Tag Heuer is riding a wave of marketing successes and new launches to grow its market share in the luxury watch world, according to its CEO.
The company, which is owned by LVMH, opened a flagship boutique on Manhattan’s Fifth Avenue on Wednesday as part of a rapid expansion in the U.S. It plans to more than double its boutiques in the U.S. to 50 by 2026, according to Tag Heuer CEO Frédéric Arnault.
Along with increasing sales, the boutiques give the brand more direct relationships with its customers rather than relying on third-party retailers or department stores.
“This is a big shift in the last five years and that will continue in the next five to 10 years,” said Arnault, the 28-year-old son of LVMH CEO and Chairman Bernard Arnault. “Getting branded stores that we operate ourselves along with e-commerce allows us to nurture direct customer relationships.”
Frédéric Arnault, CEO of Tag Heuer.
CNBC
Those customers have been growing fast since Frédéric Arnault took over as Tag Heuer’s CEO in 2020. Under his reign, the company has leaned into its legacy in auto racing, especially Formula 1, which has surged in popularity since the Covid-19 pandemic. As the official partners and timekeeper of the Oracle Red Bull Racing team, its watches are worn by top-ranked driver Max Verstappen and his teammate Sergio Perez.
Arnault said Tag Heuer is making strides due in part to marketing wins and new products, such as the new Tag Heuer Monaco Chronograph with a skeleton dial worn by Verstappen, which clocks in at more than $10,000.
The company’s top models are so popular that Tag Heuer waiting lists are now up to 18 months long.
“Demand is a lot stronger than what we had projected,” Frédéric Arnault said. “So that’s what creates the wait list as well. And so we cannot ramp up that fast. Of course, if we want to double production in the next 18 months we can, but we will not do that. We also want to ensure that the value of the watches are maintained over the long term.”
Tag Heuer’s growth is all part of LVMH’s goal of becoming the world leader in every luxury category, from fashion and leather goods to wine and spirits and watches and jewelry. Along with Tag Heuer, LVMH owns the Hublot, Zenith and Fred watch brands and it has been increasing sales of its Louis Vuitton and Bulgari watches. The French-based company’s jewelry and watch division reported sales growth of 11% in the first quarter from the year prior, to reach 2.6 billion euros.
Arnault said a recent correction in prices for pre-owned collectible watches has been healthy for the market. After prices for trophy watches such as the Rolex Daytona, Audemars Piguet Royal Oak and Patek Philippe Nautilus surged during the pandemic, they have since fallen 20% or more as the supply of watches for sale online grows.
“After Covid, there was a very strong growth acceleration, especially in watches,” Arnault said. “We saw a huge surge in secondhand markets, due also to speculation with many resale prices that were increasing. And this has changed in the past six to eight months in the secondhand market and now it has normalized again. I think it’s healthier and we will continue to see some solid growth selling directly from the store.”
Tag Heuer may also get a lift from its partnership with actor Ryan Gosling. Gosling has been sporting a 36mm Tag Heuer Carrera with a bright pink dial as part of his promotion of the new “Barbie” movie. Arnault said “Barbie” fans can expect to see other Tag Heuer watches in the film as well.
“We made sure that there was the right watches present in the movie, ” Arnault said. “Ryan will be wearing some iconic watches that fit well in this universe. The Carrera 36mm in pink has already been nicknamed the ‘Barbie watch’ by our customers.”
