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By Matthew Dalton 

GENEVA -- You're 25 years old, basking in the glow of your first big job promotion and a hefty raise. Why not splurge on a big-ticket item?

Your father might have bought a fancy Swiss watch. But the thought doesn't occur to you -- for most of your life, you've used your cellphone to check the time. Instead, you book a getaway to Costa Rica, which you document extensively on Instagram.

Swiss watchmaking executive Jean-Claude Biver wants to change that thinking. From his perch at luxury conglomerate LVMH Moët Hennessy Louis Vuitton, the 68-year-old has seen younger generations drift away from his centuries-old industry. He is on a mission to get them interested in watches, before it's too late.

"It's the first time we have young people not buying watches," says Mr. Biver, who leads LVMH's watch division. "Time is everywhere. Why should these kids buy something for the wrists that tells them the same thing they get everywhere?"

Executives across Switzerland's watch industry have been wrestling with the same question. How can they convince young consumers that mechanical timepieces are relevant -- let alone worth the price of a car? At the same time, the tradition-bound manufacturers are fending off Apple Inc. and other tech companies that are disrupting the market with wrist gadgets that track your workouts and organize your social life.

The perils facing the Swiss industry have been laid bare by a sharp downturn starting in 2015. Chinese consumers, who drove a two-decade boom in the watch business, reined in their spending. That exposed watchmakers' growing disconnect with clientele in the West. Swiss watch exports globally fell 13% between 2014 and 2016. Last year, exports rose 2.7%, but still lagged well behind the luxury sector as a whole.

The decline has led watchmakers to lay off hundreds of workers and buy back thousands of expensive, unsold watches, prying off their jewels and melting down their metal components.

"It's not only a crisis," says Antonio Calce, chief executive of Girard Perregaux, a watchmaker based in La Chaux-de-Fonds, Switzerland. "We must rethink the existing business model."

Mr. Biver has helped LVMH's watch division power through the downturn. Watch sales at the conglomerate's two main brands, TAG Heuer and Hublot, hit record highs in each of the past three years. LVMH's watches and jewelry division, which includes TAG Heuer, Hublot and Bulgari, recorded sales of EUR3.8 billion ($4.7 billion) last year, up 10%. Sales in 2016, one of the industry's most difficult years in decades, rose 5%.

The executive acknowledges he is an unlikely candidate to reconnect the industry to young people. Today's youth culture sometimes mystifies him, he says. Aside from watches, Mr. Biver's passion is making his own cheese, produced from the milk of cows grazing on his farm in the Swiss Alps. Every year, he mails the cheese -- aged for months into fragrant hunks -- to friends and acquaintances around the world.

Mr. Biver credits a strategy that relentlessly targets younger consumers, even at the expense of traditions that have long endeared Swiss watches to older generations. Over the past few years, LVMH's brands have enlisted Jay-Z and various street artists to design watches, signed models in their early 20s as "brand ambassadors," bought ads in the virtual world of videogames and developed the Swiss industry's first smartwatch. He compares the approach to the Roman Catholic Church's 1960s-era reforms that allowed Mass to be recited in vernacular languages, not just Latin, ushering the church into the modern era.

"If you talk Latin to people who don't understand, don't be surprised that one day they won't come anymore," Mr. Biver says.

He relies on experts close to home: his 17-year-old son, Pierre, his 25-year-old stepdaughter, Carolina, and their friends.

On Pierre's recommendation, Mr. Biver chose Jay-Z as a brand ambassador in 2011 and began developing a watch with the rapper. Called the Shawn Carter by Hublot, after Jay-Z's real name, it came in two models: one in black for $17,900 and the other in yellow gold for $33,900. Both feature a transparent back displaying the watch's complicated inner workings. Hublot says the watches, with 350 made in all, sold out.

In 2014, Mr. Biver was dining at Nobu in London with Pierre and Carolina when his children noticed the model Cara Delevingne at a nearby table. Ms. Delevingne had walked the runways of fashion houses in the LVMH empire and starred in Burberry advertisements with Kate Moss, but the watch executive hadn't heard of her.

"You should take her!" the children said. "She is so cool, she is the future!"

"Huh?" Mr. Biver said.

He returned to his office in Switzerland's Jura Mountains and told his marketing director, Valérie Servageon, to "check Cara Delevingne."

"Who's she?" Ms. Servageon said.

Months later, Ms. Delevingne signed on as a brand ambassador for TAG Heuer. Since then, Mr. Biver has hired the street artists known as Alec Monopoly and Mr. Brainwash and renowned tattoo artist Maxime Buchi to design watches for TAG Heuer and Hublot. Other brand ambassadors include the 21-year-old model Bella Hadid and basketball stars Kobe Bryant and Dwyane Wade.

The Swiss industry faced a new threat in 2014 when Apple announced its smartwatch, which can display emails, monitor physical activity and serve as an electronic wallet. Mr. Biver feared the Apple watch, priced as low as $400, could compete for customers of TAG Heuer's least expensive models, which start at $1,000 and just tell the time.

But he also saw an opportunity: If TAG Heuer developed its own smartwatch, perhaps the brand could win a new, younger customer base for its mechanical watches.

The executive recruited computer programmers and electrical engineers to negotiate with global tech giants over the watch's software and hardware. The team chose Google's Android for the operating system and worked with Intel for the electronics.

Mr. Biver moved so fast that TAG Heuer's first smartwatch couldn't use the label "Swiss made." Because the smartwatch relied heavily on non-Swiss suppliers, it was disqualified from using the label.

TAG Heuer unveiled its $1,500 "connected watch," which had a step counter and could display emails and run other apps, in November 2015, just months after Apple's smartwatch went on sale.

For a second version of the watch, which came out in March 2017, Mr. Biver landed the "Swiss made" label by persuading Intel to move its production processes to a subcontractor in Switzerland. In total, TAG Heuer has sold roughly 100,000 smartwatches, Mr. Biver says -- encouraging the company that it can compete in the market.

The experiment, however, failed by one metric: It didn't spark new interest in TAG Heuer's mechanical timepieces. The company made an offer allowing customers to swap the smartwatch for a mechanical one for $1,500, but fewer than 10% of buyers have made the exchange, Mr. Biver says. The first version allowed buyers to make the swap after the two-year warranty expired, while the offer applied immediately to the second one.

"I must admit that I expected much more interest," Mr. Biver says.

Other watchmakers have started to try his strategies. Some have hired young celebrities as brand ambassadors. A few have started to develop smartwatches.

Swatch Group AG is designing a smartwatch that aims to safeguard the Swiss industry's legendary self-reliance. Unlike Mr. Biver, Swatch Chief Executive Nick Hayek doesn't want to depend on global supply chains controlled by big tech companies such as Google, Intel and Qualcomm for hardware and software.

"It doesn't make sense to reproduce something that your mobile phone can do," Mr. Hayek says.

Instead, Swatch is designing its own operating system and electronics for the watch. Relying on little-known Swatch subsidiaries that produce electronic components, the company is looking to design a smartwatch that can go a month or more without charging and wouldn't become obsolete until years after most gadgets. Swatch aims to release it by the end of the year.

Mr. Biver got his start in Swiss watchmaking when it faced a previous existential threat: the advent of the quartz watch, an electronic timekeeping technology far more accurate and cheaper to produce than any mechanical watch. In the 1970s, Japanese watchmakers such as Seiko flooded the global market with inexpensive quartz timepieces, destroying the lower and middle tiers of the Swiss industry.

Swiss manufacturers rebranded themselves to survive, limiting their production and marketing their timepieces as the works of craftsmen. Mr. Biver, who began his watchmaking career in sales and worked his way up, and his friend Jacques Piguet purchased Blancpain, a Swiss brand on its deathbed because of the quartz revolution. Mr. Biver directed its engineers to focus on designing highly complicated mechanical watches. He also raised prices and proudly declared the company would never make a quartz watch. Revenue soon began to grow. (Blancpain is now owned by Swatch Group.)

In the late 1990s, Chinese consumers began to turbocharge the recovery of the Swiss watch industry. Enjoying newfound freedom, China's rapidly growing ranks of wealthy consumers traveled the world, buying watches in Hong Kong, Europe, Los Angeles and New York.

Chinese demand helped the Swiss industry to ride out the 2008 financial crisis. Deep recessions in the West and Japan, however, hobbled buyers in the industry's traditional markets. A new cohort of younger consumers in the U.S. and Europe saw less value in spending thousands of dollars on a watch, retailers and analysts say. The mobile phone, meanwhile, was becoming ubiquitous.

Then demand from China took a hit. The luxury watch -- a favored gift to grease the wheels of business -- emerged as a target of public outrage over official corruption just as China's new leader, Xi Jinping, launched a sweeping crackdown on graft. In April 2016, Mr. Xi's government boosted customs inspections and imposed fees to stop globe-trotting shoppers from bringing suitcases full of watches and other luxury goods into the country from overseas.

Back in Switzerland, Compagnie Financière Richemont SA, owner of Cartier, Vacheron Constantin and many other brands, spent more than $240 million buying back piles of unsold watches in 2016. Unsold watches continued clogging up Richemont's wholesale distribution channels into late last year, leading company executives to float the possibility of another round of buybacks.

Another LVMH watch brand, Zenith, saw its sales hit hard in the downturn. The brand had come to rely on Chinese clients for 60% of its sales. "To be so successful with the Chinese made our people feel comfortable," says Mr. Biver, who has been with LVMH since 2008, when it bought Hublot, where he was CEO. "When you feel comfortable, you are entering the danger zone."

Without Chinese shoppers driving growth, the industry's problems in its biggest traditional markets -- the U.S., Europe and Japan -- became conspicuous.

Luxury watches suffered from the arrival of a new generation of consumers who want to collect experiences, not things, says Dan Coates of youth marketing research firm Ypulse in New York. For that, people look to their phones, equipped with everything from cameras to pedometers, he says.

On a January trip to Paris, Goncalo Pereira, a 27-year-old dentist from Portugal, strolled past luxury watch boutiques on Rue St. Honoré, one of the city's famed high-end shopping streets. He wasn't looking to buy.

"It's a habit that I lost," Mr. Pereira says. "I started checking time on the iPhone and stopped using watches."

Swiss timepieces are "so expensive," says his friend Beatriz Silva, 25. "With that money I could do so many other things, like go on a trip."

The problem was particularly acute in the U.S. The market had never recovered from its pre-financial crisis peak in 2007. That left some executives questioning whether American consumers really cared about the craftsmanship that goes into Swiss watches.

Most American consumers "don't even know the difference between mechanical and quartz, I bet you," says Mr. Hayek of Swatch.

A 2017 YPulse survey found that 29% of Americans under the age of 34 owned a traditional watch. Just 3% were planning to buy one in the next year.

When younger consumers do buy watches, they often look outside Switzerland. MVMT and Shinola, both based in the U.S., and Sweden's Daniel Wellington are among the industry's fastest-growing brands. They've managed to sell millions of watches to customers under 35 by keeping prices mostly below $1,000 and crafting canny marketing campaigns that rely on social-media influencers -- people with large followings on Instagram or other social networks -- to tout their timepieces online.

To figure out what young consumers want, Mr. Biver continues to consult with what he calls his "youth advisory board" -- his son, his stepdaughter and their friends. Last year, he took them up on their advice to buy advertising space on the popular PlayStation racing game "Gran Turismo."

"Young people are more excited about playing these games than watching Formula One on Sunday," Mr. Biver says.

Pierre and his friends sometimes give Mr. Biver tours of youth hot spots in cities around the world. A trip to Japan led the executive to begin developing a mechanical watch inspired by Japanese animation, or manga.

Mr. Biver is in talks with HBO to design a watch based on the show "Game of Thrones" in time for the show's last season next year, LVMH executives say. Negotiations are continuing. HBO didn't respond to requests for comment.

The seasoned watch executive has also become a social-media influencer himself, a rare feat for a man old enough to collect a Swiss pension. Mr. Biver has garnered 125,000 followers on Instagram by posting photos of himself hobnobbing with his celebrity brand ambassadors. Statistics on his Instagram account report that more than half of his followers are between the ages of 18 and 24.

"How can I understand the millennials?" Mr. Biver says. "It's impossible. I'm 68. I cannot understand. But I can learn."

Write to Matthew Dalton at Matthew.Dalton@wsj.com

(END) Dow Jones Newswires

March 12, 2018 11:30 ET (15:30 GMT)

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