Swatch and Audemars Piguet’s collab provides a much-needed pop
The launch may not have gone quite according to plan, but such tie-ups are a good way to inject some buzz into the market
This month’s launch of the “Royal Pop” collaboration between Swatch and Audemars Piguet — two Swiss watch brands at opposite ends of the luxury spectrum — attracted the kind of publicity the companies might have preferred to do without. But in reality, it is good news for them, and a sign of the times for the luxury sector more broadly.
The launch of the pocket watch, in Swatch’s trademark plastic but reminiscent of Audemars Piguet’s Royal Oak flagship, did not run smoothly. There were scuffles and worse in queues outside Swatch stores in London, New York, Paris and beyond, with police in some places using tear gas and pepper spray to subdue the crowds. Videos on social media showed people in hoodies fighting over the chance to buy a Royal Pop pocket watch retailing at up to £350, potentially hoping to flip it on secondary markets for a good 10 times that amount.
Still, for Swatch Group, the new product will turn a neat profit. The cost of producing each pocket watch, according to Bernstein analysts, is no more than 20 per cent of its retail price, with royalties to Audemars Piguet likely to be about the same. This still leaves a 60 per cent gross margin that, taking the lower end of estimated sales of between 500,000 and 1mn units, will deliver at least SFr100mn ($125mn) to Swatch Group’s bottom line. That’s about 40 per cent of this year’s forecast net income.
Swatch — which makes all its watches in Switzerland — can claim to have saved the national industry at least twice: from the quartz movement revolution and from the smartphone, which made wristwatches redundant for many people. Maybe this fresh iteration will help defend it a little longer.
For Audemars Piguet, the upside is less clear. It is true that high-end watchmakers do not have the option of offering cheaper “entry-level” products in the way that apparel or cosmetics makers can. So it is vaguely possible that the Royal Pop will serve that function: perhaps some young buyers will one day buy the Royal Oak for 100 times the price. But equally, some of today’s Royal Oak devotees may not love the idea of entry-level fashionistas getting a piece of their exclusive brand.
The tie-up, in any case, showcases a wider trend in the luxury sector. Fashion and luxury collaborations, already a widespread phenomenon, are a good way to inject some buzz into a market that’s been short of both ideas and consumer appetite. And perhaps the weirder, wilder and more debated, the better for everyone involved.