I’m going to tell you a story.
It’s about an industry with a rich heritage, going back more than a century, an industry with legendary brand names, heated rivalries, larger-than-life personalities, and more than anything else, an industry which stirs the emotions of passionate enthusiasts.
If you know I make watches, you might think that’s industry I'm talking about, but it isn’t.
I’m talking about motorcycles.
But the two industries have traveled a remarkably similar course through history, such that the story below could be about either. And what's happening with the one could be an indication of what's coming with the other...
Industrial Age through WWII
Like horology, the motorcycle industry traces its origins to the expansion of the Western world and the industrial revolution, but really took off at the dawn of the 20th century.
The manufacturers started out as small, cottage businesses, but grew quickly, and by World War II, were key suppliers to both sides of that conflict.
50’s and 60’s
Following WWII, the industry continued to grow, and went through a renaissance in the ‘50’s and ‘60’s, a time which saw an explosion in product diversity and brilliant design, a time of rising prosperity in many parts of the world, leading to more luxury pursuits - and luxury spending.
But then, the economy went through a downturn, and the titans of the industry struggled to adapt to the challenge of competitors emerging from Japan.
Once derided as being a nation which produced sub-par goods, starting in the late '60's, Japanese companies began offering the market lower-cost, good quality products, at just the perfect time.
Those were hard times for many established players, wherein some big names were forced to reduce their production numbers, in order to remain viable.
80’s and 90’s
The survivors made the necessary adjustments, learned to adapt, and the industry thrived once again, returning to health in the boom times of the ‘80’s and ‘90’s, extending into a new century, and new millennium.
That is, until the financial meltdown of the late 2000’s.
In the following ten years, the industry struggled to regain its footing. Many analysts predicted Armageddon, as the industry giants stumbled, some falling from great heights, a few disappearing altogether.
A decade after the economic meltdown, there are signs that all may not be lost. Some of the lumbering giants are beginning to adapt yet again.
And within their midst, some new companies are emerging, to offer those passionate enthusiasts yet more diversity in products. We may be seeing the birth of future industry leaders, and the start of a new renaissance. The industry seems to recognize that in order to survive, it needs to adapt.
See the parallels?
What got me thinking about motorcycles, and how they relate to watches?
I used to ride, a long time ago, but stopped when I got married. I sold my ‘95 Triumph Speed Triple, and within a few years, I stopped paying any attention to motorcycles at all. That’s the way it was for 20 years. That is, until recently.
What the hell was that? Whatever it is, I want one.
A few years ago, about the same time the number of microbrands exploded, it seemed like, all of a sudden, there was a lot of really cool stuff coming from motorcycle companies, especially from new or reborn brands.
Things seemed to be shaking up, with ultra-light vehicles like the KTM X-bow, parallel-seating three-wheelers like the Polaris Slingshot, very well-designed (and cheap!) chopped and bobbed customs, and naked, retro-styled “cafe racer” sport bikes from Europe and Japan.
And then, just recently, like a deafening clap of thunder, Harley Davidson started dropping some real bombs, in the form of uncharacteristically Gen-X and Gen-Y-friendly models - smaller, sportier, with modern styling, and more affordable prices.
Judging by the commercials, the new face of Harley isn’t a gray-beard Hell’s Angel cruising through Sturgis. It’s a bearded millennial in an open-face helmet riding wheelies through urban blight, set to a grungy soundtrack.
They even revealed a new electric model!!!
Ho. Lee. Shit. Don’t know about you, but I never thought this day would come.
The geezers in charge of some very big, formerly stodgy companies now seem to be waking up to reality, and realizing they need to listen to the young punks they’ve been ignoring for the last decade, when their sales were in steady decline.
Whaddyaknow? Maybe youth isn’t entirely wasted on the young!
If we’re in the midst of a motorcycle industry revitalization, and if aging, sagging, tattooed, leather-clad Harley can radically re-invent itself as a hip, edgy, youth-oriented company, with legitimate go-fast products, it makes me think - why not the watch business?
Maybe that’s what’s happening, right now. I started to look into it, to see if the parallels run deeper.
If this chart of US. motorcycle sales looks familiar, it shouldn’t come as a surprise when I say the watch industry figures seem to be following a similar pattern:
US motorcycle sales went through an enormous growth spurt leading up to the great recession starting in 2007, then fell off a cliff, bottoming out in 2010.
But sales have recently been picking up again, thanks largely, I think, to these new products, which speak more to, and stir more passions in, a younger audience.
It certainly makes sense, especially in light of articles like this one from Bloomberg, titled “Can Millennials Save the Motorcycle Industry?" Subtitle reads: "As aging riders hang up their leathers, Harley-Davidson and Honda pin their hopes on smaller, affordable bikes for a new generation."
The more I read, the more I think you could replace “motorcycles” with “watches” and everything above would all sound the same. Check this out:
“Growing motorcycle sales is about two things — accessibility and desirability. Without those two needs being fulfilled, sales are going to plummet.” - https://ultimatemotorcycling.com/2018/02/12/motorcycle-sales-patterns-explained-sky-not-falling/
Tell me the same couldn’t be said for watches, which have, over the last three-plus decades, steadily become more expensive, with fewer AD's, and frankly -- boring, with most big brands re-hashing the same themes over and over again.
Is this all just about imploring the watch industry to start catering more to millennials? No, not really. I think that would be an over-simplification for both industries.
It's about understanding your market, stupid.
Both industries were caught flat-footed by what that Bloomberg article refers to as a “generational time-bomb”.
Both industries have spent the last three decades tailoring their products, their prices and their messaging to an enormous generational cohort of wealthy and free-spending Baby-Boomers.
But the Boomers are now entering the thick of their senior years, and spending a lot less than they used to on luxury goods like motorcycles and watches.
Both have failed to attract enough younger buyers from Gen-X and Gen-Y, by failing to update designs to meet younger tastes, consistently keeping prices out of younger, less wealthy buyers’ reach, and worst of all, failing to update their messaging to keep up with the times.
But the story isn’t over yet. Both industries are starting to show signs of life again, and in similar ways.
New brands are emerging with more diverse and exciting products, which appeal to a younger demographic, both Gen-X and Gen-Y, prices are more within the realm of the reasonable, and we're seeing better engagement with the audience these companies are trying to reach.
And, to give credit where it’s due, some big, old, stodgy businesses are reading the writing on the wall, and adjusting their posture accordingly. Some are adopting the more nimble approach of the smaller brands, the ones steadily gaining market share.
It’s not just about new brands, new products and lower prices, aimed at a younger, less wealthy demographic. It’s also about changing how business gets done. Across the watch industry, we're seeing a tectonic shift take place.
The focus is moving away from bricks-and-mortar distribution towards ecommerce. There's wider acceptance of pre-orders. We're seeing more product diversity and limited-number special editions. There's been an explosion in crowd-funding. And a stampede from print and other traditional forms of advertising towards a much more democratized social media.
Say what you like about the explosion in microbrands, many of which are being launched by people barely old enough to shave - they’re helping to make things interesting.
The explosion in micros is as interesting as, if not more interesting than the reinvigoration of Tudor, Swatch Group’s pull-out from Baselworld, Ball’s embracing online pre-orders, and youth-oriented big-brand spinoffs like "Baume".
These are all signs of the rapid change spreading through the industry, in the same way rapid change is making me and many others take more notice of the latest motorcycles to hit the street.
In order to stay viable, every business has to stay relevant, which means staying in tune with whatever demographic is interested in the product. That means offering a product they want, and can afford, and communicating with them along the same wavelength.
I think we're going to see more changes, coming more rapidly, in the next few years.
Earlier this year, I ran into another Dad I know at a back-to-school event. He told me his son recently became very interested in watches.
This kid is 12. I'm not ready to put him on the payroll as a new product development consultant just yet, but ten years from now, we'll need to have something that revs his engine.
Let the good times roll!