There was a sudden enthusiasm among luxury brands to adopt the resale model both to increase revenues and achieve their sustainability goals. This is also true for watches. After all, the circular economy creates economic value through reuse and preservation, while its opposite, the linear economy operates on the concept of “more” and waste.
However, it would be misleading to think that the pre-owned business model alone does the job when it comes to sustainability. Luxury watches appear to be circular in nature as they can be easily passed down from one generation to the next. But repairing, maintaining, shipping, reselling second-hand watches is not necessarily sustainable. These activities can only create a positive ecological and social impact if they are supported by sustainability-oriented practices.
Furthermore, circularity practices repeatedly failed because the incentives to implement such business models were never good enough.
Today, we are at a crossroads; we can’t afford to let it go badly this time around. With the UN’s 1.5 degree containment target by 2050 looking likely to be missed, circularity has returned to the forefront in the luxury industry thanks to campaigners such as Patagonia.
This is the view expressed during a panel on circularity at the latest Watches and Marvels 2022 that I hosted alongside Mélanie Frémond.
“There is no choice, and from a purely business perspective, customers will make the decision,” said Matt Bowling, co-founder of the used watch specialist. watch finder.
“Last year we surveyed over 26,000 luxury watch owners and collectors – 45.6% of respondents admitted they had at least one luxury watch at home that they did not wear. What if these watches go back into the trading system, what impact would that have?”
“The message is clear that the Swiss watch industry has decided to move in the direction of circularity, whatever the brand,” said Jean-Marc Pontroué, CEO of Panerai, which manufactures luxury watches for men. “The question is, how innovative and quick can we be in acting together to respond to this?”
What are watch brands doing in the space of circularity?
The watch and jewelry industry may be behind the times, but it is fast becoming a hotbed of innovation. Designing new business models that rethink both products and people (customers and employees) is at the heart of the work the watch industry is doing in this area.
Clarisse Desgeorge, Chief Marketing Officer of the Swiss luxury watchmaker Zenithexplained how his company conducts monthly consolidation to align with sustainability measures to embed the importance of these goals into employees’ mindsets and achieve their goals by 2025.
Zenith has three pillars of sustainability, centered on the three Rs: reduce (the environmental footprint of products and packaging), reuse and recycle.
In Zenith’s DEFY Extreme E initiative, the watches come with a rubber strap containing sustainable materials from recycled Continental CrossContact tires that have been used in races. The watch is delivered in a box incorporating various upcycled elements from the sidelines. For example, the housing lid liner is made from recycled E-grip tires, while the plate liner is made from parts of an Extreme E racing tarp.
Pontroué explained how Panerai follows a similar 5R plan: recycle/upcycle, reduce, rethink, reuse and reuse.
The company was the first luxury brand to use eSteel™ on a large scale. This next-generation metal, obtained from pre-consumer recycled steel scrap (up to 95%), comes from a range of industries and its production significantly reduces CO2 emissions.
“We launched e-LAB ID in 2019,” he said. “It was the first concept watch created to push the boundaries of recyclability in the watch industry – every component of the watch is produced from recycled materials.”
Diana Culillas, Secretary General of the Swiss Association for Better Gold (SBGA)a non-profit network of industry, finance and other service providers that supports the creation of responsible gold value chains, from mine to market, explained how identifying no-go areas is essential to circular business models.
She said: “Circularity starts with responsible sourcing, from the beginning of the value chain with extraction and innovation, to the end of product life (assembly and packaging). Certain types of origin are prohibited for us; this first happened with rubies and diamonds and is now happening with other materials.
Partnerships are the engine of change
Increasingly, brands are realizing that they cannot operate circular and sustainable transformations alone: partnerships and ecosystems are essential.
Cullilas explained how the SBGA is collaborating on gold sourcing, helping brands increase the supply pool of positive impact gold (both socially and environmentally) available to luxury players.
“We are an industry association, not activists, so not your usual NGO,” she explained. “We crystallize the needs of the players in the sector in their supply chain.
“Gold demand is up 33% in 2022, and recycled gold is limited in supply – representing at best around 17% of available gold. Some of it is e-waste — it could be from iPhones, for example — and we have no idea what the conditions are for that particular source.
The SBGA, Culillas said, contributes to a lower carbon footprint, as the footprint in artisanal and small-scale mining (ASM) is smaller than in large-scale mining – some 4,000 tons of emissions per kg of gold, compared to 13,000 tonnes.
Panerai’s partnership with UNESCO is important.
“He achieves two goals,” Pontroué explained. “To make the younger generations aware of the positive impact of luxury and to be in contact with hundreds of scientists. No one has all the solutions, and we need science.
Zenith also manages partnerships that help the brand upstream, but also downstream with the creation of products. Desgeorge explained how his Nona Source Project transforms surplus fabrics from the LVMH Fashion & Leather Goods Houses into watch straps. He also collaborates with LVMH Station Fthe largest start-up campus in the world in Paris which seeks to build innovative solutions for the luxury of tomorrow.
When it comes to the certified pre-owned watch sector, Watchfinder is growing rapidly. the company offers multiple circularity solutions based on reuse and repair to brands in the downstream (retail) space. Bowling described how collaborating with other watch brands is the essence of the company’s work.
“More brands are approaching us to develop take-back programs,” he said. “These are now operational in over 80 Panerai, Cartier, Piaget, Jaeger-LeCoultre, IWC, A Lange & Söhne, Roger Dubuis, Vacheron Constantin and Montblanc boutiques in the UK, Switzerland, US, Hong Kong, France and Germany. . But the circularity of these watches really depends on consumer behavior.
The market for second-hand luxury items – mainly watches and jewelry – is growing at 8% per year, which is faster than the entire luxury industry. Experts expect the second-hand market to grow 8-10% per year through 2025, reaching annual sales of between $29 billion and $32 billion. This represents an increase from 18 billion dollars in 2019. In contrast, McKinsey predicts that the market for new watches will only grow by 1 to 3% per year during the same period.
The second-hand market alone cannot solve all of the industry’s sustainability issues. However, if good service is provided with these used parts, they are usually much cheaper, attracting a whole new segment of customers in the watch industry, Bowling said, also pointing out that this does not reduce demand. new watches. Therefore, unless the first-hand circuit becomes circular and sustainable, the goal of 1.5 degrees Celsius by 2050 will become unachievable.
Solve the challenges ahead
The watch industry must also continue to appreciate the differences in consumer trends from generation to generation.
“Millennials and older generations are absolutely interested in environmental topics,” Panerai said. But it’s different in the case of future consumers, especially generation Z. When we talk to them, we realize that the feeling is totally different. An interesting question we received was, “Do we still need the packaging?” We can use what we already have or at the very least we just need a travel pouch.
Also, sustainable materials don’t always perform well in terms of meeting luxury standards, so we need to keep innovating and be patient,” added Desgeorge, who also called for more vintage timepieces to be sourced.
Another challenge is to combat the secrecy so inherent in the luxury industry – and which has traditionally given it much of its appeal – through transparency.
Pontroué explained how, last year, Panerai launched an open-source project, disclosing the full list of engineers and suppliers who worked with them to create their concept watch, the eLAB-ID.
“The aim was to encourage anyone in the watch industry to move towards a watch industry centered on sustainability,” he said. “The concept of opening came from highlighting the ten suppliers. We have also disclosed our protocols for selecting these vendors to our competitors. We want to help the industry become cleaner.
Indeed, the industry is moving towards creating a common pool of industry best practices and that is good news for all.
Some of the problems to be solved are organizational – most importantly, governance needs to be in place to drive the transformation of circularity and sustainability internally – while others are caused by the limits of our current knowledge and those of innovation.
Perhaps most important is that brands are constantly revisiting the issue of financial incentives and ensuring that they are adhered to throughout the system.
In the coming years, expect a lot more innovation in this space.