Swatch and the Global Watch Industry

1. How did Timex succeed the Swiss as world volume leader in the 1950s and 1960s?

Timex toppled the world dominance of the Swiss by streamlining the watch making process therefore also making the process very scaleable. The Swiss had dominated in an era where very little competition existed. This paved the way for the Swiss and their high cost watch producers to remain dominant as consumers really had no alternative to turn to.

Timex introduced watches using a combination of automation, precision tooling, and simpler design then their Swiss rivals. The Timex movements also incorporated new hard alloy bearings rather than expensive jewels used by the Swiss. All this lead to efficient and effective automation of Timex production lines, further lowering already very competitive costs.

The Timex watches were introduced in 1951 and were priced at anywhere between US$6.95-US$7.95. They were disposable and yet also trendy, stylized, and highly durable. Timex provided (for the first time ever) a clear-cut alternative for the masses in the watch industry. No longer were consumers daunted with a very expensive, “life-long” purchase of a watch.

One main reason for the Swiss success around the world was due to their ability to offer their products through retail outlets such as high-end jewelry stores. Timex faced incredible difficulty in penetrating the retail channels used by the Swiss due to the fact that these channels simply were very reluctant to accept their watches. The reasons for this included the fact that the profit margins associated with the Swiss products were much larger than that of Timex’s products. Also, due to the fact that Timex was advertising the fact that its watches are disposable, the retail outlets were then also missing out on a highly profitable watch servicing business. Therefore, Timex’s pursuit to overtake the Swiss was not a “walk in the park”.

Timex