Swatch And The Global Watch Industry
Swatch Group is in a tight predicament after years of success in the global watch market and needed answers. A 14% market share worldwide, increasing net sales and gross profits, and a claim to the “Swiss Made” term proved important for the growth and advancement of the company in the past decade. Yet, internal problems were beginning to rear their ugly heads, and the repairing of these issues needed to be addressed before the company could head forward successfully. Firstly, competition was tough world-wide. Not only this, but Swatch’s product mix featured too many products, causing many consumers and suppliers to become confused. Secondly, although wanting to keep production within Switzerland, high cost of production had them wondering to outsource their factories or not, all while maintaining quality. Lastly, Swatch faced internal management issues, with many officers stepping down from their positions, all of whom stated problems with their CEO’s ability to take advice from them. These issues prove a large stepping stone that Swatch would have to cross in order to hold its large market share heading into the future.
Product Mix and Proposals
Having a large product mix, Swatch group had many options in their watches, be it high-end, tech savvy, or bargain hunting, Swatch offered a watch that would obtain to that individual. Swatch line itself seemed to be struggling for market share in the U.S. as well as the rest of the world. Targeted reasons being that the vast lineup could be a lot for the average consumer, featuring an abundance to choose from to the point where they cannot decide and resort to other brands.
To avoid the title of “fad”, Swatch group needs to slim down their product mix which shouldn’t affect them socially or ethically. This will make for a more approachable amount of watches to avoid being left in the 90’s and remain competitive into the future, all the while keeping on their highly valued quality. Groups such as Seiko, Timex, Fossil, and Guess where gaining ground and Swatch group needed to act in this way to combat it.
Heading forward, Swatch Group can look to the successes of it subsidiary Omega. Omega’s main competitor is Rolex, and being in a high end market meant little room for change in quality. Instead, Omega elected to decrease prices while keeping quality the same, streamline their processes, and most importantly, cut down the number of models they offered from 2,500 to just 130. These changes boosted Omega’s sales and made them a huge driver in sales for Swatch group as a whole. Swatch line, which focuses on low to middle cost watches, needs to complete a SWOT to see which models to cut from the line, and drastically streamline it to a handful of watches that consumers actually want, and again, maintain that quality level. This need for change can be seen in the fact that resellers dropped from roughly 3,000 to 1,200 in less than 10 years. Building on that,...