THE SWISS WATCHMAKING INDUSTRY: SOMETHING IS NOT TICKING WELL.
"May You Live In Interesting Times"
Few other industries carry the flair and the personality of the Haute Horlogerie Swiss companies.
For the last several centuries, first the decorative watch, then the pocket watch, and later the wristwatch have been the subject of study, class distinction and collectability.
Originally crafted for the elite, several factors have transformed this special manufacture into an important niche that reaches a broader audience this days.
- The technical advances have kept the passion about testing the limits of the mechanical development and miniaturization, a natural trend in the industrial age of the last part of XIX century and today a bold statement of physical knowledge and skills in a digital era.
- A carefully crafted and maintained value chain connecting watch makers, jewellers and accredited customers and collectors that connects the product in a timeless and personal way that most of other belongings can’t reach.
- Lastly, the fascination created by a careful marketing network, with expensive and well targeted campaigns that have placed the watch collecting as a significant part of the luxury high end market.
But times are changing. After surviving to the arrival of the Analog Watch, which almost kills the established industry back in the seventies, in the last decade, changes in consumer behavior, discretional spending and the arrival of the new digital wearables like Fitbit or Apple iWatch have seriously damaged the accounts of the biggest players in the industry, like Seiko, Swatch Group, Richemont or LVMH.
At the end of 2016, several reports brought some unusual news: The Swiss watch companies had exported over 1100 millions CHF, but at the same time they imported over 3700 millions CHF in repurchases of high end unsold watches from around the world.
Just in November alone, Richemont group recalled over 200 million CHF in unsold watches inventory
In the 2016 recap of SEIKO statement The japanese maker assumes a -13.3% total sales and a whooping -43.7% operating income…
Among others, either Swiss and Japanese cite reasons like yen appreciation, (swiss blame CHF rise, as well) higher mainland restriction for Chinese affluent buyers (more strick anti-laundering policies) , general economic slowdown and they even cite Brexit (¿?) .
It appears that the last two decades of raising price tags in order to trigger a “flight to safety” in the High End part of the market is not really going well. Many seasoned collectors in the biggest forums around the world and in the lobby conversations at Basel have said so, and they are favoring now smaller, boutique brands, that although less recognized and with far less market liquidity, provide well finished pieces that gives some distinction to the connoisseur , other than simply sporting the usual Rolex Daytona.
Speaking of which, this trend is in no way connected with the second hand side of the market: It is alive and well. Recently Rolex has beat its own record in Phillips Auction House with a quite unique “Royal Rolex”.
It’s clear that the tireless money (debt) printing practices of the central bankers are going to keep fueling the appetite for exclusive and limited pieces, in a world of apparently unlimited cash… You can just ask Roger W. Smith , a grandmaster watchmaker, considered the most exclusive in the world. From his tiny domain in the Isle of Man, his watches are dispatched to a 8 year waiting list of customers ready to spend up to half a million pounds per unit.
Do you like watches? Are you collecting, or plan to do it? Is it more an economic (investment) approach or its more a statement of uniqueness, personality and “analog statement” in a digital world? Feel free to comment and thanks for reading!
Sources, among others: Forbes, Daily Mail, Lepoint , Bloomberg. All images are probably owned by someone, somewhere. If you have any problem, just drop me a line. Thanks!