Sweden’s Little Watch Renaissance Is Swiftly Making Its Mark Globally
Despite a sluggish Swedish economy the local watch market has flourished as watches grew by 7% CAGR at constant 2016 prices over the review period. Sweden has certainly set the pace in Western Europe by posting the fastest growth rate in watches during the review period, by a significant margin as well. Most notable is that growth has largely been driven by local companies. As Swedish watchmaker’s ambitions grow and expand globally can they make a long-lasting mark on global watch markets?
Change from an unlikely corner of the world
A once traditional market chiefly driven by high socio-economic consumers purchasing watches as a status symbol is a fast changing notion in Sweden. The transformation has been led by Daniel Wellington, whose rise in prominence since its 2011 foundation has been nothing short of sensational.
Source: Daniel Wellington website
The watches are elegant, characterised by minimalistic Scandinavian design and often come with interchangeable straps. The multi-coloured NATO strap, originally a strap designed for the army, have become somewhat of a hallmark for Daniel Wellington. So what makes these watches so unique besides design? Their price tags. Watches of similar design have typically belonged to the high end watch market outside reach of most consumers. A Daniel Wellington watch cost between €139 and €249 depending on the model. This is one of the important reasons for why watches have become a must have fashion accessory among younger generations in Sweden, bought not as a symbol of wealth, but to complement the wearers look.
Sweden conquered. Next, the world!
Locally Daniel Wellington has quickly become a leading brand, ranking as the fifth largest in Sweden with a 4% value share in an else fragmented market. Moreover, the company is quickly expanding globally and 2015 saw global sales reach $200 million with over a million watches sold. The company isn’t the only Swedish watchmaker to grow rapidly and expand globally however. Triwa is another example of a fast growing Swedish watchmaker who’s sold more than 200,000 watches since its inception in 2007. Asia, in particular China, and US have become focus markets for Swedish watchmakers. The companies rely almost entirely on social media marketing. Daniel Wellingtons Instagram account has 2.2 million followers. That is more than Rolex and Omega, the world’s two largest watch brands, combined. Furthermore, they work actively with bloggers and celebrities in the respective countries they are expanding to promote their brand.
A viable brand development, or just another fashion craze?
While Daniel Wellington’s quick rise in watches is certainly impressive its competitive advantage and that of other Swedish watchmakers seems perilous. Its design is easy to copy, cheap production facilities in China are available to anyone and with the brands quick rise its niche is quickly becoming mainstream. This has seen Daniel Wellington in particular fall out of favor locally as current value sales at home only grew by 5% in 2015, which is 4% slower than the growth of quartz analogue watches. Fashion brands including Gant, Armani and Hugo Boss are now outperforming local Swedish brands at home.
Although the growth of Swedish watchmakers has been astonishing, it means little if they are unable translate this into a strong brand development that quickly adapts to the fickle nature of the world of fashion. To ensure sustainable brand development it will be paramount for Swedish watchmakers to continue building brand recognition through regional tailored marketing strategies and collaborations with local and influential fashionistas in all corners of world. While the experience at home might be a worrisome indicator for what to come globally for Swedish watchmakers it wouldn’t be the first time minimalistic Scandinavian design makes a long-lasting impact on world’s consumer goods markets either.