Credits: Article and images by Oliver R Müller @ Revolution Watch Magazine. See the original article here - https://revolutionwatch.com/swiss-watch-exports-decline/
On the high-end, watches with a retail price tag above CHF 40,000 are still growing very strongly with two-digit growth rates since beginning of the year. The strongest growth rate is at the peak of the price pyramid with watches selling at more than CHF 100,000 SRP, where you’ll find Richard Mille, Patek Philippe, Audemars Piguet and some independent brands such as FP Journe or H. Moser & Cie with some of their product collection.
But there’s an exception to the rule, especially with Tissot growing at its core range price level. But there is some need of analysis needed here, as a major part of that growth is due to massive store openings in Greater China and the sell-in of substantial quantities of inventory. On the other hand, the massive success of the MoonSwatch seems to flatten out, and I forecast the sales this year to be down ~-20% which would still be an impressive ca. 1.6m watches sold (2m in 2023).
The growth of the Chinese market has never picked up since the state it left in 2019 pre-pandemic and unlike most of the industry, I wasn’t expecting it. The post-pandemic catch-up effect lasted a few months which were needed to replenish the stocks of the retailers in Greater China. The whole luxury industry has to live with the fact that even though the country still bears a phenomenal potential due to a fast-growing middle class and an expanding league of millionaires and billionaires, we should understand that the market is becoming more mature. Consumers are now educated when it comes to who’s who in the luxury world, because Chinese travel, read and attend events such as Watches and Wonders in Beijing. And the brands themselves educate them to better understand the intrinsic values of their products. The Chinese Gen-Z are just as their western counterparts and buy watches also as second-hand, which as a major change from the previous generations. And finally we should not underestimate the government’s decision to damper the luxury consumption, especially amongst the younger demographics. The Chinese influencers have received strong “signals” that ostentatious luxury is no more well perceived.
The volumes are declining strongly after 2 years of recovery, mainly due to the phenomenal success of the MoonSwatch and the PRX at Tissot. And to a lesser extent the volume growth of Rolex, but which will stop this year. In June only the volume of exported Swiss watches fell by a staggering -19.1% compared with last year. And since beginning of this year, we are down by almost -10% units which would bring it to the 2021 volumes of ~15.2m watches. This is half of what the Swiss watch industry was exporting in the year 2000. Needless to say that this has a major impact on the suppliers which are losing the volumes needed to work efficiently and maintain the industrial capacities that any watch brand needs in Switzerland, small or big.
Credits: Article and images by Oliver R Müller @ Revolution Watch Magazine. See the original article here - https://revolutionwatch.com/swiss-watch-exports-decline/