The relevance of micro-brands, from the macro-brands' perspective

When it comes to the term micro-brand. the author is of the opinion that it can be considered an umbrella of lifestyle brand and enthusiast brand.

Lifestyle brands would be the ones that use design and price as the main value proposition (Daniel Wellington, Filippo Loreti, MVMT or Vincero), while enthusiast brands would be the ones that use design and specifications as the main value proposition (Boldr, Brew or Dan Henry to name a few).

The first ones targets consumers who are style savvy, while the second ones target consumers who are horologically savvy. But all in all, they both rely on direct sales for their distribution, and on social media for their promotion.

We came to the current reality through three eras that gradually opened up the market from enthusiast brands to lifestyle brands. We could split the 2000–2021 timeline in three eras of roughly 7 years each:

2000 TO 2007, BY ENTHUSIASTS FOR ENTHUSIASTS

Seasoned watch collectors such as Eddie Plats, Ken Sato or Bill Yao worked with a community of enthusiasts on bulletin boards to release the first enthusiast brands. These were the early days of post-Internet globalisation, when Chinese original equipment manufacturers started to open up to smaller accounts, besides the ones from institutional brands.

2008 TO 2014, BY ENTHUSIASTS FOR NEWCOMERS

The second era involved the democratisation of OEMs. Book a flight to Hong Kong, bring a few sketches along, and one week later you have your turnkey supply chain all set up. During that time, a Swedish entrepreneur figured out how to harness social media to promote brands.

2015 to 2021, BY NEWCOMERS FOR NEWCOMERS

By that point, the two ends of the process have become standardised, so a lot of aspiring entrepreneurs decide to venture and join the two ends, leading us to lifestyle brands.


By doing what the author calls a salmon count of microbrands and then multiplying it by the minimum order quantity (MOQ) of 500, puts the amount of watches to 300,000 per year. Even if the average price is USD 250 per watch, it still adds up to 75 million USD per year.

This is roughly the volume of a brand like Mondaine or TAG Heuer, and the turnover of a brand like Movado. So yes, put together, microbrands have the volume of a bona fide watch brand.

How does it impact large retailers? The author thinks that it is creating a parallel economy, and you have institutional brands to blame for that.


In the last 70 years, Swiss watchmakers have managed to keep releasing more expensive watches than the decade before.

Swiss exports, volume and values from 1950 to 2000

Swiss exports, image credit: Prof. Pierre-Yves Donzé

The main motivation is that when you wholesale two watches for $500, you need to spend twice on packing and handling, shipping, customs, storage and retail commission. When you wholesale one watch for $1,000, you divide these costs by 2 but you still earn the same money.

Swiss exports, volume and values from 1980 to 2014

Swiss exports, image credit: Prof. Pierre-Yves Donzé

So as the number show, since the turn of the millennium, watchmakers have managed to double the price of watches, without changing the volume.

At the same time, since the 1950s the economic reality of the world has changed. A lot of countries that used to rely on the primary sector (extraction of raw materials) have switched to the secondary sector (manufacturing) or the tertiary sector (services). As a consequence, the purchasing power of their population has drastically increased, and there are now significantly more people who can afford “working class” watches.

By focusing on the “middle class” and the “upper class”, Swiss watchmakers have deserted the “working class” segment. And this is what created an opportunity for lifestyle brands and enthusiast brands.

So these 300,000 watches represent lost sales to the retail industry, because if those brands manage to sell watches via direct sales and keep all the profits, why would they take the risk of sharing it with retailers?

To make matters worse, while a lot of institutional brands were hesitant to open an e-commerce to avoid the ire of their brick and mortar retail partners, the various COVID-19 lockdowns have forced them (or created the perfect excuse) to launch their online store. Now that the cat is out of the bag, brick and mortar retailers should plan for a future where they are also competing with e-commerce from institutional brands.

There is an opportunity however for lifestyle brands, because they can benefit from the wide reach offered by brick and mortar stores.