et, dubbed Royal Pop. The eight-piece collection, priced at US$400 each, was released on May 16 and sparked global chaos. Interested buyers and eager resellers queued outside select stores in New York, London, Barcelona and Dubai, hoping to secure one of the brightly colored pocket watch pieces. The collaboration also generated more than 25 billion social media views and helped introduce a younger generation of first-time buyers to Swatch. Retail Creative and Consulting Agency principal Christine Russo said Royal Pop’s impact on the business was difficult to overstate. “How much of an impact did Royal Pop have? A lot,” said Russo. “The numbers tell the story, especially considering that the watches and jewellery division grew 9.5 per cent at constant rates, largely off the viral momentum of the Royal Pop release and its halo effect on retail traffic. “If you strip out this data, it would pull total reported net sales down to approximately CHF2.92–2.97 billion (approximately US$3.59 billion–US$3.65 billion), exposing a contracting baseline business under heavy margin pressure. Just imagine if they hadn’t released Royal Pop.” To maintain that momentum, Russo suggested Swatch Group should lean further into the power of distinctive brand collaborations. “While Royal Pop was unique because of the AP heritage, we may see lateral moves to include sporting events, like Formula 1, which also focuses on high-functioning machines with years of technological heritage. In the vein of staying in the watch vertical, it might not be out of the realm to see a collaboration with Rolex or other prestige watch brands,” said Russo. Audemars Piguet and Swatch weren’t the only brands under the Swatch Group umbrella to experience growth over the past year. Swatch Group reported that Omega recorded about 20 per cent growth at constant rates, while Longines, Tissot, Hamilton and Breguet also posted positive sales growth. What Swatch Group’s numbers truly reveal Despite the company’s overall turnaround, the report also revealed that operating profit fell 23 per cent to roughly US$64 million, largely because of heavy currency losses and factory costs, well below market expectations. Neil Saunders, managing director at GlobalData, said the strong sales reflected both healthy demand across the watch category and the success of the Audemars Piguet collaboration. “The sales numbers from Swatch were robust, reflecting both good demand in the overall watch category and the effectiveness of the somewhat chaotic collaboration with Audemars Piguet,” he said. “The disappointing aspect of the results came from the bottom line, as Swatch has not translated sales gains into profit. Some of this is due to unfavourable currency swings, but some is also due to an operation that has become more costly on the production side.” How Swatch Group can maintain growth over the second half of the year Barney Stacher, CEO of consultancy Stacher & Stacher, believes Swatch’s greatest competitive advantage has never been a single brand, but its ability to introduce consumers to an ecosystem that evolves with them throughout their lives. “Few companies can credibly serve someone buying a US$75 Swatch as a teenager and later celebrate that same customer’s career milestone with an Omega. That’s a remarkable strategic asset, but it requires more than great products. It requires great relationships,” he said. That long-term relationship is becoming increasingly important as watches shift from functional products to symbols of identity. Younger consumers no longer buy watches simply to tell time, Stacher argued – their phones already do that. Instead, they are looking for products that express belonging and their personal stories. According to Stacher, Swatch Group has demonstrated that it still understands this through collaborations and limited-edition releases that generate excitement, scarcity and social conversation. The challenge now is extending that momentum across the rest of the portfolio. As he sees it, heritage alone is no longer enough to win younger buyers. “Heritage remains an enormous advantage for brands like Omega, Longines, Tissot and Hamilton, but heritage alone no longer closes the sale. Younger consumers expect ongoing storytelling, memorable retail experiences, creator collaborations and digital engagement that continues well beyond the purchase. Luxury brands have traditionally sold aspiration, but today’s consumers increasingly expect participation.” Looking ahead, Stacher sees Swatch Group’s biggest opportunity not in selling more watches, but in owning more of the customer relationship. Too many brands, he argued, still mistake direct-to-consumer for simply selling through their own stores or websites, when the real advantage lies in owning the customer data, dialogue and lifetime relationship. “Watches are one of the few consumer products people may own for decades, making them uniquely suited to long-term engagement. Product registration, personalised service, collector communities, exclusive events, early access to launches, trade-in programs, and authenticated resale can all strengthen loyalty while creating valuable first-party customer data.” In practical terms, Stacher believes that means shifting the focus from individual transactions to long-term communities of owners and collectors. He identified three priorities for the second half of the year: continue creating culturally relevant collaborations that attract younger consumers, build membership-style communities across every brand, and better leverage first-party customer relationships to increase customer lifetime value. Ultimately, he argued, brands that foster a sense of belonging will be the ones that succeed. “After all, anyone can sell someone a watch. The companies that win over the next decade will be the ones that make customers feel like they’re joining a club they never want to leave. Perhaps that’s the biggest irony in the watch business: in an age when almost everyone carries a phone that tells perfect time, the brands that succeed won’t be selling time at all – they’ll be selling connection.” Further reading: What the Audemars Piguet x Swatch riots tell us about luxury right now