When Smartwatches Stumbled, Luxury Didn’t Panic
The global smartwatch market hit a wall around 2023. After years of aggressive growth driven by fitness tracking, notification management, and health monitoring features, consumer enthusiasm plateaued. Sales slowed, upgrade cycles stretched, and several mid-tier players quietly reduced inventory targets. For brands that had bet heavily on connected devices, the correction was uncomfortable. For LVMH’s watch division, it was barely a footnote.
LVMH houses its timepiece portfolio under TAG Heuer, Hublot, and Zenith – three brands with different price points, different audiences, and different philosophies about what a watch is supposed to do. What they share is a strategic positioning that never fully committed to the smartwatch model, even when pressure to do so was at its loudest. That restraint is now looking less like stubbornness and more like deliberate architecture.
TAG Heuer’s Connected Line: The Calculated Experiment
TAG Heuer was the most public participant in LVMH’s smartwatch chapter. The Connected line launched in 2015 as a direct challenge to Apple Watch’s cultural dominance, pairing Swiss watchmaking credibility with Google’s Wear OS software. It was never a mass-market play – pricing started well above what most fitness tracker buyers would consider – but it signaled that the group wasn’t going to ignore the category entirely. The strategy was to occupy the luxury end of connected devices, not compete with consumer electronics brands on volume or feature speed.
What that positioning accomplished was a kind of insulation. TAG Heuer Connected sales were never large enough to distort the overall division’s performance, but they were priced and marketed in a way that attracted buyers who were already thinking in luxury terms. When smartwatch growth slowed, TAG Heuer didn’t have millions of units of aging inventory to write down. The Connected line continued as a relatively contained offering, updated on its own schedule, without the quarterly pressure that haunts consumer electronics companies trying to justify spec upgrades to shareholders.
Mechanical Watches as the Real Anchor
The broader truth about LVMH’s watch division is that mechanical watchmaking was never displaced internally, even during the peak of smartwatch hype. Zenith kept its focus on in-house movements, particularly the El Primero chronograph caliber, which appeals to collectors who consider a watch’s mechanical construction as interesting as its appearance. Hublot continued building its identity around material innovation – ceramic, carbon, sapphire – rather than software features. These weren’t legacy holdovers waiting to be updated. They were the actual strategic core.
There’s a simple reason why mechanical watches weathered the smartwatch correction without structural damage: they don’t compete on the same axis. A consumer buying a Zenith Chronomaster isn’t weighing it against an Apple Watch Ultra. The decision categories are entirely different. One purchase is about technology adoption; the other is about ownership of something that will likely outlast the buyer. When you’re not competing on features, you’re also not vulnerable to feature obsolescence.
This is where the luxury watch market’s relationship with time works in LVMH’s favor – quite literally. A mechanical watch that was considered excellent in 2005 is still considered excellent today. The Calibre standards don’t depreciate the way a processor generation does. That durability means LVMH’s watch brands don’t face the same inventory aging problem that hits consumer electronics companies when a product cycle ends early.
Hublot’s approach to novelty – introducing new complications and limited editions rather than annual software updates – also keeps collector interest cycling without requiring the brand to outpace a technology roadmap it doesn’t control. Limited production runs sell through quickly, maintain resale value, and generate press attention that would cost multiples in advertising spend to achieve otherwise.
The Secondary Market as a Revenue Signal
One indicator of how LVMH’s watch brands are actually performing is the secondary market for their timepieces. Pre-owned Zenith, Hublot, and high-end TAG Heuer pieces have held relatively stable pricing through the same period when smartwatch resale values collapsed. A three-year-old Apple Watch sells for a fraction of its original price because its software is outdated and its battery has degraded. A three-year-old Hublot Big Bang sells for something close to retail because its value was never predicated on software.
The secondary market matters to LVMH strategically because strong resale values validate the original purchase decision. Buyers who know their watch will retain value are more likely to buy at full price, less likely to wait for discounts, and more likely to re-enter the market for another piece. It creates a reinforcing cycle that consumer electronics brands have spent years trying to replicate without success.
What Comes Next for the Division
TAG Heuer’s Connected line hasn’t been abandoned. The brand has continued iterating on the product, and there’s logic in maintaining a presence in connected devices at the luxury price tier – it captures a buyer who wants the TAG Heuer name on their wrist but lives primarily in a digital interface. Whether that buyer eventually migrates to a mechanical TAG Heuer or stays in the connected product line is a question the brand is actively trying to answer through its retail and customer data.
LVMH’s watch division also benefits from the group’s broader retail infrastructure. Access to multi-brand boutiques, airport locations, and the group’s e-commerce platform means these watch brands reach consumers at multiple points without having to build out independent retail networks from scratch. That distribution efficiency matters when you’re managing three brands with distinct identities and price tiers under one corporate umbrella.
The harder question facing the division isn’t how to respond to the smartwatch slowdown – that’s largely already answered – but how to attract younger buyers who are forming their first luxury purchase habits right now. Some of those buyers will come from the Connected line. Others will be drawn in through Hublot’s sports partnerships or Zenith’s historical credibility with watch enthusiasts. But the brand that cracks the first-purchase-to-lifetime-customer pipeline most effectively will shape LVMH’s watch revenue for the next decade. TAG Heuer has been most explicit about targeting this problem, with entry-level Carrera models designed specifically to sit at the point where serious watch interest begins.
