With watches costing up to £40,000, Audemars Piguet, or AP as it’s known to watch aficionados, is one of the world’s priciest watch brands. Swatches, of course, are more often seen on mass-market wrists, in lurid colours the very antithesis of AP’s ‘quiet luxury’. So, news of a collaboration between the two surprised some, although few could’ve expected the frenzied scenes at Swatch stores and the subsequent fallout.
At £335 each, the eight limited-edition Royal Pop pocketwatches, positioned as a “disruptive collaboration between two icons of Swiss watchmaking”, drew crowds of thousands to Swatch stores, with some shoppers camping in queues for two days, in anticipation of the hefty resale value. Mayhem soon ensued: brawls, stampedes. Police deployed dogs, fired tear gas. Twenty stores were forced to close. And social media footage of the scenes ensured both brands went viral, with watches reselling for as much as £16,000 the next day – and one customer reportedly paying $25,000 for all eight.
Is any publicity good publicity? In this instance, the question divided the Sense Worldwide studio, with Lee seeing the upside for AP and Christina more dubious…
For Swatch, time queuing is time well spent.
At the very least, everyone could agree that the launch ticked several boxes for Swatch. With smartwatches continuing to decimate sales of affordable watches (by 56%, for Swiss brands under £475), the AP collaboration offers Swatch a chance to repeat the success of its partnership with luxury watchmaker Omega, which generated $1 billion in additional revenue over two years. As Omega’s parent company, Swatch might’ve found that collab a little easier logistically, but both work for Swatch because they give its customers a chance to buy a premium brand at a manageable price. Realistically, the minority of online commentators bemoaning the diversion of police resources to Swatch stores won’t remain critical for long, amid the onrush of the newscycle, and in any case they’re vastly outnumbered by the majority enjoying the comedy and insanity of the spectacle. For Swatch, once the controversy clears, all that’ll be left is the buzz, a highly desirable product, an uplift in brand equity thanks to the halo effect from pulling off a collab with a reputable brand (one it not only doesn’t own but which it radically differs from), and revenue. Current estimates vary widely, from 150 million to a billion Swiss francs by the end of the year. But commentators also expect additional revenue from the sales of other Swatches as a result, particularly the Omega MoonSwatch.
But for AP the equation is more complicated. Balancing heritage with cultural relevance is a very dicey exercise – a largely unrewarding one for AP, Christina argued, given that the appeal of luxury goods is often precisely their lack of cultural hype: their rarity, their scarcity, that sense of “if you know you know”. According to GWI, luxury shoppers are 19% more likely than others to want the brands they buy to feel exclusive, especially in an era in which instant online availability has turned friction into a sign of value. Of course, days-long queues and fierce competition do foster a sense of exclusivity – only not of the calibre AP is accustomed to.
AP customers already face years-long waiting lists to buy watches, let alone two-day-long queues. Every watch it’s able to make by 2030 has already been bought. Indeed, since 2012 demand has risen so high that the independently owned AP has quadrupled its revenue. In this context, Christina felt that while the furore reinforced AP’s exclusivity to the mass market, by implying the brand was accessible at all – in any form, even with a two-day wait – it diminished its sense of exclusivity for the market that matters most to it: the luxury shoppers who can actually afford one.
The reason Swatch’s Omega collab worked for Omega was that it reduced the cost of an Omega (of a sort) from about £5,000 to £200, introducing the brand to shoppers who could feasibly, one day, afford to land the price jump in the opposite direction. By contrast, AP’s Royal Oak costs around £40,000 – and even the very few shoppers who can afford that still struggle to get their hands on one, increasing their appeal, the competition among shoppers, and, in turn, their rarity. So, for Christina, AP’s Swatch stunt risks alienating a luxury elite, accustomed to a higher echelon of exclusivity, without replacing that elite with a greater number of mid-market shoppers, because it’s unlikely any Swatch buyers will ever be able to afford the brand.
Leveraging the mechanics of status.
Lee saw things differently. Firstly, as the Royal Pop’s design only superficially resembles the Royal Oak’s, he felt that it actually drew attention to the gulf dividing the two – thus underlining the inaccessibility and exclusivity of the latter, making it even more desirable. Simultaneously, the coverage of the collaboration introduced AP to rafts of new audiences, unlikely to have had a reason to be aware of such an elite watch brand beforehand. And the more people aware of the Royal Oak, AP and what is involved in obtaining one, the more widely it confers the status of the owner. So, if the watch is bought primarily as a status symbol – a big “if”, perhaps – the Swatch collaboration succeeds by arguably amplifying that status and, therefore, both existing owners and wealthy shoppers’ primary motive for purchasing one.
Even without mid-market shoppers ever actually buying an AP watch, their demand does matter. It’s mass demand, combined with inaccessibility, that often cements a brand as a status symbol. Ferrari, for example, boasts 400 million fans, despite sales of a mere 330,000 cars across its entire history. Similarly, Birkin’s popularity vastly exceeds the number of shoppers who can afford or access one.
Lee’s argument is particularly persuasive when applied to millennial shoppers, 54% of whom are keen to display their wealth and accomplishments (read: status) through luxury purchases. That said, according to Forbes, it’s a motive 40% more prevalent among millennials than it is among older consumers, who, presumably, tend to be the age of those with the disposable income necessary for actually buying a Royal Oak. But with AP unable to meet its current demand, it’s unlikely that increasing demand among shoppers who can afford one now was the short-term objective in the first place. More likely, the brand was looking towards the future.
According to most commentators, hype for the Royal Pop was “carefully primed to press the buttons of Gen Z”, with manufactured virality, promotion before the launch kept to a tantalising minimum, and Gen Zers’ preferred high-low aesthetic embedded in the design of the watch itself. That places the Royal Pop in a long line of recent collaborations between luxury houses and mass-market brands, intended to mitigate “stuffy” legacies with an injection of cultural relevance, to appeal to younger audiences. Naturally, younger audiences are the least likely of all to have £40,000 today but, by disseminating knowledge of the brand through an affordable starter watch, AP may introduce itself to the collectors of tomorrow. If the Royal Pop can start even a few consumers on the path to appreciating fine watchmaking, AP can reap the rewards of its Swatch collaboration in decades to come.
Indeed, Gen Zers and millennials are projected to represent 80% of the global luxury market by 2030. And these generations don’t purchase luxury products for the same reason as earlier generations did. 68% of Gen Zers, for example, buy luxury products not to flex their wealth but to “express aesthetic alignment with their chosen community”; an immense 72% make purchases “based on personal, social, and environmental values”. So if, for younger people, products need to convey their values and identity, could the Royal Pop’s embrace of accessibility and, in a sense, equality endear AP to the next generation of luxury consumers?
It’s also worth remembering that 56% drop in sales of Swiss watches under £475. At first glance, buyers at that end of the market might not seem to matter to AP. But if cheaper Swiss brands sell fewer of the starter watches responsible for setting young shoppers on the path to an interest in watchmaking, which is what leads some – however small the percentage – to eventually buy a Royal Oak, AP may have a bigger role to play in rebuilding those sales than meets the eye. Perhaps in testament to AP’s commitment to spreading the gospel of watchmaking, the brand is even donating 100% of its profits from the collab to an initiative dedicated to watchmaking education and the preservation of the craft.
Connecting or missing new audiences?
Perhaps tomorrow’s collectors were AP’s target, then, but whether the Royal Pop is really reaching young consumers remains to be seen. For Christina, while the low(ish) cost theoretically widens access, it’s unclear who was actually queueing – and why. Plenty of Royal Pops are already appearing on resale sites, priced as high as £16,000, immediately undermining the purported accessibility of the collaboration and reasserting its exclusivity. “I’m coming back to buy more,” one queuer told the BBC. “It’s one per person but I’ve got friends who I’ve paid to get them from other shops.” Evidently, scalpers are lining up just as much, if not more, than genuine Gen Z watch enthusiasts.
Even ignoring the scalpers, if the intent of the collab was to make it easy for the average younger shopper to access an AP watch (of a sort) and start on the path to learning about the craft – in order to convert at least a few of those shoppers in years to come – it may still fail, in that anyone willing to endure days-long queues is hardly the “average” shopper. In an age in which almost all products are accessible at the tap of a screen, the perceived “accessibility” of the Royal Pop – only available in select stores, not online – is vastly overstated and perhaps more performative than meaningful.
With all that mind, it’s possible that, contrary to first impressions, Gen Z weren’t AP’s primary target. Some are observing that the Royal Pop’s lanyard enables it to hang from a handbag. While the brand might’ve made this design choice principally to distance the product from its £40,000 wristwatches – to avoid devaluing collections and angering collectors – it might’ve also served as a play for women. In line with the industry average, only 20% of AP’s sales are to female customers, a market the brand has reportedly been attempting to crack for a decade – and might be about to finally win over, if 2024’s Labubu craze is any indication.
For now, we’ll need to watch this space.
At £40,000, the Royal Oak only needs to be bought – in the future – by a fraction of a percentage of the people following the Royal Pop drama for the collaboration to pay off for AP. Whatever AP’s motive, Lee suspects the brand has managed to achieve two important things with this collaboration. Firstly, amplify the status of the ‘real thing’, its existing product portfolio, for existing owners and fans. And secondly, activate that future customer base, thereby increasing desirability and demand and, someday, competition and scarcity. For Christina, the collab can only be deemed a success if it achieves that without alienating connoisseurs. What if, she asks, the collab does eventually educate young people into watchmaking connoisseurs only to, ironically, spoil AP for them once they’re educated enough to understand the potentially negative connotations of the Swatch collab?
By outsourcing almost all production, promotion, and sales to Swatch, AP can increase revenue by hundreds of millions of pounds, without investing much in the way of resources. It can donate that to an initiative that the brand cherishes. Along with the buzz, admiration, and notoriety from collaborating on a product at the heart of such a seismic cultural moment, that definitely constitutes a short-term win for AP. But for a brand over a century old, prone to thinking generations ahead, not years, it feels a little reductive as an answer to the mystery behind its motive. If the weeks and even months it can take AP to craft individual watches are anything to go by, Lee and Christina could be debating this for some time yet…
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