Just pondering upon one of the lectures in the Knowledge Incubator series here at IE Business School on Fashion, Luxury & Creative Business, I was unnerved by the thought of the time when time stops. Don't get me wrong, I'm not being apocalyptic. I rather leave that job to the traditional doomsayers, at least till Dec 2012. I merely happened to glean on the state that the Watches industry finds itself in today.

The Global Watches market has taken a serious hit in the past couple of years owing to the global economic slowdown, which hasn't spared many. Short and medium term recovery is already on its way, fuelled by three main factors - A growing demand in the Asia-Pacific region, rising consumer interest in fashionable and innovative models & a resurgence in the luxury watches segment. Research firms, like Global Industry Analysts inc., have projected the Watches industry to be raking in US$46.65 Bn by 2017. But as most industry-folks would tell you, all of this is nowhere near the scope of the problem we might have at hand, the keyword here being 'long-term'.

The problem is simple. The younger generation, that is growing up in the era of digital ubiquity, is finding the unidimensional idea of a watch to be incomprehensible. In plain words, “they don't buy it”. They don't think they need it; and why exactly would they? There's time on display everywhere- in their mobile phones, on their computers, on TV, and of then there's always the lonely-looking clock somewhere in the vicinity. Sales for this demographic are dropping sharply. Worrisomely enough, it's them, who run the likelihood of growing up without the concept of a watch, that constitute the 'long-term' for this industry.

The industry, appreciating the gravity of the situation, is responding with attempts in different directions. Most of the emergent innovation seems to be taking the hi-tech route – Smart watches with the ability to download photos, customize backgrounds and communicate with smart-phones; and luxury phones with a built-in mechanical watch to name a few. In terms of both the unusual development from the demand side and the radical responses of the supply side of it, it is a strategic moment. Ideally with the rest to be only subsequent, the watch-makers would have to ask themselves, afresh, the question - “What business do we see ourselves in?” . To me, there are two main categories of answers to this – A) The business of making watches & B) The business of telling time. A third, which is the mix of the two, is represented by the case of watch-makers' foray into luxury phones with mechanical watches, but quite honestly I personally don't see that as a major salvage device for the long-term market.

The type A players would be best advised to take heart from Nicolas Hayek's Swatch revolution of the 80s in response to the disruption brought about in the market by quartz technology. These players would be more likely to innovate on the design and fashion side of traditional watches and possibly reposition the watch as an accessory or a symbol of style, status or fun that, just as a matter of fact, could also tell you the time'o'day. One could say that the watch already bears that nature to some extent. Yes, but that extent would need to expand now if the type As have to see sunnier days. The type B players would have to act crafty and work hard with digital technology to make sure that their time displays offer additional valuable features in as fuss-free and efficient a manner as that in which our silly watches today tells time. Irrespective of their type, these players would do well to keep an eye on the growth trends, the most promising of them being registered in the Asia-Pacific region (it is moving up at 3.6% currently, with India, for example, at 9%). The luxury segment is still the largest in terms of revenue but the mass-market segment is the fastest growing one (2.6% even amidst the slowdown). Putting the pieces together, it only makes it clearer as to which customer, which region and what price-ranges the industry can ill-afford to miss in this realignment story.

The habits of time-keeping and those of time-keeping instruments too are ones that are best set in early. Along the line in this tradition comes the practice of giving watches as gifts. I remember my father giving me a watch, that he bought for me on his first trip to U.S.A., as a birthday gift. I still fondly wear it (and it seems to impress the ladies a lot). I'm reasonably old-school in certain terms and so, even if out of nostalgic inertia, I somewhere want these traditions and practices to live on. Years from now, if I give an elegant watch to my son/daughter as a gift, I would want to see love in his/her eyes for daddy the greatest, and not disappointment for daddy the greatest idiot.
If I get my wish, I'd know that this industry made some good decisions along the way.