Two pivotal changes that enabled the micro-brands boom

The explosion of microbrands that has been taking place since the mid-2010s can be attributed to the alignment of two stars:

  1. A lower entry level to the procurement of watches
  2. A demand in sensibly priced watches that serve a purpose as milestone memento and statement pieces.

This document looks at how these two pivotal changes manifested themselves, when it comes to procurement and purpose.

PROCUREMENT

Being able to delegate production and quality control is what has enabled so many microbusinesses to start distributing their own watches.

Delegating production

The fist thing to consider is that the barrier for getting involved in the procurement of watches has been significantly lowered. The industry is divided between factories who produce the watches, and brands who distribute the watches.

Most institutional brands have their own production line, but a lot of them also rely on third party production lines, and these have gradually been opening up to third party clients.

So when you see a microbrand that distributes watches, most of the times they are procuring them from an assembly line that 10 other microbrands also work with… if not more.

All that the brand owner has to do is to tell them what the design should look like. Sometimes it’s just a matter of mixing a few elements from their catalogue and slapping the logo on it. Sometimes it’s a matter of giving them a sketch on a napkin, or sending three photos and letting their in-house designer put a concept together.

This turnkey solution is extremely convenient, but the owner is taking the risk of leaving the design in the hands of the supplier. Should they decide to switch supplier, they would have to start from scratch.

Delegating quality control

Above a certain price per unit, the author usually recommends to microbrand owners to decentralise their supply source and buy components separately to have them assembled by a workshop. So instead of buying a complete watch, you get the movements, cases, dials, hands and straps from different suppliers. This is how a bona fide brand works. Should they run into a quality issue with one of the suppliers, you just replace them and you avoid starting all together from scratch.

dial CAD drawing

The second main difference is that institutional brands run thorough homologation test on their watches, just like Ford will test drive their new model before market launch. Watchmakers produce a first Q series, that they test for up to 6 months before launching mass production.

The author suspects that none of the microbrands are aware of this practice. They trust that the supplier did their own testing and they rely on the factory’s warranty in case of design flaws. So again, responsibility is delegated to the factory.

PURPOSE

Now when it comes to smartwatches, the fundamental mistake is to equate wrist watches with wrist computers. Yes, they do compete for the same wrist (although the majority of us have two wrists, so we could accommodate one of each), but they result from very different pursuits.

Wrist watches have existed for less than 150 years, but they have superseded pocket watches in the 1930s, after combat in WWI proved the tactical superiority of wrist watches: instead of fuddling through the pockets of a uniform to find your watch, you could simply lift your sleeve and read the time. For more background information on this, see The relevance of micro-brands, for the macro-brands' perspective.

Once that their practicality was established, wrist watches fulfilled several purposes:

  1. They offered a standalone time base, which could be used for scientific measurements or navigational orientation.
  2. They somehow represented a milestone. Teenagers would receive a watch to mark the passage to adulthood, and loyal employees would receive one when going into retirement. Needless to say, a memento that you won’t be able to keep after three years because it no longer supports firmware updates is kind of pointless. So consumer still favour wrist watches over wrist computers as milestone memento.
  3. They were a fashion statement. Watchmakers explored all possible shapes in the 1930s, and by the 1970s, the Gucci watches license pioneered the highly lucrative product category of fashion watches.

If the miniaturisation of transistors allowed to create wrist electronic watches, it also allowed to miniaturise computers to the size of the wrist. But even if wrist computers can easily offer a time base, the fundamental difference remains that they do not result from a pursuit of style like wrist watches do.

In Francis Jacquerye's answer to Are online microbrands collectively making a dent on larger retailers?, the author presents a theory according to which Swiss watchmakers have been deserting the lower price points. Between 2000 and 2020, they have managed to double the price of Swiss watches, without doubling the volumes.

Swiss exports, volume and values

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

At the same time, a lot of economic areas have seen their productivity and purchasing power rise, so while the Swiss have been trying to sell their watches to the ultra rich, there are new swarms of moderately rich or not so rich consumers who have the means and the will to buy wrist watches that they can use as milestone memento and/or statement piece.


And this is where what the author calls lifestyle watches (the likes of Daniel Wellington, Filippo Loreti, MVMT or Vincero) or enthusiast watches (the likes of Boldr, Brew or Dan Henry) fill connect the two dots.