Long-term prognosis for global watch industry is healthy as players adapt to realities
On the retail and consumer end, some large groups have been buying back stock to support their supply chain partners
It has been a difficult time for the watch industry. The most recent figures released by the Federation of the Swiss Watch Industry (FH), which tracks exports out of Switzerland, show 15 straight months of falling numbers. September shows a 5.7 per cent drop, but the trend is flattening.
On the retail and consumer end, some large groups have been buying back stock to support their supply chain partners.
The Deloitte Swiss Watch Industry Study for 2016 cites Hong Kong as the most important export market, and has produced figures that show export levels to the city that approach those not seen since the global economic downturn in 2009. The United States became the big mover for July, and this looks to continue for the rest of this year.
Much of the atmosphere is a result of moving too quickly to take advantage of new markets and increased demand without having the fundamentals in place. The past 10 years have seen wristwatches incorporating all sorts of trends to appeal to the Russian market or the Chinese market. Brands jumped in at great cost looking for profit or market share.
They also started taking over stores and distributorships as opposed to having the local partners (and local knowledge) that allowed watchmakers to enter organically.
The potential market has grown dramatically. Yes, Hong Kong is down, but mainland China figures for lesser-priced watches have declined less.
Right now, the economy has been affected by anticorruption programmes and there is much speculation of an economy that has grown without the necessary business infrastructure development. While the high end sales have come and gone, the overall effect of the massive communication push has been to help fuel an interest in watches in general.
Technological advances have also opened quality watchmaking to middle and lower price point watches which benefited then. Watches with affordable price tags are now better than before, and they are inexpensive enough to be considered small purchases.
Perhaps because of fear of new technology, many brands jumped head first into new markets. The past dozen years or so though have been aberrations.
“We should not forget that the market was amazing. It went up, up, up non-stop – which is unrealistic,” said Thierry Stern, president of Patek Philippe during the year’s Baselworld. “Yes it will be a challenge this year, but when I say ‘challenge’, I don’t mean disaster ... It just has a small decrease, and our distributor is not worried, he is prepared.”