When the Swatch Group presented their half year numbers a little while ago, the industry included all specialists had an intense discussion. How come these numbers where not as expected (you can ask yourself if not expecting it is stupid), and why did the Swatch Group talk about it as if there was no problem at all? All of this and the overall changes in the market was reason enough for Suzanne Vallance to dig deeper into the market and find out what the change was all about. Suzanne is the new member of House of Chronos and works for ‘Repairs by post’. Her knowledge about watches and the industry is something that’s constantly under construction and growing. Enjoy reading her piece and be on the lookout for more!
Swiss watch exports have been in steady decline, but experts are still scratching their heads as to why. We read data in reports but must remind ourselves that the world of horology is synonymous with keeping their cards close to their chests and figures are rarely released unless absolutely necessary.
Heavy hitters in the watch industry, such as a the Swatch group are not known to disclose sales figures so horology fans are only privy to a general view of growth or decline through summarised reports.
There is one source of information that leads the pack with relevant information. Third party data reports are available through the FHS (Federation de l’Industrie Horlogere Suisse), though this data is still complex. The data below which explains “Swiss watch exports in June 2016” does not refer to a decline in sales as such, but instead the fact that there was a 16.1% downturn in Swiss-originating watches that were exported from Switzerland to other countries.
This information shows us that fewer watches are being exported out of Switzerland as retailers buy fewer pieces to sell. Some classic watch fans assume this is due to the rise of the smart watch, though the general consensus is that lovers of horology and those who purchase smart watches are not in the same demographic. It’s also hard to tell if there is a correlation as leading technology giants Apple have only been selling smart watches for one year so true data cannot be distinguished.
If not Smart watches, what?
If smart watches are not causing the damage to the Swiss watch market, then what is? It’s important to know that the FHS information does not cover the whole market. View the full report.
We can see that the downward trend paired with the fact there are far more inexpensive Swiss watches being exported means that as the inexpensive watches enjoy the greatest sales volume, the expensive timepieces, though selling less have much higher prices per watch.
The FHS do their best to show us the statistics of the watch market, but we don’t see statistics of watch prices at varying levels and we don’t have any access to the top priced luxury timepieces so don’t see the whole landscape clearly. The FHS state:
“All figures released by FHS refer to exports and not sales to end-consumers. Differences between these two types of data may therefore exist.”
It looks like there is a downturn in the watch industry, but this might not strictly represent the truth of the entire watch market. Bear in mind this data does not mention the Asian luxury watch market or the buoyant grey market.
The Grey Market
The grey market for luxury watches is booming. Perhaps smart watches are not the reason for the downturn and in fact it’s timepieces being sold out with the confines of authorised dealers. Thanks to the rise of technology and connectivity between watch lovers pre-owned watches can be purchased with a discount of up to 60% through non-traditional channels. Though the official market looks glum, the popularity of timepieces has not faltered.
Where does the market go from here?
Thankfully it seems the Swiss watch market is catching on the trend of new channels of purchasing watches and can hopefully address the issue by selling directly to the customers.
Alexander Linz of The Watch Insider explains how the Swiss watch market should adapt:
“The biggest challenge is how to find the customer … how to serve the customer… how to pamper the customer when once found …”
One way to retain a client base is for luxury brands to reproduce past successes at an affordable cost, today the consumer is looking for more watch for their money. Repricing current overpriced models may be the secret to rejuvenating the Swiss watch market.
Today the watch market is a wonderful industry to be involved in thanks to the centuries old craft that evokes such emotion in collectors; however it’s vital not to rest on our laurels. Luxury brands should keep an eye on new market trends so as not to alienate their customers and keep hold of their place in the market.