Demand at the top end of the watch market is booming — and Audemars Piguet, the Swiss watchmaker whose cult Royal Oak timepieces will set shoppers back between $50,000 and $100,000 for most popular styles, is making a killing.

Over the past five years, Audemars Piguet’s sales more than doubled, surpassing 2 billion Swiss francs ($2.2 billion) last year, the family-owned watchmaker told BoF.

While it’s still smaller than industry leader Rolex, Audemars Piguet has overtaken Patek Philippe to become the world’s second-largest independent watch brand, and successfully cemented itself as one of the industry’s most coveted labels, favoured by rappers, rockstars and horologists alike. As sales of luxury timepieces rose 4 percent to $55 billion last year, Boston Consulting Group estimates, Audemars Piguet grew by at least 25 percent, according to BoF analysis.

Even as second-hand prices for many watches have cooled from record highs during the pandemic, buyers continue to pay high premiums on retail prices for Audemars Piguet’s Royal Oak, which can be difficult to track down on the primary market due to limited quantities and surging demand.

“Audemars Piguet is probably the singular most in-demand brand in the world from a product perspective. It might even be more desirable than Rolex right now,” said Ben Clymer, founder of Hodinkee, the influential watch media and retailer.

Audemars Piguet — or “AP” as its colloquially known among followers — isn’t simply riding the wave of post-pandemic demand. While the value of the market is at a record high, the volume of new watches being exported from Switzerland has roughly halved since 2000 amid the rise of smart watches. The company is pulling ahead in a sector that has become more polarised and premiumised, with growth driven by just a handful of top-end brands.

From Discount To In-Demand

Many credit the work of outgoing CEO François-Henry Bennahmias, the brand’s chief executive since 2012, for transforming the brand’s fortunes and catapulting it to the “champions league” of the watch world, as Swiss watch analyst Oliver Müller puts it. Bennahmias is set to step down at the end of this year to pursue other opportunities.

When Bennahmias took the top job, Audemars Piguet watches were languishing in stores, with about 30 percent of the brand’s global inventory more than three years old, he told BoF.

Clymer remembers when Royal Oaks traded at considerable discounts. “I have distinct memories of being offered Royal Oaks at 40 percent off — 50 percent off at times — at retail. They were just looking to move inventory,” he said. “It’s hard to imagine now.”

Bennahmias, who began his career as a pro golfer before leaving sports behind for the luxury industry, overhauled the Swiss watchmaker’s business model and brand. He eschewed its longstanding wholesale model in favour of direct-to-consumer distribution and fostering close relationships with clients, while an early embrace of street culture and collaborations helped the brand get a head start on rivals as the audience for luxury timepieces became younger and more diverse. By bolstering Audemars Piguet’s offer of ultra-high-end models and limited editions, Bennahmias burnished the brand’s image, excited the market and boosted revenues to boot.

“The vision was to focus on making everything better, instead of more: so better product, better quality, better distribution, better connection with people,” Bennahmias said.

Shift to Direct-to-Consumer

The focus on selling directly to the consumer has helped Audemars Piguet grow its revenues rapidly without drastically ramping up production, as the brand captures hefty retailer markups on each sale and has a tighter grip on its inventory management. Production at Audemars Piguet remains well below competitors: in 2021, it sold 45,000 watches, compared with 68,000 at Patek Philippe, 600,000 at Cartier, and over 1 million at Rolex, according to Morgan Stanley estimates.

The DTC model remains a rarity in the high-end watch world: In 2021, Rolex, Patek Philippe and Swatch-owned Omega all relied on wholesale for over 70 percent of sales, Morgan Stanely estimates show, while Audemars Piguet drove over 70 percent of revenue from its own stores. Only Richard Mille, which sells just 5,000 watches a year exclusively in its own stores, has a tighter control of its distribution among the industry’s big players.

Drastically shrinking Audemars Piguet’s wholesale exposure also meant Bennahmias’ could focus on maintaining fewer, but better, retail locations. Now the brand has just 99 points of sale globally, compared with with 470 a decade ago.

Bennahmias’ approach to retail has been to focus investments on well-trained staff and high-touch services, rather than vying with luxury conglomerates like LVMH for high-visibility retail spaces. In 2019, the brand debuted its “AP House” concept: private boutique spaces that look and feel more like five-star apartments than retail stores. The inaugural location, above a Church’s store on London’s Bond Street, has no store frontage at street level. Its main room is outfitted with a bar, a grand piano, and even a pool table, inviting clients to have a relaxed, intimate experience.

“At our price point, the exposure and space we need to host people the right way,” Bennahmias said. “We’re only selling 50,000 watches. I want to get to know the 50,000 people who are buying every year.”

The set-up has worked wonders, with clients spending three to four times as much as they would in a traditional store. In four years, the brand has opened 15 AP Houses, including in New York, Shanghai, Tokyo and Zurich. “In our future, maybe 50 percent of our locations will be houses, and 50 percent will be [traditional] retail,” Bennahmias mused.

Audemars Piguet is set to launch a pre-owned watch programme in-house within the next year. While second-hand watches are a complex business for brands — and not easy to make profitable — the move will add an additional layer of control over its brand image and relationships with consumers.

Culturally Relevant Collabs

Bennahmias’ own passion for sports and music has heavily influenced Audemars Piguet’s move to embrace and cultivate its role in popular culture in a way that few other watch brands have done. In 2005, when Bennahmias was AP’s North America chief, he spearheaded a tie-up with Jay Z, releasing a limited-edition Offshore watch with the rapper at a time when collaborations with hip-hop stars were unheard of in the luxury industry. Since then, the brand has regularly rolled out limited-edition product collaborations with athletes and artists ranging from Lionel Messi and Sachin Tendulkar, to LeBron James and Quincy Jones.

AP’s more inclusive approach to building relevance in sports, music and street culture paid dividends as millennials came of age and the worlds of luxury fashion and streetwear collided: the brand has come out ahead of rivals when it comes to attracting a younger and more diverse customer base.

The brand’s collaborations proved a winning strategy, serving to animate their flagship product in new ways while engaging a variety of different communities. Even more off-beat tie-ups continue to drive hype as appetite for unique pieces soars among luxury consumers. Take last year’s collaboration with Marvel on a Royal Oak Concept inspired by the Black Panther movie: a one-off special edition fetched $5.2 million at a charity auction during the collaboration launch event.

“Francois saw the potential in what popular culture could mean to high-end watchmaking really, really early — and he embraced it in a way that nobody did back then, and very few even do today,” Clymer said.

Looking to the future

A successor has yet to be named to follow up Bennahmias’ transformative tenure when the executive exits later this year.

“The challenge for [the next CEO] is quite high,” said Oliver Müller, industry analyst and founder of consulting firm LuxeConsult. “His or her mission will be to stabilize growth, and get into a mode where they will still grow but probably in a less spectacular way.”

Analysts say there’s plenty of room for the brand to keep growing without diluting its appeal. While the flagship Royal Oak drives over 90 percent of revenues for the brand according to LuxeConsult estimates, demand for the watch isn’t set to die down anytime soon, as production remains limited and new buyers compete with AP die-hards, who sometimes collect multiple editions of the classic model.

But Bennahmias’s impending exit and recent changes to the company’s board have set off speculation about a potential sale of the brand. Italian luxury executive Alessandro Bogliolo was named chairman of the board last November after Jasmine Audemars, great-granddaughter of the brand’s co-founder Jules-Louis Audemars, retired. As pointed out by respected industry blog Miss Tweed, Bogliolo’s specialty is not luxury watchmaking, and he has a reputation for selling luxury businesses at a high price: Bogliolo was behind the blockbuster sale of Tiffany & Co. to LVMH in 2020.

LVMH would be a credible suitor: AP’s estimated 15 billion swiss franc valuation ($16.1 billion) would make an acquisition one of luxury’s biggest ever deals — and price out most other prospective purchasers.

However, as the brand flourishes as an independent company, there’s little pressure to force family shareholders to cash out. “Thanks to Mr Bennahmias and his teams, the networth of the brand is about 10 times what it was when he came in,” said Müller. “If I’m a shareholder at Audemars Piguet, why would I sell if the brand pays me a very good dividend every year?”

The company said in a statement it was drawn to Bogliolo’s “sound understanding of family-run businesses” and his experience developing luxury brands at an international level.

Bennahmias denied there were any intentions to sell the company after his departure.

“We are extremely firm on the message that we’ve been delivering for ever, saying that we are very proud of our independence, and we’ll keep working that way,” he said.

Two vacuum brands are the hottest names in haircare today.

With the introduction of its hair dryer in 2016, Dyson, previously known for vacuums, hand dryers and air purifiers, came roaring into the beauty world. At $400, the dryer was expensive. But it became a must-have for beauty enthusiasts.

Its next hair product arrived two years later and became a full-blown phenomenon. The AirWrap, a multi-styler tool that includes attachments so users can blow dry, brush and curl their hair — all without heat damage — is even more expensive than its predecessor, at $600. It promised a rare feat: the ability to achieve a bouncy, salon-esque blowout at home with minimal skill required.

On social media, countless influencers share Dyson AirWrap tutorials and tips; the hashtag #dysonairwrap has over 4 billion views on TikTok. It routinely sells out, and consumers even clamour over refurbished models. Today, haircare accounts for 30 percent of Dyson’s US business, the Wall Street Journal reported. The company declined to comment.

The AirWrap’s success has touched off a hair tools arms race. Among the new entrants: SharkNinja, one of Dyson’s primary competitors in vacuums, which released its own multi-styler tool, the FlexStyle, last year. Though similar in many ways to the AirWrap — it also offers an array of attachments, including curling barrels and a diffuser — its most significant difference is its cost, which, at $299, is less than half that of the Dyson.

Dyson’s success has shaken up a category that hasn’t had a reputation for innovation but is now booming with new products. Existing hair tools brands are releasing updated devices to show they can keep up with the new competition: GHD last month launched its Duet Style, a hair straightener that simultaneously dries hair. Hair care brands are also rolling out tools for the first time. Tracee Ellis Ross’ Pattern debuted a blow dryer with multiple attachments designed for textured hair in January.

“The beauty industry has traditionally been growth led, and so companies are incentivised to quickly iterate more so than innovate,” said Jana Bobosikova, the CEO of investment management company Epic FutureLabs that works with beauty brands. “A company like Dyson, their core technology is far more advanced than anybody that has focused on beauty to date.”

The Dyson Effect

Blow dry brushes were already on the rise when the AirWrap was released — Revlon had a hit with its one-step product, which launched in 2016. Dyson essentially took what Revlon had done and expanded upon it. Rather than just one round brush, it also included curling barrels, a flat brush and a traditional blow dry head.

Success wasn’t guaranteed; the vacuum brand had a strong reputation with consumers, but its premium pricing was better suited for appliances and commercial use.

The pandemic changed that.

“Covid accelerated all home tools to a place that never would have gotten otherwise,” said Jill Gilbert, a former beauty tech producer at CES. “People want more control, to be able to do it at home, and do it well.”

Dyson, in particular, she added, pushed forward the high-end luxury side of the market. For consumers used to paying for blowouts, the AirWrap quickly paid for itself, even at $600.

Its success has spurred all ends of the market. DryBar, for example, sells a blow dry brush with interchangeable brush heads, while Walmart sells a $45 device made by Elecsop that looks strikingly similar to the AirWrap.

But the real showdown is between Dyson and SharkNinja. The latter’s device offers a similar breadth of styling options, from a brand also known for its air-powered technology. (Shark also made tweaks to its model, in its view, to improve upon its competitors, adding a horizontal bend to its product to allow for more powerful blow drying, and a diffuser attachment for curly or coily hair.)

Videos comparing the two have become commonplace on Instagram Reels and TikTok, with one side of the head curled with the AirWrap, the other with the FlexStyle.

“We don’t consider ourselves a vacuum company, we consider ourselves an innovation company and a home appliance company,” said Danielle Lessing, the SVP for global product development at SharkNinja. “We don’t think of ourselves through a product lens, It’s about making consumers’ lives better with products that you interact with every day.”

Beyond Multi-Stylers

The AirWrap — and products like it — may be the hottest thing in hair tools today, but its reign can’t last forever. It’s benefitting from the fact that voluminous, softly curled locks are in style at the moment, for one. As well, there’s only so many people willing to shell out $600 for a hair tool, and it’s not an item that a person needs multiple of.

What will last, however, are the changed expectations consumers have for their hair devices. Being multi-purpose and non-damaging is table stakes for the next generation of tools, but already, brands are looking for ways to expand on that premise.

Other brands are responding accordingly. GHD, a 22-year-old hair care and tools brand, known for its blow dryers and straighteners, released its Duet Style product in January, a flat-iron that simultaneously dries hair, promising no damage.

“We are very conscious that we have to take a pain point out of the equation, which is time,” Jeroen Temmerman, chief executive of GHD. “We are developing ourselves to tackle that, be more efficient and help drive solutions.”

Some brands are selling more specialised products, but promising superior performance. Bio Ionic launched its Smart-X High Efficiency Dryer, for example, last fall, which it claims provides much speedier drying times in addition to better use of energy.

However, with more innovation comes more opportunity for brands to drive revenue. Hair tools were already a compelling segment for hair care brands — you can charge a lot more for a blow dryer or straightener than a bottle of shampoo. Dyson’s sky-high cost has helped warm up beauty consumers to the idea of spending hundreds of dollars on a hair tool. GHD’s Duet Style, for example, costs $399, while DryBar’s interchangeable blow dryer, which launched in March 2022, is $350.

Having new players in the hair tools segment, too, brings in fresh perspectives.

As more companies both in and out of beauty take note of the power of hair tools in generating conversation around a brand in addition to driving sales, there’s likely only to be more to come.

“We haven’t been in the space long enough to recognise what’s not possible,” added Lessing. “We just charged forward at such a voracious pace.”

As a kid in the 1990s, Trisha Okubo remembers shopping at Gap and Banana Republic in her local mall. But those mall visits didn’t mean she went home laden with shopping bags — in fact, whenever she saw a shirt or a pair of trousers she liked, she’d wait until they went on sale. And inevitably, they would.

Years later, as Okubo built her own jewellery brand, she knew she didn’t want her shoppers to have the same expectation for discounting.

“I didn’t want to fall into that trap,” she said.

Of course, that’s easier said than done. When planning a season’s worth of products, it’s impossible to know the exact consumer appetite for each style. Trends come and go overnight. Especially since the pandemic, consumer sentiment can be tepid one day, spike the next and then plummet just as fast.

Too conservative of an approach to inventory means missing lucrative full-price sales and risking shopper disappointment — an opportunity cost that most brands are reluctant to bear, especially if they answer to public shareholders every quarter. More often, retailers overestimate demand, and are stuck with excess goods with no other option than to mark down prices.

“First of all, the approach should be to minimise markdowns as much as possible in matching supply and demand better,” said Cowen analyst Oliver Chen.

The consequences of a product glut can be dire, as not only Gap and Banana Republic but also countless other mall retailers have learned in the past two decades. A constant stream of promotions can cause irrevocable damage to the perception of a brand, effectively conditioning consumers to wait for prices to fall or skip retail altogether and head straight to off-price retailers like Saks Off Fifth or T.J. Maxx (T.K. Maxx in the UK).

In certain European markets, markdowns and promotions are government regulated. Federal policy in France, for instance, limits promotions to two periods in the summer and winter. But in North America, the UK and other parts of the world, fashion companies are left to their own discretion for discounting strategies. They can mark down as much of their assortment as frequently as they’d like, for better or for worse.

Marketing plays a key role in underscoring the value of a retailer’s offering. Creative promotions, such as product bundles or personalised shopping events, can also help reduce the need for discounting. In the last segment of the inventory cycle, brands and retailers can look to third-party platforms to help offload leftover merchandise.

While there is no single blueprint suitable for every brand or retailer, the objective of this case study is to unpack the full inventory and markdown process and identify best practices in each stage, from the “test, read and react” approach in the planning stage to working with the most innovative start-ups in the liquidation space.

Click below to read the case study now.

US House of Representatives Speaker Kevin McCarthy said on Sunday lawmakers will move forward with legislation to address national security worries about TikTok, alleging China’s government had access to the short video app’s user data.

In the United States, there are growing calls to ban TikTok, owned by China-based company ByteDance, or to pass bipartisan legislation to give President Joe Biden’s administration legal authority to seek a ban. Devices owned by the US government were recently banned from having the app installed.

“The House will be moving forward with legislation to protect Americans from the technological tentacles of the Chinese Communist Party,” McCarthy said on Twitter.

TikTok CEO Shou Zi Chew appeared before a US House Committee for about five hours on Thursday, and lawmakers from both parties grilled him about national security and other concerns involving the app, which has 150 million American users.

In Thursday’s hearing, the TikTok CEO was asked if of the app, has spied on Americans at Beijing’s request. Chew answered, “No.”

Republican Representative Neal Dunn then referenced the company’s disclosure in December that some China-based employees at ByteDance improperly accessed TikTok user data of two journalists and were no longer employed by the company. He repeated his question about whether ByteDance was spying.

“I don’t think that spying is the right way to describe it,” Chew said. He went on to describe the reports as involving an “internal investigation” before being cut off.

McCarthy, a Republican, said in a tweet on Sunday, “It’s very concerning that the CEO of TikTok can’t be honest and admit what we already know to be true — China has access to TikTok user data.”

The company says it has spent more than $1.5 billion on data security efforts under the name “Project Texas” which currently has nearly 1,500 full-time employees and is contracted with Oracle Corp to store TikTok’s US user data.

Rather than appease lawmakers’ concerns, Chew’s appearance before Congress on Thursday “actually increased the likelihood that Congress will take some action,” Representative Mike Gallagher of Wisconsin, the Republican chairman of the House Select Committee on the Chinese Communist Party, told ABC News on Sunday.

Former US President Donald Trump lost a series of court rulings in 2020 when he sought to ban TikTok and another Chinese-owned app, WeChat, a unit of Tencent.

Many Democrats also have raised concerns although have not yet explicitly backed a US ban.

By Kanishka Singh in Washington, additional reporting by Leah Douglas; editor: Scott Malone and Cynthia Osterman

Learn more:

What Would a US TikTok Ban Mean for Fashion

TikTok’s CEO will appear before Congress on Thursday to defend the social media platform as lawmakers pressure owner ByteDance to sell the social platform or risk a ban. Businesses and creators are bracing for impact.