Omega x Swatch: decryption of a collaboration

DEVELOPMENT AND KEY FIGURES IN WATCHMAKING

Before getting to the heart of the matter, as in any case study, it is essential to know the context in which this operation occurs. Statistics in the watch industry always indicate a very high polarization of the sector .

The figures from the Swiss Watchmaking Federation are clear: comparing 2021 to 2019, while exports of wristwatches increased by 3.5% in value, volumes fell by 23.8%.

How is this possible? In fact, it is the high-end that is driving the growth of the sector with +9.7% compared to 2019, the mid-range is limiting the damage with -3.5% and the entry-level is losing ground considerably with -25.1% ! Even more than in the past, the watchmaking sector is showing a deceptive performance with a small number of brands, mainly in the high-end and luxury sector, which are reaping the benefits of the return to growth.

The entry-level Swiss wristwatches are in fact facing very strong competition from smartwatches. Two figures to illustrate this fact: in 2021, nearly 80 million smartwatches were sold worldwide , while all categories combined, Swiss watches sold 15.7 million watches.

This reminder of the evolution of current markets allows us to partly grasp the challenges for the brands occupying the different ranges in the watchmaking sector, but let us now refine the study by looking more closely at the two brands concerned by the collaboration. These two brands are in truth very different although they belong to the same group.

OMEGA OR THE EPIC OF A HISTORIC WATCHMAKING BRAND

Omega is, in my opinion, one of the most beautiful brands in the watch industry. It occupies a special place in many ways because it is one of those brands that have fully participated in the great hours of watchmaking.

You know it through two of its current pillars in terms of communication: the space adventure with the famous Speedmaster Moonwatch but also through its constant appearance in films about the least secret agent on the planet: James Bond and this from Golden Eye with Pierce Brosnan to No Time to Die with Daniel Craig.

But reducing Omega to just these two aspects would be extremely reductive. The brand's history is one of the richest in the entire sector.

The company was founded in 1848 but its current name appeared in 1894. The name Omega actually comes from one of the calibers developed by the company. This seems anecdotal, but in fact we have here an essential point on the real identity of the brand, its name does not come from an advertising idea or the name of a founder but from a movement and here we touch on the central point which is now found on the scale of the group that owns Omega: we are dealing with an industrial model concentrated on two pillars: the mastery of vertical integration in production and the search for technical innovation.

Omega has been and still is one of the largest watchmaking houses in the world , whether in the 60s or today. Thus, Omega occupies the 2nd position with 7.5% of the global market share in value in boutiques for wristwatches according to a study by Morgan Stanley.

Omega is in fact clearly one of the brands that most drives up the results of the entire Swatch Group to which it belongs. Its positioning has evolved over time.

If in the past, a majority of brands actually occupied more or less the same positioning in terms of price , the brand was positioned a few decades later in the high-end and luxury segment and it thus finds itself in direct competition with Rolex which occupies the 1st position with 28.8% of the global market share in retail values ​​for wristwatches.

The brand uses new-generation mechanical calibers + while continuing to use for some of its reference models calibers inherited from previous periods such as the manual-winding chronograph caliber equipping the traditional Speedmaster Moonwatch Professional.

SWATCH OR THE MARKETING CONCEPT THAT BECAME A RALLYING POINT FOR SWISS WATCHMAKING

If Omega is a very traditional century-old brand, the Swatch brand was born much more recently: in 1982. The date is important because we were still at that time in the midst of the quartz crisis.

Traditional watchmaking houses are generally (very) in a bad way, many have closed their doors, in competition with the massive arrival of inexpensive Asian watches using quartz. At that time, almost all Swiss brands had to largely abandon beautiful mechanical calibers and also make quartz, whether it was Omega, Zenith or Rolex .

Even with the use of quartz, these brands were not out of the woods, it was in this context that an idea germinated in the heads of a few Swiss engineers and managers: Ernst Thomke, Elmar Mock and Jacques Müller, to which was later added the intervention of a marketing consultant: Franz Sprecher. These people would develop an idea that would go well beyond the marketing stunt to become a strategic leap for Swiss watchmaking: the idea of ​​the Swatch.

You know the Swatch, they were very present in the past and were often a first experience in the field of watches. To face the Japanese tidal wave of the time, the idea was to develop a new watch on two pillars:

• On the industrial level, design a watch that is very easy to mass produce - but of quality - with very low production costs
• In terms of marketing, creating a fun, colourful, plastic watch, offered at an extremely affordable price (50 Swiss francs at the time) supported by dynamic communication

The experiment was a global success that allowed the resources and also the time needed to be given back to the rest of the industrial fabric. This breath of fresh air allowed for reform, reconstruction and then a return to mechanical watches over time.

Swatch, from the outset, allowed itself much more freedom compared to historic brands which tended to manage their heritage “more wisely”.

The idea of ​​bringing fun into the relatively traditional world of watchmaking translates into more daring designs, the use of more vibrant colours or the use of materials – such as plastic or variations such as bioceramic – that older brands would not necessarily have used.

The Swatch brand has also already collaborated with other brands such as the Japanese A Bathing Ape or with the art world with, for example, the Centre Pompidou or the Louvre.

So, very used to collaborations, the Swatch brand is this time aiming for something quite unprecedented in watchmaking: a collaboration between an entry-level watch brand and a high-end watch brand.

OMEGA AND SWATCH: WHAT IF OPPOSITES ATTRACT?

Once these important reminders have been made, now you can understand everything that separates the two brands that belong to the same group and also have in mind the challenges and developments in the sector. Swatch seems 1,000 miles away from Omega in terms of its origins and positioning.

Ultimately, almost everyone differentiates the two brands. One could say that nothing seems to unite them, as the "DNA" of the two brands seems to be opposed. But the real link between the two is not only financial through their membership in the Swatch Group: it is also industrial.

The Swatch Group is characterized by a highly integrated structure on an industrial level. Basically, brands like Omega, Longines or Hamilton had their own historical calibers, many of which came from the companies themselves .

Today, following the grouping of these brands under the umbrella of the Swatch Group, the calibers are produced through a common structure: ETA.

Although both designed and manufactured by ETA, the Master Co-Axial is dedicated to Omega models while the Sistem51 is dedicated to Swatch brand models: these movements are not at all equivalent, one being high-end when the other is in fact a very low-cost mechanical movement. The industrial integration of the Swatch Group has two positive effects:

• Rationalization and therefore optimization of production: this is the great strength of Swatch Group, which overcame the quartz crisis by optimizing its industrial production as much as possible.
• Industrial and technical mastery with the corollary of a very controlled quality of production: which is easier to control via a single structure rather than through several separate subsidiaries

But even if Omega and Swatch are part of the same industrially integrated group, a collaboration between the two brands does not necessarily lead to a successful collaboration. To do this, there are principles to respect.

GENERAL PRINCIPLES OF SUCCESSFUL COLLABORATION

BonneGueule's readership is accustomed to collaborations because it regularly encounters this type of operation which allows two brands to join forces to carry out a joint action.

In the clothing industry, they have become increasingly common : to take a famous concrete example, a giant like Uniqlo regularly partners with Jil Sander, but we could also have mentioned the example provided by H&M and Balmain. These two cases are emblematic of a part of the collaborations because they associate a large fast fashion group with a luxury house.

In a way, it is marrying the mass market with the exclusive character of the label of an artistic creator or a very high-end house. However, not all collaborations are limited to marrying two brands that seem to occupy diametrically opposed positions. Thus, there are other types of collaborations that can bring together brands of comparable size or companies that each have a particular skill or a different audience.

BonneGueule has carried out its collaborations but with a selection of very cutting-edge brands specialized in their fields. Benoît, in this article , details the ins and outs of the collaborations carried out by BG. To summarize, when BG approached a brand to develop a collaboration, it was mainly about:

• Seeking expertise in a particular field to develop a product using a specific material or technique mastered by one of the parties
• Look for a complementarity with the brand's "signature" and/or a particular "vibe" that is different from that of BonneGueule but which is "strong" and deserves to be highlighted through a collaboration

The key words in a collaboration for BonneGueule are: complementarity – know-how – originality . And here we already see a difference compared to a large number of collaborations present in the sector. There are two types of collaborations: those that focus on the product and those that are part of the marketing collaboration between two brands.

Of course, we should not have a purely binary reading, of course the two aspects are mixed but there is an essential difference in the final objective of the collaboration: on the one hand all the energy of the project will be concentrated on the realization of a final product while on the other hand all the energy of the project will come from the desire to carry out a "marketing stunt" synonymous with a "one shot" with potentially ephemeral success.

A collaboration requires a lot of effort, it involves combining the skills and codes of the two brands but it also has the corollary of crossing the image of two brands .

It is important for each of the two brands to not only know their own universe well + and to know the universe of the other brand well.

Finally, the chemistry between the two teams is essential because it would be difficult to carry out any project if one of the parties does not share the same objective and the same energy as the other.

Now that the principles have been established, what do you think of the collaboration between Omega and Swatch?

OMEGA X SWATCH OR SWATCH X OMEGA?

Although both brands are part of the same group, the two brands are very different in almost every way.

1. ARE THE BRANDS SWATCH AND OMEGA COMPLEMENTARY?

The two brands can be complementary: they do not share the same positioning, of course, the two audiences are mostly different .

Omega has, among other gems, in its luggage the Speedmaster Moonwatch which is perhaps one of the most beautiful traditional mechanical chronographs and certainly the most emblematic of the sector. And Swatch, by its origin and its positioning, can afford to dare much more compared to the traditional house that is Omega, the latter having focused on a resolutely high-end positioning.

2. CAN OMEGA AND SWATCH REPEAT THEIR SUCCESS?

The watch having been released and at the time of writing out of stock in stores, the answer to this question is yes: it is already a success that seems to be fulfilling its objectives in commercial terms but also in terms of buzz due to the relays in the traditional press or in social networks.

3. IS THIS THE BEGINNING OF A MORE LASTING SUCCESS FOR BOTH BRANDS FOLLOWING THIS COLLABORATION?

I'm not so sure. Is it so revolutionary to see a quartz and bioceramic Speedmaster arrive? I wonder and my opinion is divided. No, I don't think that the iconic Speedmaster is denatured by a version that works with the help of a battery and sells for 250 euros.

Has the Rolex Submariner been distorted by the advent of the Ice Watches, which are – from a design point of view – very visually inspired? No. The success of the Submariner model or the Rolex brand has never been disrupted by the Ice Watch in any way.

On the other hand, the big difference between the two is that Rolex has never had the slightest agreement with Ice Watch, the name Rolex obviously does not appear on the dial of an Ice Watch, it is in no way a collaboration between two brands but rather an inspiration in terms of design from one brand compared to another brand.

For Swatch, I think the operation is positive. The brand faces very fierce competition in its price range, especially since its price range has been invaded by the tidal wave of smartwatches. It is in Swatch's very nature to carry out marketing stunts to create buzz and in this respect, it has been a complete success for Swatch.

For Omega… I am not so sure though. What does Omega have to gain from this collaboration? More notoriety compared to the clientele it targets? This clientele is already largely watered by the brand's targeted communication operations. Putting the Speedmaster back at the center or re-energizing it? This Omega model already occupies a central place, it is even a "cash cow" for the brand and the Swatch Group.

If at the time of writing we can talk about the success of this collaboration because the product of this collab is sold out, there are still some fears to have about this kind of collaborations and one has come true:

Symptomatic of the most vulgar speculation, the phenomenon of buying and reselling on the same day is, in my eyes, one of the most pathetic features of this operation.

This phenomenon obviously exists in other sectors than watchmaking, such as clothing, with the example of collaborations between fast fashion brands and luxury designers, with queues forming in front of stores to jump on these products as if they were a basic necessity during a shortage... obviously, part of the public smelled a "good deal" to be made by immediately reselling these products on online platforms with their labels.

In the watchmaking sector, this also exists for some luxury brands, but it is more discreet. The brands concerned play on the phenomenon of rarity – very artificial in fact – to maintain the feeling of exclusivity and desirability of their products , but in doing so, they maintain the same phenomenon of immediate purchases and resales by a part of the clientele for purely speculative purposes.

There are no small profits, you might say, but for my part I find absolutely nothing healthy because it not only distorts the market and above all it gives a completely truncated idea of ​​the entire sector. If I feel an interest in watches, it is certainly not by seeing them as objects of speculation.

In a way, I am trying to reconnect with the view of our predecessors who considered watches above all as beautiful objects that were a pleasure to have on your wrist and which also had a use: to tell the time. Quite simply.

And not to end up five minutes after a visit to the store on an online platform with a price multiplied by five or six...

THE MARKETING "GOOD MOVE" THAT OBJECTS THE PRODUCT ITSELF

Ultimately, what I remember from this collaboration is the affixing of the Omega name on a Swatch: this is, in my opinion, the real source of the buzz. Thus, the marketing stunt seems to me to obscure the product resulting from this collaboration. It would have been interesting to have created the buzz on a revolutionary or at least very innovative product. There is a bit of that in this MoonSwatch with the use of bioceramics.

The use of bioceramics is not without interest but it is counterbalanced by the use of a quartz movement powered by a battery which itself has nothing very bio about it.

The choice of quartz was obviously made to be able to offer the watch at an affordable price. To allow a whole section of the public to develop curiosity towards the original Speedmaster Moonwatch in steel and with a mechanical movement? Sometimes you have to know how to open a window on watchmaking to allow its rediscovery, especially in a world that has partly lost the reflex of checking the time in an analog way, on your wrist.

You see, I am ultimately divided on this collaboration. Not for reasons of conservatism with regard to watchmaking but rather because I am doubtful about the basis of this collaboration which seems to me to be more about marketing rather than developing a strong and innovative product. And I see nothing innovative in taking the design of an iconic Omega watch to transpose it to Swatch and sell it for 250 euros with a quartz movement and a non-metallic case.

In this, if we escape from the short-termism of the moment, all focused on relaying the buzz of the moment, it is rather a half-success in my eyes in the medium and long term.

Moreover, a telling sign, I have heard more in the sector or from the public that this collaboration is a "good marketing move"... The circle is complete: a good marketing move that was perceived by a large part of the public as a good move to achieve on resale. But I want to say: is that really a compliment?

Having created a buzz at the beginning of 2022, the time of a short-lived collaboration between two brands, were all these efforts really worth it in the end for Omega and more generally for the Swatch Group? This question will be up to you to decide.