Omega's Precision Timekeeping in the Olympics But Imprecision in Luxury Sales
Omega's marketing strategy stays away from the mass media but uses well-known faces in the entertainment world to promote their products.
Highlights
Omega unveils the Quantum Timer with microsecond precision, revolutionizing timekeeping for over 10,000 athletes.
With smartphones and smartwatches dominating, Omega navigates declining sales by targeting niche clientele and emphasizing status symbolism.
Omega uses famous people and personal relationships to keep their appeal strong, even in today's social media-driven world.
Nowadays, there is nothing easier than telling the time. We have watches everywhere on every digital device, from a microwave to a car. However, Omega is no ordinary watch manufacturer. With 170 years of tradition, it produces high-end luxury watches of world-renowned quality. It holds a significant share of the $6.9 billion global luxury watch market. In this article, we explore the relationship between this world-famous Swiss watch brand, its role in the Paris 2024 Olympic Games, and how an analog wristwatch company is faring in the digital age.
Omega and the Games: a long-standing partnership
Since 1932, Omega has fulfilled the role of Official Timekeeper at the Olympic Games on 30 occasions. Since 1992, it has also sponsored the Paralympic Games.Â
But Omega's history at the Olympics is also the history of the progress of measurement and precision technology. From pocket watches to complex electronic systems that surpass the accuracy of the human eye by several orders of magnitude, technology has accompanied incredible advances in athletes' physical performance for a century. In the Olympic Games, every split second counts, and the difference between gold and silver can come down to microseconds.
On this occasion, in anticipation of the Olympic and Paralympic games of Paris 2024, the brand has installed a live countdown clock near the Eiffel Tower. As the start date of the Games approaches, the excitement of all Parisians grows as the countdown approaches zero.
Of course, Omega will also provide the necessary measuring instruments in all disciplines, including exceptional watches, motion sensors, and live processing for decision-making to define the winners of the Games. In this case, Omega will leverage the event to showcase a new generation of products: the Quantum Timer, a device capable of a measurement resolution of 1 μs (microsecond or one-millionth of a second). More than 10,000 athletes, all aspiring gold medalists, will rely on Omega's cutting-edge precision to make their dreams come true.
Is there a place for luxury watches in the modern world?
How relevant are luxury watches today? Unlike other luxury goods categories such as fashion, beauty, and travel, the watch industry has had better days, as it is currently facing major threats. The advent of smartphones has put an essential instrument in the pocket of more than 75% of the world's population. In addition to this phenomenon, there is the arrival of smartwatches from technology giants such as Xiaomi and Apple on the market. How many customers are willing to pay $10,000 for an Omega watch when they can buy a state-of-the-art smartwatch for a fraction of that price?Â
Although it is a niche market with a particular clientele, the number of sales follows a downward trend in the latest financial reports of the Swatch group, owners of the Omega brand. Since the sales peak reached in 2014, the company has been on a downward trend in its revenue, which is also seen in its stock price.
Marketing strategy
Omega has a very detailed segmentation of their audience, allowing them to save efforts in promoting their business to those not connected to their product. Their marketing strategy stays away from the mass media but uses well-known faces in the entertainment world to promote their products in premium locations such as airports, shopping malls, and high-profile tourist destinations. George Clooney, Michael Phelps, and Nicole Kidman are just some of the famous personalities who regularly wear these watches at public events.
The company is aligned with a strategy of personal relationships with its clientele, allowing it to create an attachment to its products and add value. For this reason, Omega does not have an e-commerce portal for online delivery; instead, it redirects its customers to its physical shops.
From timekeeping tool to status symbol, the future is unknown.
While watches have long served as physical embodiments of status, the rise of social media as a factor in enthusiasts' lives has strengthened this facet of the industry. In the years before social media and following the mass adoption of cell phones, watches saw a decline in use. Before that, watches chiefly served as utility-driven timekeepers to keep the world in order. Still, the explosion in the use of smartphones and socially-driven apps, particularly Instagram, has changed the importance of timepieces from tools to status symbols. In present times, a watch's role as a timekeeper for many has been relegated to a useful novelty, while its role as another marker of personal expression has grown significantly.
Manufacturers such as Omega, Rolex, and Breitling understand this phenomenon, and for a reason, they continue to be relevant players in the market. Their products are aimed at a very discreet selection of high-purchasing-power sectors capable of paying between 10,000 and 200,000 USD for an accessory that denotes status. After all, one does not pay that price to see the time but to own an Omega Moonwatch worn on six lunar missions or the Omega Seamaster, the watch used by James Bond in all his films.
Financial Outlook — Swatch Group
Net sales up by 12.6% at constant exchange rates, or 5.2% at current rates to
CHF* 7 888 million (USD 8.6 billion). Sales growth of over 8% in the fourth quarter in local currencies. View Swatch Group’s FY23 report (ending Dec. 31, 2023) here.Operating profit of CHF 1 191 million (USD 1.3 billion) — previous year: CHF 1 158 million (USD 1.2 billion).Â
Operating margin of 15.1% (previous year: 15.4%).Investments doubled to CHF 803 million (USD 882 million), of which over CHF 300 million (USD 329 million) invested in production equipment and CHF 220 million (USD 241 million) in retail properties in prime locations.
Operating cash flow of CHF 615 million (USD 675 million), previous year: CHF 724 million (USD 795 million).
The Board of Directors of the Swatch Group will propose a 8.3% higher dividend of CHF 1.30 (USD 1.43) per registered share (previous year: CHF 1.20) and CHF 6.50 (USD 7.14) per bearer share (previous year: CHF 6.00) at the Annual General Meeting on 8 May 2024.
Excellent growth prospects in 2024, especially also in the lower and medium price segments, despite the problematic strength of the Swiss franc. The brand Swatch started the year very strongly with the worldwide launch on 11 January 2024 of the Scuba Fifty Fathoms "Ocean of Storms".
Outlook for 2024: The Group anticipates excellent opportunities for further growth in local currencies in 2024. The jewelry brand Harry Winston will surpass one billion in turnover in 2024. The brands Swatch and Tissot, as well as Longines, will continue to develop strongly in the lower and medium price segments. Omega will benefit from a global media presence as the official timekeeper of the Olympic Games in Paris. America and Japan will continue to offer great growth prospects for the Group's brands. In China, the Swatch Group will enjoy additional demand with its strong brands in the lower and medium price segments. Exchange rate movements will continue to impact the Group's results due to its strong industrial base in Switzerland.
*1 Swiss Franc = 1.10 USD
