BBC reports TAG are in trouble

[Strnglwhank]

http://www.bbc.co.uk/news/business-29418452

[Alansmithee]

Bit more here:

Biver said the cuts resulted from having decided to produce only one chronometer movement as opposed to two, and to focus on the group's core business of watches priced between 1,000 euros ($1,270) and 4,000, as opposed to more expensive items.

Biver said most of the cuts would affect Tag Heuer's sites in La Chaux-de-Fonds and Chevenez in Switzerland, where he estimated the brand's total staff to be around 600, of which 400 are in production.

http://uk.reuters.com/article/2014/0...0HO1Q520140929

[Optimum]

"In trouble" may be a bit strong but interesting anyway - thanks for posting.

Hong Kong represents an estimated 20% of luxury watch sales.

This is an incredible stat!

[James K]

I wonder if this will bring a slow down in the crazy price increases of Swiss watches over recent years. The last Seamaster I brought was £1150 in 2007. What are they now £4000?

The introduction of the first Aquatimer wasn't that long ago but they have gone up from the hundreds to nearly £2000.

Comparative to income and other costs I don't know of anything which has risen quicker, especially in a supposed recession.

[Chris H]

I wonder if this will bring a slow down in the crazy price increases of Swiss watches over recent years. The last Seamaster I brought was £1150 in 2007. What are they now £4000?

Hopefully, this will be a wake up call.

That's a staggering fact about HK's watch market! I wonder what that equates to in £?

[Strnglwhank]

"In trouble" may be a bit strong but interesting anyway - thanks for posting.

This is an incredible stat!

Isn't it just - wow!

[kungfugerbil]

I wonder if this will bring a slow down in the crazy price increases of Swiss watches over recent years. The last Seamaster I brought was £1150 in 2007. What are they now £4000

It's not a like-for-like comparison though. I have a 2531.80 SMP that I bought a decade ago for £890 (RRP was £1100). The newest SMP equivalent of my old watch would have a better bracelet, ceramic bezel insert, applied logo, coaxial escapement and 3 year warranty. It would cost a big chunk for sure, but it is a better watch.

edit: £2155 against an RRP of £2770

[gentlemenpreferhats]

Reminded me of this article I saw a few weeks ago:

http://www.scmp.com/lifestyle/articl...-tastes-region

"In recent years we witnessed an explosion of demand for luxury goods and items that communicated wealth and status to all around. Now, we are seeing a general dissatisfaction with this 'borrowed' expression of self and a move towards a more unique and authentic image."

Uh-oh.

OTOH:
http://www.ft.com/cms/s/0/4876cf88-0...#axzz3Endpwr5r

“One of the biggest reasons behind the spending slump has been a reduced tourist flow from mainland China to Hong Kong thanks to large ongoing pro-democracy protests,” says Luca Solca, a luxury analyst at Exane BNP Paribas. Watches and jewellery make up a quarter of total retail spending in Hong Kong, according to data from MasterCard.
Mr Solca adds that flows of inbound travellers for overnight stays from China have fallen by about 20 per cent over the past 12 months.
The city has been hit by a shift in the shopping habits of wealthier Chinese who, increasingly uneasy about visiting Hong Kong, are choosing to go further afield to make big-ticket purchases.

[adzman808]

I wonder if this will bring a slow down in the crazy price increases of Swiss watches over recent years. The last Seamaster I brought was £1150 in 2007. What are they now £4000?

The introduction of the first Aquatimer wasn't that long ago but they have gone up from the hundreds to nearly £2000.

Comparative to income and other costs I don't know of anything which has risen quicker, especially in a supposed recession.

Iirc the current SMP is about £2800rrp

Also, iirc Omega (or Rolex) haven't raised their prices since 2012

recession generally just means the gap between rich and poor widens....

I SUSPECT the problem with brands like Tag is that they've pursued a more outsourced manufacture model and this leads to cuts in European locations...

Maybe its time for Jack to take it back, old skool style, hostile take over, a dish best served cold!!

[Yunsung]

Friends and family from Hong Kong tell me that your typical HK native absolutely despised the mainlanders. When their market was booming they would come over and buy everything, bargains could no longer be had (not just in luxury goods). You only have to watch the news nowadays to know why they have stopped coming over.

[Passenger]

I wonder if this will bring a slow down in the crazy price increases of Swiss watches over recent years. The last Seamaster I brought was £1150 in 2007. What are they now £4000?

The introduction of the first Aquatimer wasn't that long ago but they have gone up from the hundreds to nearly £2000.

Comparative to income and other costs I don't know of anything which has risen quicker, especially in a supposed recession.

In response to your last sentence I would suggest maybe house prices;)

[Itsguy]

It seems that clamping down on corruption in China has some pretty drastic consequences! But watches in general don't seem to be in trouble, as other brands are up. Perhaps we can conclude that people would rather have a basic model of a higher end brand, than a high end model from a lower end brand, the price being equal - the brand statement wins out over the actual functionality.

TAG have been doing some inventive stuff, technically speaking, but it's stopped short of re-positioning the brand in the way that Omega have managed, after endless expenditure. And no matter how good their best pieces are, and as silly as this might seem, I've always felt TAG are trapped in the mid range due to their logo. Everything about a brand and anything on a watch dial counts, and it all has to be just right - and TH are unfortunately stuck with a dated, messy logo that just doesn't fit the high end. Love 'em or loath 'em, Rolex have a damn fine logo, as do Omega and Zenith, IWC works even though it's just three letters... TH is a bit of a mess, even without the dubious colours. No wonder people seem to go out of their way for one that just says Heuer on it, it does look better.

[James K]

In response to your last sentence I would suggest maybe house prices;)

I don't think even house prices have doubled in the last seven years, in fact they went down for a while.

[andrew]

Rolex have a damn fine logo, as do Omega and Zenith, IWC works even though it's just three letters... TH is a bit of a mess, even without the dubious colours. No wonder people seem to go out of their way for one that just says Heuer on it, it does look better.

T-H had a fine logo too - it's been going strong for nearly 30 years. It's just that it's not a logo that finediscerning WIS like! Although the colours don't help much if you want to make something elegant or casual as well as sporting.

I think only a few people go out of their way to buy Heuer instead of TAG Heuer, and it says just as much about them as it does people who buy TAG-Heuer for the logo - the only difference is, they're Jonesing for a different brand on the dial. There's not a lot of difference in quality between a 1970s Carrera with a bought-in 17-jewel Lemania and a 2014 Carrera with the once-SII 1887 movement - in fact I'd say the new watch is probably a lot better.

[Itsguy]

There's not a lot of difference in quality between a 1970s Carrera with a bought-in 17-jewel Lemania and a 2014 Carrera with the once-SII 1887 movement - in fact I'd say the new watch is probably a lot better.

I'm sure you're right - but looking better is half the struggle with watches. I've noticed that they are tending to drop the multi-coloured logo on a lot of their current models - I don't know if that's a new development, but it seems like a good idea. Imagine someone wearing a green shirt with red trousers, it's not the best combination. I suppose at least they'd be able to find a matching watch. Even the type faces go badly together, being from different, and not at all complimentary eras. It's quite an achievement to design a logo that actually clashes with itself.

[Passenger]

I don't think even house prices have doubled in the last seven years, in fact they went down for a while.

In Hong Kong they´ve gone up 300 per cent in the last 10 years. Extraordinary.

[jk103]

If you took Tag out of the name a lot more buyers would exist. The name change doesn't make it a different watch just makes it a different brand to those wanting history.

[andrew]

If you took Tag out of the name a lot more buyers would exist. The name change doesn't make it a different watch just makes it a different brand to those wanting history.

But isn't that totally, completely artificial? "i won't buy it if it says TAG Heuer, but I'll buy the identical product, provided you rub the TAG bit out". I just find that weird.

[Itsguy]

But isn't that totally, completely artificial? "i won't buy it if it says TAG Heuer, but I'll buy the identical product, provided you rub the TAG bit out". I just find that weird.

Nothing weird about it. Half of watch making is the technical skill of micro-engineering to exacting standards. The other half is using art to create an iconic object with beauty and style, or even a visceral aura or power. In that game, the watch that looks better, is better, and a few square millimetres out of place on the dial means everything.

[jegger]

But isn't that totally, completely artificial? "i won't buy it if it says TAG Heuer, but I'll buy the identical product, provided you rub the TAG bit out". I just find that weird.

Branding is a huge part of a product, just ask this bloke https://www.youtube.com/watch?v=IOGlRNrdHQs

[jk103]

But isn't that totally, completely artificial? "i won't buy it if it says TAG Heuer, but I'll buy the identical product, provided you rub the TAG bit out". I just find that weird.

It's not weird Andrew it's the consumer's perception. Doesn't make it right or wrong just the way things are. All watches would be the same money if they had non-descript names on the dials.

[Parnassus]

Brand, logos, everything matters... BTW I like some THeuers, so good news if they finally reduce the price

[kempoman]

Well HK represents mainland Chinese buyers too.

[Olives]

Whilst luxury is under the spotlight , the heads of LVMH are only interested in making money. Surely their ad and marketing spend is massive but it drives the sales of the brand. They are being realistic and reacting to a competitive market. It's crazy as it seems to me that most watch windows showing lots of brands can be dividen up into two or three group owners.

It's a fascinating area- the luxury brand market. But Buyers do like to be a little different and many people seem not to want big brand juggernauts like LV. Especially now, in watches and fashion ,we see lots of small brands finding new buyers because their quality is comparable but the markup is less eg: Steinhart, Cambridge satchel co

It will be interesting to see what happens in 2015 - maybe the annual price increases we all dread but expect might not happen.....

[Rod]

I think Tag's problem is that their range is too wide along with distribution. When you see them in dealer windows there's a huge range and there's a few that look similar. They should concentrate on a core range and aim for a narrower distribution.

Rod

[exp-]

I think consumers are becoming aware that certain watch brands are pushing the envelope on how much they charge for watches.

[Strnglwhank]

I think Tag's problem is that their range is too wide along with distribution. When you see them in dealer windows there's a huge range and there's a few that look similar. They should concentrate on a core range and aim for a narrower distribution.

Rod

They don't have the prestige factor to try to compete with others at the higher price range. Trying to appeal to everyone at multiple price ranges just confuses brand & effects sales.

[markosgr28]

Very interesting! Thanks for sharing!

They say they aim at the 1000-4000 euros market, but still they are stopping their entry level quartz watches, for example in the F1 series. At least for now, they don't have many choices in the 1000 euros price range.

Personally I became aware of the brand from their great looking for the time and affordable f1 quartz plastic watches back in the 90s. I liked several other models from the brand in the past, such as many models from the 2000 series (I still own two of them, a watch and a chrono). These models were in the 1000 euros price range, or a little bit more for the chronos.

Today I like many aquaracers and a few carreras, but they are at the 2000 euros or more price range, in which there are also many other choices available. The 300m auto aquaracer was at the 1000-1200 euros price range when it was introduced and it was a great choice at this price range and now it is almost twice as that.

Today, I don't expect a plastic watch from the brand, but an affordable watch at about 600-700 euros such as the entry level F1's of the recent past would definitely be on my wishlist.

The brand IMHO has made several poor choices in the past, it turned into a fashion brand, while trying to sell expensive luxury watches, they have made poor choices in the design of several of their models etc. Only recently they have tried to turn their image back into the watchmaking direction. They have even bring back they 90s "don't crack under pressure" moto, probably because that was the time they were at their pick of their reputation. Let's see what the future will bring for this brand.

[Beaunidle]

One of the biggest drivers in recent watch price inflation is quite simply the CHF. Stupid curve over the last seven years.

[Tokyo Tokei]

Correct, but you're yelling at traffic with that line here

[TheFlyingBanana]

I think a price crash on many watches is coming now, and is possibly inevitable. Demand is not unlimited, and as millions and millions of high-end pieces are added to the used market pool, some will become harder and harder to sell on at anything other than rock-bottom prices.

[andrew]

I think a price crash on many watches is coming now, and is possibly inevitable. Demand is not unlimited, and as millions and millions of high-end pieces are added to the used market pool, some will become harder and harder to sell on at anything other than rock-bottom prices.

On some brands (which, as any fule kno, it's really all about) then certainly. But others are assured. Overall it will mean more watches with great intrinsic qualities, capabilities and longevity at lower prices that don't have the right name for online "intelligentsia", and that's a good thing.

[morgandk]

In all fairness most of the price increases over the last 4 years have been due to a strong CHF. Wages, buildings, materials and infrastructure is paid in CHF. When the CHF goes up over 20% to USD and Euro - prices 'increase'.

M

[teknicolourfox]

I think their pricing strategy is part of their failing. I was looking at Monacos earlier today, it would be much cheaper to get on a plane to USA, buy one and bring it back, than it would to buy one over here...

Crazy

[dinobaggio]

Really interesting this, across the whole arena of watch collecting I've seen prices rise steady over past 5 years, vintage Breitlings especially. Auction houses are now as expensive as ebay, and private sales, it makes you wonder whether this is the start of a fall in watch prices?