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Frédéric Arnault, the newly appointed CEO of LVMH Watches and second-youngest son of scion Bernard Arnault, is putting his plans in place for the future of the hard luxury category he now oversees, which includes opportunities for advancement in digital innovations alongside mechanical ones — and this extends beyond watches. He says it signifies an intention to foster growth in the three watch brands he now oversees — Hublot, Zenith and Tag Heuer. This extends beyond watches, he says, speaking at LVMH Watch Week in Miami Beach, where he made his first major public appearance since being named to the newly created role in January.
The position is a signal of intent from LVMH for the potential of the luxury watch category and to invest more in the future, Arnault says. It’s “an effort to give more strength to our watch brands and the watch category overall inside the group”, he says.
To Arnault, this means continuing transformation at Tag Heuer while extending his expertise to Hublot and Zenith, as well as keeping each strategy independent. He’s shown a particular interest in technology: while CEO of Tag Heuer, he introduced a project to bring NFT PFPs to digital watch faces and began offering connected watch owners the option to add new limited-edition watch faces that correspond to physical watch launches.
“I’ll be able to stay very involved at Tag Heuer to continue to accompany the end of the transformation, and with [new CEO Julien Tornare] in charge, making sure the strategy stays the same, and the brand continues to grow at a good level. At the same time, looking strongly at Hublot and Zenith with two different objectives to reinforce the strength of these brands in the future.”
Luxury watches have become a key pillar of luxury brand strategies in recent years, thanks to high margins and the seeming resilience of big spenders to increasingly high prices. LVMH in particular has been increasing its efforts, having completed the acquisition of Tiffany & Co. in 2021 and working to build out other existing watch brands within the group. In the group’s recent earnings call, LVMH chairman and CEO Bernard Arnault shared that the watch and jewellery division had grown 7 per cent in the most recent quarter, noting that higher prices must be justified by technical and economic reasons. (Some of the group’s watches can reach €500,000 or more.)
This fifth instalment of LVMH Watch Week, which served as both an introduction to new products and an introduction of Arnault in this new capacity, was hosted in a rented mansion on Miami Beach’s Star Island, where views of palm trees and Florida’s glistening Biscayne Bay competed for attention with limited-edition dazzlers from Bulgari, Daniel Roth, Gérald Genta, Hublot, Tag Heuer and Zenith. Brands showcased innovations ranging from Hublot’s MP-10 Tourbillon Weight Energy System Titanium (its 592 components completely upend traditional watch mechanisms) to nostalgic Gérald Genta pieces (featuring animated interpretations of Mickey Mouse and Donald Duck).
During the opening remarks, LVMH CEO of Americas Anish Melwani says that Miami was the right location, after previous iterations in cities including Singapore and Dubai — Florida was the third-best US market outside of New York and California.
Tag Heuer announced during the event that it would be expanding its connected watch face options; the project Arnault led as CEO and a high point of Watch Week for the executive. This means that people who own a Tag Heuer smartwatch can update their watch faces with limited-edition designs — even digital designs that photorealistically replicate the mechanical movements of an analog watch — without buying an entirely new watch. The connected watch faces were originally offered in the Carrera line, but have since expanded into styles including the Aquaracer and Formula 1 designs, leading to a total of 20 watch face options, and legions of other customisations. (The connected watches use Google’s Wear OS operating system but can be operated by iPhone users through an app.)
Arnault sees the connected watch faces as a new calling card for collectors, because each new physical watch will be accompanied with the launch of a connected watch face, he says. For example, in September, Tag Heuer launched a 100-piece collection in collaboration with racing brand Team Ikuzawa in Japan, designed to be easily recognisable in red and white. Those with a connected watch could also wear the limited-edition design.
Although connected watches account for just 15 per cent of Tag Heuer’s watch business and a small portion overall, Arnault considers the usage to be strong. The brand is able to tell from the connected watches how often customers are using and interacting with them. “The number I track every day is not sales; it’s how many people are wearing the connected watch,” he says. “That’s the most important one.”
Still, many watch collectors remain traditionalists, and he cautions that the company doesn’t plan to lean too far into the connected watch category, as mechanical watches make up the bulk of sales. Similar prioritisation applies to the NFT project he spearheaded at Tag. He says that while owners still use the NFT functionality, the NFT market has slowed, and the brand must now focus on other initiatives. “As we know in tech, the limiting factor is always resource, even for the biggest companies — meaning the number of resources we have versus the roadmap, so there’s a constant need to prioritise.”
Innovations in his new role span multiple brands and interpretations, including mechanical engineering. A core challenge will be staying involved in each brand while maintaining their unique identities. “It’s very important to keep their independence, especially in strategy, creativity and innovation,” Arnault says. “Hublot is a very innovative brand as well, and they make it core to their brands. That’s super cool. Hublot will grow also through innovation, but very different from Tag Heuer. It’s important that they stay innovative, but they don’t steal each other’s ideas or compete too much.” Zenith has also been undergoing a revitalisation under Tornare, before he took over Tag Heuer. Arnault says that a connected watch for this brand wouldn’t make sense. (It’s worth noting that Zenith did create one with a digital display in the 1970s, an original version of which was on display at the event.)
And what’s next? Arnault brings a pair of eyeglasses out of his jacket pocket, with a grin. “We just launched eyewear, which is also run by innovation.” The glasses are a new piece from Tag Heuer’s revived eyewear offering, created with the LVMH eyewear division Thélios, focusing on sporty use cases. (Tag Heuer originally offered eyewear from 2002 to 2016.)
“The first thing I worked on when I was on the innovation team [at LVMH] was to think about connected eyewear,” he says. He started his time at LVMH working on connected products. “Then I thought, ‘First, let’s take care of the connected watch. Then we need to take care of the brands. Then we need to relaunch eyewear properly. And then 10 years later, maybe we will launch connected eyewear’.”
So there are four years left? “Maybe,” he says.
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