessory.” Swatch was so successful that in its heyday its sales reached close to $20 million a year. Consumers fell in love with the creative, colorful designs. New models were scooped up immediately.
One of the extraordinary elements of the Swatch brand was its ability to leverage abundance and rarity. Although not a luxury item, Swatch understood the consumer need to own something inherently unique that was available to anyone, anywhere. Swatch dropped new, immediately coveted designs on a regular basis.
You may not know this but plastic Swatch single-handedly resuscitated the sedate, serious, exclusive traditional Swiss watch industry in the late 1980’s and 1990’s. So much so, that currently, extreme luxury watch brands are hot. Financial Times sometimes devotes an entire section to watches. Not only are these watches bought as investments, these watches are pitched as items that can be passed down to future generations as more than mere status but as family tradition. High-end watches are rare and expensive. They are also prestigious, conferring a particular image to the wearer.
Furthermore, it turns out that coronavirus lockdowns have hyped the desire to own expensive Swiss timepieces. During the pandemic, expensive mechanical watches became hot items for those stuck at home. Brands such as Rolex, Patek Philippe and Omega Speedmaster saw prices rise. According to CE Noticias Financieras English, with Covid-19 forcing people to stay at home, “…prices for some steel sportswatches (sic) more than doubled on the secondary market, and today it’s nearly impossible to buy a Rolex at the suggested retail price, even from an authorized dealer.”
However, Swatch brand watched from the sidelines. As its high-end siblings grew more coveted, Swatch’s fortunes were hammered by fitness wristbands, smartwatches and smartphones, all of which changed the way we perceive and use watches. According to Swatch CEO, Nick Hayek, Swatch lost some relevance to younger generations.
In order to bring back the swagger, Swatch joined with one of the Swatch Group’s more prestigious brands, Omega. The result is the Omega-Swatch MoonSwatch. This is another example of Swatch employing abundant rarity to its advantage. The Omega Speedmaster Moonwatch is a rarity among timepieces. It is also a fine, luxury Swiss watch. Swatch’s version shares in its sibling’s limelight.
The Omega-Swatch MoonSwatch highlights the look, feel and tradition of the coveted Omega Speedmaster Moonwatch, the watch worn on the wrists of U.S. lunar astronauts. The Omega Speedmaster Moonwatch is a steel, hand-wound timepiece selling for about US $7,000. Its new, scrappy sibling, the quartz, ceramic and plastic Omega-Swatch MoonSwatch costs around US $260.
As quoted in CE Noticias Financieras English, CEO Hayek credits the collaboration with Omega for bringing Swatch back into the luxury category. Mr. Hayek says that “… sales of Swatch brand in Switzerland (excluding the MoonSwatch) rose 41 percent since the watch’s launch, and other regions have seen similar increases.”
Although the Omega-Swatch MoonSwatch is not a limited edition, there appears to be a robust resale market for the brand. Data show that Omega-Swatch MoonSwatch watches are selling for twice its original price online. This is something you see with high-end brands such as Rolexes due to the brand’s scarcity. But, twice the price for a Swatch?
Swatch has come back and grown relevant by cleverly using the concept of abundant rarity. The German wine makers and automotive companies might want to take a look. The collaboration with Omega that draws on Omega’s heritage while maintaining the benefits of a Swatch watch shows that the disruptive marketing of the 1980’s and 1990’s that made Swatch a must-have are still as applicable today. One of those elements is abundant rarity, the ability to be seen as highly unique and highly available.