Chanel Rejects the ‘Fashion Watch’ as It Takes Aim at Rolex

(Bloomberg Businessweek) -- Chanel’s jewelry boutique on the Place Vendôme in Paris sells ceramic timepieces, floral brooches, and gold quilted-pattern rings. Its three arched windows face the Ritz hotel where Coco Chanel once lived, on a square that today is home to the shops of such Swiss stalwarts as Rolex, Breguet, and Patek Philippe.

The French house is sending a message to its noble neighbors: The company synonymous with woven chain-link handbags, tweed blazers, and No. 5 fragrance is determined to become a bigger force in the rarefied world of fine timepieces. But pushing even one of the most coveted names in female fashion into a category still populated predominantly by men won’t be easy. Other fashion brands such as Dior and Hermès have tried to make headway in the tradition-bound industry, with limited success. And from its inception 109 years ago, Chanel has enjoyed a reputation for feminine sensibility, which could make it difficult to build a big business in truly expensive watches, where the majority of sales are to men. “Diversifying is always tough, and it can go wrong if a brand lacks legitimacy,” says Oliver Mueller, a brand consultant at LuxeConsult in Aubonne, Switzerland, which specializes in the Swiss watch industry. “What Chanel has done very well is make its watches coherent with the rest of its product offering in terms of price and aesthetics.”

Chanel’s signature timepiece is the J12 (named after a class of racing yacht), a unisex divers’ watch made of black or white ceramic that got a subtle design overhaul and new movement for its 20th birthday this year. Chanel also launched a marketing campaign featuring billboards on high-profile real estate from Paris to Los Angeles, as well as short videos with brand ambassadors such as actress Keira Knightley and model Claudia Schiffer philosophizing about the meaning of time.

The most celebrated names in fashion have struggled to extend their cachet into timepieces. Indeed, “fashion watches” has become an almost pejorative term to aficionados more drawn to such technical features as perpetual calendars, minute repeaters, and gravity-defying tourbillon escapements.

Fashion watches from the likes of Giorgio Armani, Gucci, and Michael Kors are typically available for a few hundred dollars and powered by reliable yet unremarkable quartz movements, acting as an entry point to the brands for younger consumers, similar to how fragrances or sunglasses are positioned by luxe houses. Even Hermès, among the most exclusive names in luxury, sells “affordable” quartz watches for as little as $2,100. Chanel has instead priced the automatic J12 with its crystal case back starting at $5,700, approaching the cost of the Rolex Submariner, the standard-bearer of sporty dive watches. “It’s not a fashion watch, it’s a real watch with a fashion inspiration,” says Marianne Etchebarne, Chanel’s global head of watches and fine jewelry marketing.

Chanel has sought to burnish its credentials by focusing on what makes many watch lovers tick: the movement. The company owns 20% of Swiss movement maker Kenissi, which powers the J12 model, as well as a stake in Geneva-based watch brand F.P. Journe, whose models can cost as much as a luxury car.

While the categories of fashion and expensive watches coexist under the umbrella of luxury emporiums such as LVMH, Kering, and Richemont, few houses have managed to become a recognizable force in both. But as LVMH’s recent agreement to purchase Tiffany & Co. for $16 billion shows, jewelry and watches are seen as areas where big brands can still grow. “Consumers are becoming more interested in brands than specific products,” says Michael Jais, chief executive officer of fashion advisory firm Launchmetrics.

Labels like Chanel can extend their name across a range of items—from sneakers to handbags to watches—because customers view their products as a lifestyle offering with a consistent design language. That makes the brand more elastic than those specializing in niches such as footwear or watches, which risk getting marginalized and stand to see lower returns on their marketing spending, Jais says. “Acquiring new clients has become so costly and competitive,” he says, “it’s hard to make it worth it when you’re only selling one thing.”

Chanel’s ambitions in watchmaking haven’t gone unnoticed. The J12 model took home the prize as best ladies’ watch this year at the Geneva Grand Prix—the Oscars of luxury timepieces. And in 2018 a $47,300 Chanel skeleton watch that showed its inner workings through a diamond-rimmed, transparent case also won the top women’s prize.

While Chanel remains overwhelmingly a brand catering to women, watches also provide a way to draw in men. The Monsieur de Chanel is the company’s first dedicated men’s watch, with a starting price of $35,100, and the sporty design of the J12 doesn’t make that timepiece look out of place on a man’s wrist.

Chanel’s network of more than 200 boutiques around the world gives the company an advantage to pitch its watches directly to well-heeled consumers once they’re through the door. The brand’s managers are betting that today’s smartphone-wielding shoppers may still be willing to splurge on a mechanical watch from a house that’s created an aesthetic bond with buyers. For Chanel, Etchebarne says, “technology is never the starting point. The design is the starting point.” —With Thomas Mulier

To contact the editor responsible for this story: James Ellis at jellis27@bloomberg.net, Benedikt Kammel

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